Germany Updates Supply Chain Act: Less Bureaucracy, More Practicality

At the end of August, the German government announced upcoming amendments to the Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG). The law, in force since 2023, requires companies to carefully assess their suppliers in order to prevent human rights violations and environmental risks.

Now, the rules are being revised to ease administrative burdens while keeping the core principles of due diligence intact.

What Will Change?

The most significant change is the removal of the obligation to submit an annual report. Companies will no longer need to prepare lengthy formal documents every year. Still, the duty to identify risks, take preventive measures, and document compliance efforts remains unchanged.

Another adjustment concerns penalties. The draft reform seeks to limit the number of violations for which fines may be imposed. This should provide companies with clearer compliance expectations and reduce legal uncertainty.

Why It Matters

The amendments respond to strong criticism from businesses that considered the original LkSG overly bureaucratic. By simplifying reporting duties, the government aims to make the law more practical and enforceable without undermining its intent.

For companies in Germany and abroad, the reform means:

• fewer formal requirements, more focus on substance;
• clearer rules on fines and sanctions;
• greater emphasis on effective risk management instead of paperwork.

What’s Next?

The government plans to approve the draft bill on September 3 and forward it to the Bundestag. After parliamentary debate, the revised law could take effect within the coming months.

Conclusion

The reform of the LkSG reflects an effort to balance human rights and environmental protection in global supply chains with reduced red tape for businesses. Companies should prepare for a new framework: less reporting, but continued responsibility for meaningful due diligence.