Lieferkettengesetz

Lieferkettengesetz, formally the Act on Corporate Due Diligence Obligations in Supply Chains, is a German law enacted in 2021 to improve the protection of human rights and the environment in global supply chains. It obliges large companies to identify, prevent, and remedy abuses that occur in their supply networks, including activities by suppliers and sub-suppliers.

Scope and thresholds are central to the law. It originally applied to companies with at least 3,000 employees. From 2024, the threshold was lowered to 1,000 employees, expanding the set of companies subject to its requirements. The law covers entities with a business presence in Germany, including foreign companies, and extends obligations beyond direct suppliers to significant portions of the supply chain.

Core obligations require a documented due diligence process. Companies must adopt a human rights and environmental policy, carry out regular risk analyses, establish risk management and preventive measures, and implement remediation when abuses are found. They must map their supply chains, set up complaint mechanisms, train staff, and monitor supplier compliance. Public reporting and transparency are required, including an annual due diligence statement.

Enforcement and consequences lie with the Federal Office for Economic Affairs and Export Control (BAFA). Violations can lead to administrative penalties and may affect eligibility for public procurement. The law is designed to align with international guidelines and the broader EU context on due diligence, encouraging responsible business conduct across global supply chains while placing new compliance responsibilities on large German companies.