Home Business Environmental Sustainability LkSG Scrapped Immediately, EU ...

LkSG Scrapped Immediately, EU Sustainability Law Delayed One Year

Environmental Sustainability

Business Honor
15 April, 2025

Germany ends strict due diligence law, replacing it with a delayed, lighter EU sustainability directive.

Germany's human rights and environmental supply chain due diligence law, the Supply Chain Act (LkSG), will be immediately cancelled as part of a union agreement. The LkSG will be replaced by the EU's new Corporate Sustainability Due Diligence Directive (CSDDD), according to the agreement. However, according to the EU's current Omnibus proposals, the CSDDD is only expected to go into effect in the middle of 2028 and will need less frequent monitoring than the LkSG.

According to the law, businesses must do yearly environmental and human rights risk assessments for their operations, direct suppliers, and indirect suppliers if they are aware of human rights violations. The LkSG first applied to businesses with over 3,000 employees; then, beginning in 2024, it also applied to businesses with over 1,000 employees.

In the new agreement, the partnership announced in a section focused on reducing bureaucracy that the reporting requirement under the LkSG would be immediately abolished and fully eliminated. They further clarified that existing obligations would not be subject to sanctions until the CSDDD comes into force, except in cases of severe human rights violations. The CSDDD mandates that businesses identify, assess, prevent, mitigate, resolve, and correct the effects that their upstream supply chain and certain downstream operations, such as distribution and recycling, have on people and the environment. These effects can include deforestation, pollution, emissions, child labor, slavery, and ecological damage.

Adopted in May 2024, the CSDDD Act is scheduled to go into effect in July 2027. Following the release of the European Commission's Omnibus proposals, which include measures to significantly simplify and reduce sustainability compliance obligations for companies, EU lawmakers in the European Council have agreed to postpone the implementation of the sustainability due diligence law by one year.