Update on the reporting requirements under the German Supply Chains Act (LkSG)
The Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) was introduced in 2023 to protect workers' rights along global supply chains. But its implementation is already being undermined.
Significant pushback led the German government to postpone the deadline for reporting and announce the suspension of sanctions for companies that fail to report by January 1st, 2025. Moving forward, companies falling under the scope of the European Directive will be allowed to report under the CSRD instead. The last two measures were communicated as part of the “Wachstuminitiative” (Initiative for Growth).
That means most companies would not be expected to report on mandatory human rights due diligence until 2027 at the earliest, the first year of implementation for the CSDDD transposed into national law.
And there is more: the current scope of application of the LkSG could be reduced as the German Government raises the threshold to align with the minimum required by the CSDDD, which is deemed unlawful by some organizations (German Watch and Oxfam).
This development is a step backward for corporate transparency and human rights. The absence of reporting is even more regrettable now that we know the information shared in the LkSG reports provides unprecedented transparency — even though improvements are still needed.
With the help of our community of contributors, we looked at 20 reports published by companies across various sectors under LkSG and found that:
- 95% of companies identified risks in their supply chain. In total, 80% described risks related to modern slavery. By comparison, only 53% of companies describe such risks in their Modern Slavery Statements under the UK and Australian Modern Slavery Acts (see Beyond Compliance Dashboard).
- 50% identified and described at least one violation in their supply chains. Instances of non-compliance are rarely described in documents published by companies.
- 50% describe the remediation processes they implemented in response to violations. This information is important for human rights advocates to ensure that appropriate access to remedy is available to workers.
We urge companies to lead the way and continue to publish their reports under the LkSG rather than delaying until the new reporting requirements enter into force. The mandatory human rights due diligence train has already left the station, it’s up to companies to decide whether to jump on first or last.
If you are interested in the data from LkSG reports, please get in touch with aureliane@wikirate.org.
Thank you to our Wikirate contributors who assessed companies’ statements for this project: Thewodros Tesfaye, Anja Trojak, and Sebastian Jekutsch.
