Germany Eases Supply Chain Law to Focus on Severe Rights Violations
The German government has decided to amend the Supply Chain Due Diligence Act (LkSG), aiming to reduce bureaucracy and focus on severe human rights violations. The act, in effect since January 1, 2023, initially faced criticism for being overly bureaucratic.
The LkSG was introduced to improve international human rights and ecological aspects in supply chains. However, the federal government has now decided to replace it with a low-bureaucracy implementation of the European directive CSDDD. The amended LkSG will abolish the current reporting obligation and nine out of thirteen offenses in the catalog of administrative offenses.
The Federal Ministry for Economic Affairs and Energy (BMWE) and the Federal Ministry of Labor and Social Affairs (BMAS) have instructed the Federal Office for Economic Affairs and Export Control (BAFA) to apply the LkSG in a restrained and business-friendly manner. BAFA has been directed to stop examining company reports, discontinue ongoing administrative offense proceedings, and not initiate new proceedings for the abolished offenses. Fines will only be imposed for the remaining administrative offenses in case of severe violations associated with particularly serious human rights violations, and high requirements must be met for their imposition.
The LkSG was initially signed by Mayor Andreas Bovenschulte and then-Mayor Maike Schaefer in 2021 as part of the resolution 'Communities for a strong supply chain law in Germany'. Many companies and the Bremen Chamber of Commerce initially criticized the LkSG as a 'bureaucratic monster', leading to the recent amendments.
The amended LkSG focuses on serious human rights violations, reducing bureaucracy and reporting obligations. The government aims to create a business-friendly environment while still addressing critical supply chain issues. The new regulations are expected to come into effect soon.
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