Supply Chain Act in transition – what companies need to know now
The Gesetz über die Sorgfaltspflichten in Lieferketten has been accompanying companies since the beginning of 2023. Initially, it applied to companies with more than 3,000 employees, and since 2024, companies with 1,000 employees or more must also comply with the legal requirements. However, the law had barely come into force before it came under political pressure. The complete abolition of the law, which was pushed through by a CDU minister, was demanded by his own party as soon as it was in opposition. Once again a governing party, drastic cuts were discussed in spring 2025.
Today it is clear: The LkSG will not be repealed, but parts of it will be amended. The federal government presented a draft amendment at the beginning of September 2025, which sets the direction.
The current situation
The scope of application remains unchanged. Companies with at least 1,000 employees are still obliged to check their supply chains. The definition of the supply chain also remains the same. The company's own business area, direct suppliers and indirect suppliers must be considered as before. Likewise, the central due diligence obligations remain in place. These include risk analysis, a policy statement, prevention and remediation measures, and the establishment of a Complaints system, comprehensive documentation and human rights officer's monitoring of risk management.
What changes
The essential change concerns the reporting obligation. Previously, companies had to report annually and on an ad-hoc basis about their activities, particularly via the BAFA portal. This obligation is to be abolished, with retroactive effect. Those who have not yet submitted a report will not have to do so now. For companies that have already submitted their reports, nothing changes. Nevertheless, businesses should not relax too soon. From 2027, the new reporting obligations under the European CSRD will come into effect, which has significant overlap in content with the previous LkSG requirements.
In the area of sanctions, there are also relevant adjustments. In future, they will focus on serious violations. This includes, for example, if preventive measures are not taken or not taken in time. Likewise, failure to take remedial measures, even though a human rights violation has occurred or is imminent, will remain punishable. The absence of a complaints procedure will also continue to be penalised. However, an inadequate risk analysis will no longer be subject to sanctions. While it remains a requirement, it will no longer carry immediate penalties. Similarly, sanctions for environmental risks will be abolished.
The due diligence obligations of companies remain, and the protection of human rights is clearly paramount.
A look at Brussels
The amendments to the LkSG are closely linked to the Developments at the European level linked. The planned Corporate Sustainability Due Diligence Directive, or CSDDD, is still going through the legislative process. It remains open as to what company size the rules will apply to. Thresholds of 1,000, 3,000, or even 5,000 employees are being discussed, combined with turnover thresholds of at least €450 million.
The question of whether the risk analysis should be mandatorily extended to indirect suppliers is also controversial. Furthermore, it is unclear how binding the climate transformation plan will remain and whether civil liability will be introduced.
As long as these questions are not clarified, the German amendment draft will not be finally introduced to the Bundestag. The government wants to wait until the European trilogue negotiations are concluded. Only then is the LkSG to be passed in adapted form in Germany.
What does this mean for businesses
Companies should not be lulled into a false sense of security by the political discussions. The LkSG [Supply Chain Due Diligence Act] will continue to apply in its current form until further notice. All due diligence obligations must be complied with. On 01.10.2025, the BMWE instructed the BAFA to act in accordance with the regulations of the BAFA Amendment Act; thus, to anticipate its application.
In the medium term, the reporting obligation will lapse until the CSRD rules come into effect from 2027. The number of sanctions will be reduced, but for serious violations, the risk remains high. In the long term, European regulation will take over and is likely to set stricter standards.
Conclusion
The Supply Chain Act remains an integral part of the corporate framework. Even if the reporting obligation is dropped, companies should not neglect their processes. A functioning risk management system, clear preventative mechanisms, and robust documentation remain indispensable. Internally, a report will continue to be necessary. Those who consistently work on their compliance now will not only meet current requirements but will also be prepared for future European regulations.
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This article was created from the webinar on the current status of Omnibus and LkSG. Request recording and presentations
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