‘Effective’ German supply chain law under threat from new proposals

Core Insights - The German law (LkSG) imposes legal obligations on companies to address human rights violations and environmental breaches in their business activities and supply chains [1][2] - The law has led to visible consequences, such as wage claims by truck drivers and actions by Turkish trade unions, indicating its utilization by employees and human rights defenders [1][2] - Despite these developments, many impacts of the law are not apparent to the public, with changes primarily occurring within internal company processes [2][3] Regulatory and Compliance Issues - The effectiveness of the LkSG is under discussion, especially with recent amendments to the EU Corporate Sustainable Due Diligence Directive (CSDDD) that limit its scope and enforcement [3] - Trade associations have lobbied for reduced regulatory requirements, arguing that the LkSG imposes excessive reporting burdens without addressing practical business realities [4] - Enforcement is a significant issue, with the Federal Office for Economic Affairs and Export Control (BAFA) overseeing compliance but facing questions about its political independence due to directives from relevant ministries [5][6] Potential Changes and Implications - If Germany aligns the number of companies covered by the LkSG with recent EU regulatory developments, many entities could be exempted from due diligence obligations, impacting stakeholders in their supply chains [7] - German business associations have called for the suspension of the LkSG following the first reading of an amendment in the German parliament, indicating potential shifts in regulatory focus [7]