It has been one year since the far-reaching German Supply Chain Due Diligence act (SCDD) was passed, and from January this year its reach has expanded significantly.
The Act – known in German as Lieferkettengesetz (LkSG) – forces firms to observe due diligence on every aspect of ESG, from human rights violations to compliance with environmental standards.
LkSG means German companies face fines of up to 2% of their global turnover if they cannot demonstrate ESG transparency in their supply chain.
Throughout 2023 the legislation applied only to companies with a registered office or branch in Germany 3,000 or more employees but as of January 1, 2024, now extends to companies with more than 1,000 employees.
This expansion significantly increases the number of corporations under its jurisdiction, from around 900 to just below 4,000 organisations.
Organisations contravening the law face fines of up to 8 million euros, depending on the gravity of the violation. Companies with an annual turnover of more than 400 million euros could be fined up to 2% of their turnover.
German supply chain law impacting public contracts
German companies that fail to comply with the new law also risk being…
