German Supply Chain Act
Overview Summary
The German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz, LkSG) obligates companies operating in Germany to identify, prevent and mitigate human rights and environmental risks—such as forced labour, child labour, unsafe working conditions and environmental harm—across their entire supply chains.
The law requires companies to establish a risk‑management system, conduct regular risk analyses, maintain an accessible complaints mechanism and implement preventive and remedial measures. These due diligence obligations apply to a company’s own operations, direct suppliers and, in a risk‑based manner, to indirect suppliers.
Scope of Coverage
The German Supply Chain Act applies across all industries:
– A company’s own activities
– Direct suppliers
– Indirect suppliers (when the company obtains substantiated knowledge of possible risks)
Issues addressed:
– Human rights risks—including child labour, worst forms of child labour, forced labour, modern slavery, occupational health and safety breaches, discrimination, restriction of the freedom of association, unequal treatment, withholding of adequate living wages and inappropriate use of security forces
– Environmental risks which cause human harm—including soil contamination, water pollution, excessive water consumption, damage that restricts access to clean drinking water or food production and environmental impacts that harm human health
Affected Entities
In‑scope Companies (German & Foreign with German Operations):
– Applies to companies with a central administration, principal place of business, statutory seat or a branch office in Germany
– Companies with at least 3,000 employees* in Germany (since 2023)
– Companies with at least 1,000 employees* in Germany (from 2024 onward)
*Includes posted workers and temporary agency workers when assignments exceed six months
Supply Chain Coverage:
– Own operations
– Direct suppliers
– Indirect suppliers when risks become known (risk‑based)
– All steps globally—from raw materials to delivery to final customers
While SMEs are not directly regulated, they are increasingly required to provide evidence and data to in‑scope business partners.
Applicability & Compliance Timeline
2023 → applies to companies with 3,000+ employees
2024 → Threshold lowered to 1,000+ employees
What This Means for Companies
Companies operating in Germany need clear visibility into human‑rights and environmental risks across their supply chains, along with consistent documentation of due‑diligence measures as required under the German Supply Chain Due Diligence Act.
Meo Carbon Solutions supports organizations by mapping risks, enhancing supplier engagement and developing practical due diligence processes that align with LkSG requirements.
Status
Adopted
*LkSG will remain valid until the EU CSDDD is transposed into national law
**In 2025, the German government adopted amendments that abolished the reporting obligation and reduced sanctions to only severe violations.
Key Links
Federal Office for Economic Affairs and Export Control: https://www.csr-in-deutschland.de/EN/Legislation/German-Supply-Chain-Act/german-supply-chain-act.html