Proposal to delete reporting obligations and scale back penalties below the German Supply Chain Due Diligence Act

In line with the federal government’s coalition agreement, the German Ministry of Labour and Social Affairs proposes to streamline the controversial Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG). Reporting necessities are set to be abolished, and the imposition of fines might be regulated extra restrictively, however due diligence obligations shall stay in pressure. A draft of the proposal was despatched to related associations on 29 August 2025 with a really quick deadline for feedback and, in line with press studies, it might be adopted by the cupboard as early as this week.

The reporting necessities have all the time been thought-about notably difficult, not solely in view of the pending implementation of the CSDDD. Unsurprisingly, the Ministry states in its justification for the draft that it goals to stop corporations from dealing with extreme burdens through the transition interval till the directive is transposed into nationwide legislation. The proposal can also be in step with the federal government’s coalition settlement (learn extra right here). The abolition of the reporting obligation is meant to take impact retroactively from 1 January 2023. This will, nonetheless, have restricted sensible affect for corporations on condition that the Federal Office for Economic Affairs and Export Control (BAFA) had already introduced that it’ll not implement the reporting obligations earlier than 1 January 2026. 

In-scope corporations could also be extra relieved to be taught that the variety of regulatory offenses is about to be considerably lowered. The slightly obscure provisions of the coalition settlement are anticipated to be clarified, in order that fines will solely be imposed for violations of the obligations to (i) take preventive measures, (ii) take remedial measures, and (iii) set up a complaints process. This signifies that solely these violations of obligations deemed notably extreme by the legislator might be topic to fines. For occasion, fines for lacking or incorrect danger analyses, or breaches of documentation obligations, would stop to use.

If the draft turns into legislation, in-scope corporations would not have to fret about friction with the CSDDD with regard to the aforementioned features. However, the LkSG would in any other case stay in pressure, notably the due diligence obligations. In-scope corporations ought to due to this fact stay vigilant and compliant, and in addition monitor additional developments referring to the CSDDD (learn extra in our Omnibus Tracker) and its transposition into nationwide legislation.

Update: The authorities adopted the invoice on 3 September 2025. Its draft, which is equivalent to the ministerial draft, will now be mentioned by each legislative chambers earlier than it might probably develop into legislation.