What is the German Supply Chain Act (LkSG)

What organizations need to know about Germany's Supply Chain Act (LkSG): who it applies to, what due diligence it requires, how the complaint procedure works, and the status of proposed changes for 2026.

What is the German Supply Chain Act?

The German Supply Chain Act, or Lieferkettensorgfaltspflichtengesetz (LkSG), is Germany's law on corporate human rights and environmental due diligence. It came into force on January 1, 2023, after being signed into law and published in the Federal Law Gazette on July 22, 2021.

The LkSG was the first German law to put a company's responsibility to respect human rights in its supply chain on a legal footing. It requires in-scope companies to identify, prevent, and address risks to human rights and the environment, not only inside their own operations but across their supply chains, from direct contractual partners to more distant, indirect suppliers.

The law sits inside a broader shift in EU due diligence policy. The EU's Corporate Sustainability Due Diligence Directive (CSDDD) entered into force on July 25, 2024. Germany's governing coalition has committed to eventually replacing the LkSG with a national law implementing the CSDDD; the deadline for EU member states to transpose the CSDDD has been extended to July 26, 2027. Until Germany's replacement law is in force, the LkSG applies as written.

Who must comply with the LkSG?

The LkSG applies to companies with their central administration, principal place of business, administrative headquarters, statutory seat, or a branch office in Germany, once they cross an employee threshold.

• Since 2023: companies with at least 3,000 employees in Germany
• Since 2024: companies with at least 1,000 employees in Germany

Meeting the threshold is only part of the picture. The law's due diligence duties extend to a company's own business area and its direct suppliers as standard practice, and to indirect suppliers further down the chain where the company has substantiated knowledge of a possible violation.

Does the LkSG apply to companies outside Germany?

Not directly, unless a company itself meets the German establishment and employee thresholds above. Indirectly, the law reaches far beyond Germany's borders. Companies that supply, source from, or hold a subsidiary tied to an in-scope German company often find LkSG expectations passed down to them by contract.

If your company sells into or sources from Germany, our guide to the LkSG complaint procedure for non-German companies walks through how that cascade works in practice.

What does the LkSG require?

The LkSG is built around a risk management system rather than a fixed checklist. In-scope companies must identify, prevent, minimize, and, where necessary, remediate risks connected to a defined set of legal interests, drawn from eleven internationally recognized human rights conventions. The most frequently cited concern:

• Child labor, slavery, and forced labor
• Occupational health and safety
• The right to an adequate wage
• Freedom of association and the right to form employee representation bodies
• Access to food and water
• Protection against unlawful taking of land and livelihoods
• Related environmental harms connected to these rights

Risk analysis

Companies must run a risk analysis of their own business area and their direct suppliers at least once a year, and again on an ad-hoc basis whenever they face a materially changed or expanded risk situation, for example from a new product, project, or business area. Indirect suppliers are brought into scope on that same ad-hoc basis, specifically when the company has substantiated knowledge of a possible violation.

Preventive and remedial measures

Where a risk is identified, companies must take reasonable preventive steps. Where a violation has already occurred, they must take steps to end or minimize it.

Complaint procedure (Beschwerdeverfahren)

Every in-scope company must set up an appropriate internal complaint procedure, or take part in a qualifying external one. The procedure must let people flag human rights and environmental risks, and violations of related duties, connected to the company's own operations or its direct suppliers. Companies must confirm receipt of every complaint to the person who raised it, and the people running the procedure must discuss the facts with that person. Companies must review the procedure's effectiveness at least once a year, and immediately after any significant change in their risk exposure.

Reporting: current status

Companies with at least 1,000 employees in Germany are, under the law as currently written, still required to file an annual due diligence report with Germany's Federal Office for Economic Affairs and Export Control (BAFA). In practice, this has changed: BAFA has stopped reviewing and accepting these reports since October 1, 2025, following a Federal Cabinet decision to amend the law. A bill to formally remove the reporting requirement (and to limit fines to serious violations) was still moving through the Bundestag as of this writing and had not yet been passed into law. The substantive duties, including the risk management system and the complaint procedure, are not affected by this proposal and remain in force regardless of its outcome.

How to assess your LkSG readiness

A practical review covers four areas.

Risk analysis. Have you run and documented a risk analysis covering your own operations and direct suppliers in the last year, and do you have a process to trigger an ad-hoc analysis when circumstances change?

Complaint procedure. Does your Beschwerdeverfahren let people raise concerns about your own operations and direct suppliers, and can you show that receipts are confirmed and facts are discussed with the person who raised them?

Documentation. Do you have a structured, time-stamped record connecting each risk, preventive step, and complaint to a documented outcome, rather than scattered emails and spreadsheets?

Effectiveness review. Have you reviewed your complaint procedure for effectiveness in the last year, and again after any material change in your risk profile?

A gap in any of these areas usually points to the same underlying issue: a policy on paper that hasn't been operationalized into a system regulators and customers can verify.

How SpeakUp helps companies meet LkSG requirements

Meeting the LkSG's complaint procedure requirement in practice, across a multi-tier, multi-country supply chain, takes more than a published policy. It takes a system the people affected can actually find, trust, and use.

With supply chain grievance software, your compliance team can run one mechanism that supports the Beschwerdeverfahren without building a Germany-only system. Employees, direct suppliers, and workers further down the chain can raise concerns through web, mobile, phone, or voice intake, in the language they actually speak. Anonymous, two-way communication lets a case handler follow up with a reporter who never has to reveal their identity.

On the case management side, SpeakUp Report gives your team a structured, time-stamped record from intake through remediation, along with the automated acknowledgment that the law's confirm-receipt requirement calls for. Cases can be routed by supplier tier and tracked against the annual review cycle the LkSG requires.

Because the LkSG shares much of its underlying logic with the CSDDD and the UN Guiding Principles' effectiveness criteria, one SpeakUp implementation can help your team work toward coverage across all three instead of building parallel systems for each.

Note: this page is a general guide to the LkSG and does not constitute legal advice. Obligations under the LkSG, and Germany's transition toward a CSDDD-implementing law, continue to evolve. Confirm your company's specific obligations with qualified legal counsel.

Frequently asked questions

What does LkSG stand for?‍

LkSG is short for Lieferkettensorgfaltspflichtengesetz, Germany's Act on Corporate Due Diligence Obligations in Supply Chains. It came into force on January 1, 2023.

Which companies must comply with the LkSG?‍

Companies with their central administration, principal place of business, administrative headquarters, statutory seat, or a branch office in Germany, and at least 1,000 employees in Germany (3,000 before 2024), must comply directly. Non-German companies often face LkSG expectations indirectly, through contracts with in-scope German customers.

Has the LkSG's reporting requirement been abolished?‍

Not yet, as a matter of law. BAFA has stopped reviewing and accepting the annual reports since October 2025, and a bill to formally remove the requirement was still moving through the Bundestag as of this writing. The core due diligence duties, including the complaint procedure, are unaffected either way.

What is the Beschwerdeverfahren?‍

The Beschwerdeverfahren is the LkSG's mandatory complaint procedure: a channel that lets people connected to a company's own operations or its direct suppliers raise human rights and environmental concerns, with confirmed receipt, direct discussion of the facts with the reporter, and an effectiveness review at least once a year.

What are the penalties for non-compliance with the LkSG?‍

Administrative fines can reach up to 8 million euros, or up to 2 percent of average annual global turnover for companies with turnover above 400 million euros. Companies fined above a minimum threshold can also be excluded from public contracts for up to three years.

Need a complaint procedure built for the LkSG and the incoming CSDDD? Book a demo.