German Supply Chain Act to be abolished – A Relief for Businesses

Review: The Supply Chain Act and its obligations

Since 2023, the Supply Act (LkSG) has required companies with more than 3,000 employees to meet extensive human rights and environmental obligations throughout their supply chains – including risk analyses, preventive measures, and grievance procedures.

For many businesses, this meant high administrative effort, unclear liability risks, and a significant bureaucratic burden. Criticism was widespread – and now, a political reversal is underway.

Coalition agreement 2025: Abolition decided!

In April 2025, the new federal government, formed by CDU/CSU and SPD, made a clear decision: the Supply Chain Act will be completely repealed.

The coalition agreement states:

“In addition, we are abolishing the national Supply Chain Due Diligence Act (LkSG). It will be replaced by a law on international corporate responsibility that implements the European Supply Chain Directive (CSDDD) in a way that is both low on bureaucracy and enforcement-friendly.”

 A relief for medium-sized companies – and a signal to all entrepreneurs:

• The reporting requirement will be dropped immediately.
• The new law should be based on European regulations, but should be much easier to implement.
• Administrative burdens will be reduced without completely abandoning the issue of sustainability.

What is the current status?

Although the LkSG is still formally in force, the government has announced the following:

• Sanctions will be suspended, except in cases of serious human rights violations.

Companies are encouraged to review and streamline their existing processes. The transitional period can be used strategically to realign compliance efforts.

What does it mean for foreign suppliers?

Suppliers of small and medium-sized enterprises will also benefit: Since the new law is specifically designed to provide relief, the previous obligations for foreign suppliers will no longer apply to the same extent, and they will not have to fear sanctions either. This will also facilitate international cooperation.

Conclusion: A Move Toward Entrepreneurial Common Sense

With the abolition of the LkSG, politicians are finally creating room for maneuver for companies – without losing sight of the importance of responsible corporate conduct. For many companies, this is a welcome relief, a signal of a new beginning and an opportunity to reorient their compliance in a future-oriented and pragmatic manner.