Proposal to delete reporting obligations and reduce penalties under the German Supply Chain Due Diligence Act

In line with the 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 requirements are set to be abolished, and the imposition of fines will be regulated more restrictively, but due diligence obligations shall remain in force. A draft of the proposal was sent to relevant associations on 29 August 2025 with a very short deadline for comments and, according to press reports, it may be adopted by the cabinet as early as this week.

The reporting requirements have always been considered particularly challenging, not only in view of the pending implementation of the CSDDD. Unsurprisingly, the Ministry states in its justification for the draft that it aims to prevent companies from facing excessive burdens during the transition period until the directive is transposed into national law. The proposal is also in line with the government’s coalition agreement (read more here). The abolition of the reporting obligation is intended to take effect retroactively from 1 January 2023. This will, however, have limited practical impact for companies given that the Federal Office for Economic Affairs and Export Control (BAFA) had already announced that it will not enforce the reporting obligations before 1 January 2026. 

In-scope companies may be more relieved to learn that the number of regulatory offenses is set to be significantly reduced. The rather vague provisions of the coalition agreement are expected to be clarified, so that fines will only be imposed for violations of the obligations to (i) take preventive measures, (ii) take remedial measures, and (iii) establish a complaints procedure. This means that only those violations of obligations deemed particularly severe by the legislator will be subject to fines. For instance, fines for missing or incorrect risk analyses, or breaches of documentation obligations, would cease to apply.

If the draft becomes law, in-scope companies would no longer have to worry about friction with the CSDDD with regard to the aforementioned aspects. However, the LkSG would otherwise remain in force, particularly the due diligence obligations. In-scope companies should therefore remain vigilant and compliant, and also monitor further developments relating to the CSDDD (read more in our Omnibus Tracker) and its transposition into national law.