German Supply Chain Due Diligence Act

LkSG: Supply chain due diligence obligations for German companies

The German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG) requires companies with at least 1,000 employees and a registered presence in Germany to identify, prevent, and remedy human rights and environmental risks across their supply chains, with core due diligence obligations remaining in force through the transition to EU-level CSDDD rules.

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Next deadline:

July 26, 2029: LkSG obligations are expected to be replaced when CSDDD begins to apply at EU level, though Germany's final transposition law has not been confirmed.

LkSG required companies to submit an annual report to BAFA (The Federal Office for Economic Affairs and Export Control) documenting their due diligence activities. That reporting obligation was suspended in autumn 2025, and the Bundestag (German Federal Parliament) is advancing legislation to abolish it. The due diligence activities themselves (conducting risk analyses, implementing preventive and remedial measures, operating a complaints mechanism, and maintaining internal documentation) remain legally required.

Companies in scope today need documented, auditable processes for those obligations, regardless of the reporting status.

Regulation timeline

1. January 2023

LkSG enters into force for companies with at least 3,000 employees and a registered presence in Germany.

3. September 2025

German federal cabinet passes draft amendment to LkSG, suspending BAFA's review of annual reports ahead of formal legislative change.

16. January 2026

Bundestag (German Federal Parliament) holds first reading of the LkSG amendment bill. Key change: retroactive abolition of the annual BAFA reporting obligation from January 1, 2023. Core due diligence obligations remain in force.

26. July 2028

Deadline for Germany and all EU member states to transpose the amended CSDDD into national law. LkSG is expected to be replaced by a new German implementation of CSDDD obligations.

1. January 2024

Scope extends to companies with at least 1,000 employees, bringing approximately 5,200 German companies into direct scope.

7. November 2025

BAFA deactivates its online reporting portal. Submission of annual LkSG reports via BAFA's system is no longer possible.

18. March 2026

Amended CSDDD (Omnibus I) enters into force across the EU, triggering a two-year transposition period for member states.

26. July 2029

Amended CSDDD begins to apply to in-scope companies. EU-level threshold: more than 5,000 employees and more than EUR 1.5 billion annual net turnover. National threshold for Germany may differ.

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2023

1. January 2023
LkSG enters into force for companies with at least 3,000 employees and a registered presence in Germany.
2024

1. January 2024
Scope extends to companies with at least 1,000 employees, bringing approximately 5,200 German companies into direct scope.
2025

3. September 2025
German federal cabinet passes draft amendment to LkSG, suspending BAFA's review of annual reports ahead of formal legislative change.
7. November 2025
BAFA deactivates its online reporting portal. Submission of annual LkSG reports via BAFA's system is no longer possible.
2026

16. January 2026
Bundestag (German Federal Parliament) holds first reading of the LkSG amendment bill. Key change: retroactive abolition of the annual BAFA reporting obligation from January 1, 2023. Core due diligence obligations remain in force.
18. March 2026
Amended CSDDD (Omnibus I) enters into force across the EU, triggering a two-year transposition period for member states.
2028

26. July 2028
Deadline for Germany and all EU member states to transpose the amended CSDDD into national law. LkSG is expected to be replaced by a new German implementation of CSDDD obligations.
2029

26. July 2029
Amended CSDDD begins to apply to in-scope companies. EU-level threshold: more than 5,000 employees and more than EUR 1.5 billion annual net turnover. National threshold for Germany may differ.

What the regulation requires

LkSG applies to companies with at least 1,000 employees and a registered presence in Germany. A registered presence includes a registered office, principal place of business, administrative headquarters, or a branch office.

In-scope companies must annually assess human rights and environmental risks across their own operations and all direct suppliers, implement preventive and remedial measures where risks are identified, operate a complaints mechanism accessible to affected parties, and maintain internal documentation of all due diligence activities for at least seven years. For indirect suppliers, the obligation to act is triggered by substantiated knowledge of a specific risk.

The Federal Office for Economic Affairs and Export Control (BAFA) enforces the law and can impose fines of up to EUR 8 million for serious violations, or up to 2% of annual global turnover for companies exceeding EUR 400 million in annual revenue.

Common LkSG implementation challenges

Risk analysis must cover every direct supplier, every year

LkSG requires annual risk analyses covering the company's own operations and all direct suppliers. The methodology must address human rights topics (forced labor, child labor, freedom of association, fair wages, and occupational safety) and environmental topics (soil contamination, water pollution, and obligations under the mercury and persistent organic pollutants conventions). It must be documented and repeatable, as supplier bases change continuously.

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