LkSG — Lieferkettensorgfaltspflichtengesetz (German Supply Chain Act)
German Supply Chain Act (LkSG · BGBl. I 2021 Nr. 46), in force since 1 Jan 2023. It applies by headcount threshold in Germany. The national precursor of the EU CSDDD.
Context
The Lieferkettensorgfaltspflichtengesetz (LkSG) is a German federal law published on 22 July 2021 in the Bundesgesetzblatt Teil I (German Federal Law Gazette Part I) Nr. 46. In force since 1 January 2023, it institutes legal supply-chain due diligence obligations on human rights and the environment for companies with a registered office or branch in Germany that exceed the set headcount thresholds. It is the most important national precursor framework to Regulation (EU) 2024/1760 CSDDD adopted in June 2024.
Subjective scope and thresholds
Companies with a registered office or branch in Germany with 3,000 or more workers in Germany.
Reduction of the threshold to 1,000 or more workers in Germany.
Workers posted from a foreign company with a branch in Germany count towards the threshold if they work at least 6 months in Germany.
Suppliers that supply LkSG companies are indirectly subject via cascading contractual clauses, even if they do not exceed the threshold.
Core obligations
Adoption of a policy statement on human rights and the environment signed by executive management.
Systematic annual identification of risks in direct suppliers (tier 1) and in indirect suppliers where there is
«substantial knowledge»
of specific risks.Adoption of appropriate corrective measures, supplier training, cascading contractual codes.
Operate a grievance channel accessible to suppliers' workers with confidential handling.
Annual report published to the BAFA (Bundesamt für Wirtschaft und Ausfuhrkontrolle, the federal control authority) with public disclosure.
Retention of evidence for 7 years.
Penalty regime
The BAFA is the competent authority for supervision and penalties. Administrative fines may reach up to 2 per cent of annual worldwide turnover for companies with turnover above EUR 400,000,000. Sanctioned companies may be excluded from public tenders in Germany for up to 3 years (Vergaberecht §§ 124, 125 GWB). The regime does not include direct civil liability, but victims may act under the general German liability regime (BGB §§ 823 et seq.).
Applied case
A European textile brand with a commercial office and logistics warehouse in Frankfurt (Germany) and 1,200 workers between the European parent and Germany verifies its exposure to the LkSG.
Threshold calculation. It verifies how many of the 1,200 workers count in Germany (those with a German contract + those posted from the European parent with at least 6 months in Germany). If it exceeds 1,000 in Germany it falls directly under LkSG phase 2.
Corporate policy. It adopts a policy statement on human rights and the environment signed by its CEO, published on the corporate website, translated into German for its German stakeholders.
Risk analysis. It carries out an annual risk analysis of its tier 1 suppliers (manufacturers in India, Bangladesh, Turkey, Portugal) focusing on risk sectors and geographies identified by the BAFA in its sectoral guidance.
Grievance mechanism. It implements a grievance channel accessible to suppliers' workers in relevant languages (English, Hindi, Bengali, Turkish, Portuguese) with confidential handling managed by an independent third party.
BAFA reporting. It publishes an annual report to the BAFA in German in the authority's official format, with simultaneous public disclosure on the corporate website.
CSDDD anticipation. It articulates the LkSG implementation with the future German CSDDD transposition (which will extend the scope and the penalty rigour), avoiding duplication but anticipating regulatory convergence.
Common mistakes
The LkSG does NOT include direct civil liability: only an administrative penalty regime.
The LkSG institutes legal obligations with an administrative penalty regime via the BAFA (fines up to 2 per cent of worldwide turnover). It does NOT include direct civil liability of the company for damage to third parties. Victims in the supply chain may act under the general German civil-liability regime of the BGB §§ 823 et seq., not via the LkSG. The EU CSDDD (Reg. (EU) 2024/1760 Art. 29) does include harmonised civil liability — a notable difference between the two regimes.
The LkSG does NOT apply only to German companies: also to branches of foreign companies.
The subjective scope is companies with a registered office OR branch in Germany that exceed the headcount threshold in Germany. A European brand with a commercial office or logistics warehouse in Germany counts the workers assigned there + those posted from the parent with at least 6 months’ stay. European brands with a real operational presence in Germany must verify the calculation.
The LkSG will NOT be fully replaced by the CSDDD: it coexists for years with the transposition.
Germany will transpose the CSDDD by adjusting the LkSG, but the operational coexistence between the two regimes will last for years. The 2026 Omnibus (Dir. (EU) 2026/470) amended the CSDDD threshold to 1,000 workers AND EUR 450,000,000 (cumulative). A brand can fall under the LkSG without being under the CSDDD (the CSDDD turnover threshold is higher) or vice versa depending on its structure.
The LkSG does NOT automatically cover due diligence at tier 4 or deeper.
The LkSG risk-analysis obligation covers direct suppliers (tier 1) and extends to indirect ones only where there is
«substantial knowledge»
of specific risks. It is not recursive analysis down to tier 4. The CSDDD adopts a similar approach after the 2026 Omnibus, which limited the chain of activities to direct tier 1 as a general rule (Omnibus recital 17). Both regimes avoid unlimited recursion.
Frequently asked questions
What is the German LkSG?
The Lieferkettensorgfaltspflichtengesetz (Supply Chain Due Diligence Obligations Act), a German federal law published on 22 July 2021 in the Bundesgesetzblatt Teil I 2021 Nr. 46. In force since 1 January 2023, it institutes due diligence obligations on human rights and the environment for companies with a registered office or branch in Germany.
Who is subject to the LkSG?
Companies with a registered office or branch in Germany that exceed headcount thresholds in Germany. Phase 1 (since 1 Jan 2023): 3,000 or more workers. Phase 2 (since 1 Jan 2024): 1,000 or more workers. Workers posted from a foreign parent with at least 6 months’ stay in Germany count. Suppliers of LkSG companies are indirectly subject via cascading contractual clauses.
How does the LkSG differ from the EU CSDDD?
The LkSG is a German federal law without direct civil liability (only an administrative penalty regime up to 2 per cent of worldwide turnover via the BAFA). The CSDDD (Reg. (EU) 2024/1760, amended by the 2026 Omnibus) is an EU framework with harmonised civil liability and different thresholds (1,000 workers AND EUR 450,000,000 cumulative). Germany will transpose the CSDDD by adjusting the LkSG.
How does it affect European textile brands?
On two levels. Direct level: if the brand has a branch in Germany with 1,000 or more workers counted there, it falls under the LkSG. Indirect level: if the brand is a supplier of a German company subject to the LkSG, it receives cascading LkSG clauses via commercial contracts. In both cases it must build a due diligence policy prepared for the LkSG and CSDDD simultaneously.
Fuentes oficiales
- Federal Republic of Germany · Bundesgesetzblatt22 jul 2021 · vigente 1 ene 2023Binding German federal law
- Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA)22 jul 2021Official implementation guidance
- European Parliament and Council · OJEU OJ L of 5.7.20242023-2026Harmonising EU directive
- European Parliament and Council · OJEU L of 26.2.202613 jun 2024Amending directive
