Table of Contents
What Has Been Removed
The reporting obligation has been abolished without replacement and retroactively
What Remains
The due diligence obligations remain unchanged
Legislation
The status of the legislative process
CSDDD
The EU directive as the actual turning point
Interim Period
Three years until 2029 and what follows
Recommendations
What makes sense now
Organisational Resilience
Supply Chain Due Diligence and Business Continuity
Sources
References and further sources
The Supply Chain Act has not been abolished. It has become quieter. The annual reporting obligation has been removed[1], the BAFA no longer reviews reports[2], and the catalogue of fines has been significantly reduced. Many companies draw the wrong conclusion from this.
Because the due diligence obligations themselves remain unchanged. Anyone who stops the risk analysis, disables the complaint procedure, or no longer maintains documentation is violating applicable law – it just goes unnoticed more often now.
This article clarifies what has actually been removed, what remains, and why the upcoming EU directive holds a surprise for most affected companies.
What Has Been Removed
The Reporting Obligation
Abolished without replacement and retroactively
The annual reporting obligation under §§ 10 to 12 LkSG[3] was abolished without replacement and retroactively as of 1 January 2023. The BAFA ceased reviewing company reports in autumn 2025 and clearly states on its website that the reporting obligation no longer applies.
If you still have a report in the drawer: It does not need to be submitted. If you have not created one: There is no disadvantage.
The Majority of Administrative Offences
The catalogue of fines has been reduced from 13 to 4 offences. Fines remain applicable only for violations of preventive measures, remedial measures, and the complaint procedure.
The BAFA has adjusted its practice accordingly and states that a fine is „always only considered as a last resort in the event of serious human rights violations“. The criteria are the extent, scope, and irreversibility of the violation.
What Remains Unchanged
And here lies the misunderstanding. What was removed was the accountability for the due diligence obligations – not the due diligence obligations themselves. Still in force are:
- Risk Management including the appointment of a responsible person
- Regular Risk Analysis within the business area and with direct suppliers
- Policy Statement on human rights strategy
- Preventive Measures within the business area and towards suppliers
- Remedial Measures for identified violations
- Complaint Procedure accessible to affected parties
- Occasion-Related Due Diligence towards indirect suppliers
- Internal Documentation
The scope of application also remains unchanged: companies with at least 1,000 employees domestically.
The documentation obligation is often overlooked
Internal documentation must be retained for seven years. It was never identical to the reporting obligation: the report went externally, the documentation remains in-house.
With the elimination of the report, the proof does not disappear. It is just no longer routinely requested. In a serious case – in the event of a tip-off, a complaint, or a media inquiry – the documentation is the only thing standing between an organisation and the accusation of having done nothing.
The Status of the Legislative Process
The Federal Cabinet adopted the amendment draft on 3 September 2025[4]. The BAFA has already adjusted its supervisory practice before the conclusion of the parliamentary process and has not been reviewing reports since autumn 2025.
This constellation is unusual and important for practice: The supervisory authority has brought forward its enforcement. For the reporting obligation, this is inconsequential because it is retroactively abolished. This explicitly does not apply to the due diligence obligations – they are not up for negotiation.
The LkSG remains in force until it is replaced by an implementation law for the European supply chain directive.
The EU Directive CSDDD
The Real Transformation
On 26 February 2026, the so-called Omnibus-I Directive was published in the Official Journal of the EU – Directive (EU) 2026/470[5]. It significantly amends the supply chain directive CSDDD[6] and also affects sustainability reporting under the CSRD[7].
| LkSG (today) | CSDDD after Omnibus | |
|---|---|---|
| Threshold | from 1,000 employees | from 5,000 employees and more than 1.5 billion euros worldwide net turnover |
| Non-EU Companies | – | more than 1.5 billion euros net turnover in the EU |
| Implementation by Member States | – | by 26 July 2028 |
| Application by Companies | since 2023 or 2024 | from 26 July 2029, uniformly |
| Civil Liability | excluded (§ 3 para. 3 LkSG) | EU-wide liability regime abolished, national law applies |
| Climate Transition Plan | – | obligation abolished |
The figures warrant a second look. The threshold rises from 1,000 to 5,000 employees, and it is additionally tied to a turnover of 1.5 billion euros. Both conditions must be met.
This means: A significant portion of the companies that currently fall under the LkSG will not fall under the European regime from 2029. How the German legislator will handle this gap – whether it will align with the EU level or maintain its own, stricter thresholds – remains open.
Three Years Interim Period
What Follows
Between today and 26 July 2029, there are approximately three years during which the LkSG with the threshold of 1,000 employees will continue to apply. Anyone who reduces due diligence during this period takes a double risk:
- Legally: The obligations remain in force. Prevention, remediation, and complaint procedures are still subject to fines.
- Practically: Customers, investors, and major clients request proof of due diligence regardless of the law. A company below the CSDDD threshold becomes a supplier to a company above it – and receives the requirements via contract rather than law.
The second point is underestimated. The CSDDD obliges large companies to examine their activity chain. They pass this obligation on. Anyone who scraps their risk analysis today will rebuild it in 2029 under time pressure and at the behest of a customer.
What Makes Sense Now
- Stop report creation. This is real relief and costs nothing.
- Maintain risk analysis, but scale it back to the necessary level. An annual, well-documented analysis is sufficient.
- Do not alter complaint procedures. They are subject to fines and are also the most effective early warning system a supply chain has.
- Continue documentation. Seven years of retention, and in case of doubt, your only proof.
- Check impact under the CSDDD. 5,000 employees and 1.5 billion euros in revenue – if you fall below this, plan for the role as a supplier, not as an obligated party.
- Review contracts. Due diligence clauses in customer contracts continue to apply regardless of the legal situation.
The Connection to Organisational Resilience
Supply chain due diligence and Business Continuity view the same chain from two directions. One asks what damage my supply chain causes to others. The other asks what damage my supply chain causes to me if it fails.
Both require the same foundation: knowing who the suppliers are, which ones are critical, and what happens if one fails. This is precisely the knowledge provided by a Business Impact Analysis, and this is exactly what a Business Continuity Management builds upon.
Anyone who has already conducted the supply chain analysis from the LkSG has half the groundwork for both. Discarding it because a report is no longer required would be the most expensive form of bureaucratic relief.
However, a supply chain analysis ages. Anyone who does not align it with the current situation works with yesterday’s image. The monthly resilience status report collects what has changed in supply chains, service providers, and conditions.
Status: September 2026. The amendment process for the LkSG was not yet completed in all aspects at the editorial deadline; the supervisory practice of the BAFA has already been adjusted. This article does not replace legal advice.
Sources
The information in this article is based on the following sources. Paid standards are not quoted verbatim; their contents are summarised.
- BMAS: Act to Amend the Supply Chain Due Diligence Act
- BAFA: Supply Chains – Overview – Elimination of Reporting Obligations, Current Supervisory Practice
- Act on Corporate Due Diligence Obligations in Supply Chains (LkSG). Freely available at gesetze-im-internet.de. ↑
- Federal Government: Reporting Obligations Eliminated – Cabinet Decision of 3 September 2025
- Covington & Burling: EU CSDDD/CSRD Omnibus Published in Official Journal – Directive (EU) 2026/470, Thresholds and Deadlines
- Directive (EU) 2024/1760 on Corporate Sustainability Due Diligence (CSDDD). Freely available at EUR-Lex. ↑
- Directive (EU) 2022/2464 on Corporate Sustainability Reporting (CSRD). Freely available at EUR-Lex.
