Germany's Supply Chain Due Diligence Act (LkSG)
Requires companies to identify and address human rights and environmental risks in their supply chains, ensuring compliance with international standards and promoting responsible business conduct.
What You Need to Know
Date of Adoption
16-Jul-21
Scope
Since 2023, the LkSG applies to enterprises with 3,000 or more employees.
Starting in 2024, it also applied to enterprises with 1,000 or more employees.
Reporting Obligations
Affected companies must prepare an annual report detailing how they fulfilled their due diligence obligations during the previous financial year. The EU has introduced new reporting requirements under the Corporate Sustainability Reporting Directive (CSRD). As a result, Germany’s authority, BAFA, has decided to postpone the review of these reports until January 1, 2026. All necessary information regarding reporting obligations can be found [here].
Penalties
Companies that fail to comply with their legal obligations may face administrative fines of up to 8 million euros or 2% of their annual global turnover. The turnover-based fine system applies only to enterprises with an annual turnover exceeding 400 million euros.
More about this regulations
Issued by
Germany
Isadora Costa
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