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European Supply Chain Act: What remains – and what happens next?
The European Supply Chain Act should enshrine binding human rights and environmental due diligence obligations for companies along global supply chains at EU level. However, after massive lobbying pressure, the directive was significantly weakened at the end of 2025. The overview shows which key elements remain, what effect the German Supply Chain Act has had so far – and what is now important when transposing the CSDDD into national law.
From progress to dilution: A brief review
Conservative forces won the elections in the EU in June 2024 and in Germany in February 2025. Parts of the economy, especially the associations, claimed that the CSDDD was a bureaucratic monster. This presentation is too short. The observance of human rights, the prohibition of child labour or protection against discrimination are not bureaucratic self-objectives, but obligations under international law. In addition, a significant part of the bureaucracy was created by companies themselves: Instead of a risk-based approach – as provided for in the LkSG – many companies sent blanket questionnaires to all suppliers. While the business associations strongly lobbyed against the CSDDD, many companies for the CSDDD such as VAUDE, Otto, Tchibo and others 44% of 1,300 companies surveyed,That the CSDDD would bring advantages over the US and China.
Nevertheless, the overall association textil + mode spoke of overregulation and unreasonable bureaucratic effort and Chancellor Merz announced that he wants to abolish the LkSG altogether.
Pressure from the U.S. fossil lobby
But it was not only German and European business associations that opposed the CSDDD. Leaked documents published by Dutch NGO Somo reveal how a secret alliance of 11 companies called the Competitive Roundtable, including Chevron, ExxonMobil and Koch, targeted EU bodies to dilute or eliminate the CSDDD.
The companies, most of which are headquartered in the US and are active in the fossil fuel sector, wanted to "divide and rule in the Council", exclude "persistent" departments of the European Commission and get the European People's Party (EPP) in the European Parliament "to side with the right-wing parties as much as possible" (Somo).
The fire wall on the right has collapsed.
On the 9th In December 2025, the European Parliament voted on the so-called Omnibus Package I, under which the CSDDD was also merged. For the first time, the European People's Party (EPP) openly relied on votes from far-right parties to enforce the dilution of the directive. As a result, the firewall to the right, which has so far been invoked, also proved to have fallen at the European level.
What has changed in the CSDDD?
Under lobbying pressure, the scope was reduced, thresholds increased and transitional periods extended. In terms of content, the current version of the CSDDD means:
- Restricted scope: Only companies with at least 5,000 employees and an annual turnover of 1.5 billion euros are covered by the directive. Originally, 1,000 employees and 450 million euros were planned. It is estimated that around 70 percent of companies are no longer included.
- Postponed reporting obligation: The reporting obligation under CSDDD is abolished, but companies have to report according to the likewise diluted EU directive CSRD (Corporate Sustainability Reporting Directive). However, the CSRD applies to companies with more than 1000 employees and a net turnover of EUR 450 million – i.e. more companies than the CSDDD.
- Abolition of civil liability: Those affected can no longer sue companies for damages across the EU. Instead, national rules apply.
- Elimination of climate transition plans: The reference to the Paris Climate Agreement has been deleted.
What effects did the LkSG have and what remains?
After all, the entire CSDDD has not been abolished. There is still an obligation for companies to carry out risk analyses in their supply chain and to take action in the event of non-compliance. At least that is the theory. In-house, effective complaint channels must be made available to employees.
In the LkSG, the supervisory authority BAFA also critically examined this and sent 630 requests for information to companies in 2024 (according to BAFA’s annual report) and reminded them accordingly. Some companies reported voluntarily in 2024 and it became known that e.g. KiK had 149 complaints in its supply chain, Tchibo 81, VAUDE and Hugo Boss had 11 complaints procedures.
Complaints can still be submitted via the supervisory authority BAFA. However, in the past, no company had to pay a penalty due to a complaint in Germany under the LkSG.
According to BAFA’s 2024 annual report, a total of 314 complaints were registered. Of these, 228 were rejected at the outset because they concerned companies not covered by the LkSG or because they were not sufficiently related to the law. In fact, there were 86 complaints. In 48 cases, the proceedings were closed as no infringement of the LkSG was found. 42 complaints remain open.
At the same time, experience in Germany shows that the entry into force of the LkSG alone has led companies to take stronger preventive action.
In another case, Oxfam reached a compensation payment to the affected workers on a banana plantation in Costa Rica in November 2025 by the buying company Aldi.
It is also positive that the attenuated CSDDD continues to require a risk-based approach to risk analysis. In addition, the LkSG has given trade unions more influence and influence along the supply chain.
Gender equality: A blind spot
Women make up around 60 percent of employees in the clothing industry, and in some countries up to 80 percent. Studies by the ILO and Human Rights Watch show systematic discrimination: lower wages, sexual harassment, lack of opportunities for advancement and low union representation.
LkSG and CSDDD could be important tools for enforcing women's rights. However, a mandatory gender-sensitive risk analysis is lacking. The particular concern of women, in particular in the case of multiple discrimination, is hardly systematically taken into account. Gender-specific data on wages, contracts or overtime are also rarely collected.
What is particularly problematic is that the ILO Convention 190 on Protection against Violence and Harassment at Work is not mentioned either in the Supply Chain Due Diligence Act or in the CSDDD as a reference document in the annex. On the other hand, it is positive that the UN Convention on the Rights of Women CEDAW (Convention on the Elimination of All Forms of Discrimination against Women) has been included in the annex to the CSDDD, but not in the German LkSG.
Problems with the implementation of the LkSG
The effect of the law remains limited, as violations are hardly sanctioned. In the case of FEMNET's complaint against IKEA and Amazon, BAFA considered an audit to be sufficient without involving complainants or the trade union. Rightholders are not consulted and the lack of transparency of supply chains also makes effective controls more difficult.
What's next?
The Federal Government has until July 2028 to transpose the CSDDD into national law. Companies will then receive another year for the application of the new rules, i.e. in fact three years. However, due to the prohibition of deterioration under EU law and the prohibition of regression under international law, Germany must not fall behind the current level of protection of the LkSG. A restriction of the scope to only a few large undertakings would therefore be inadmissible. How the federal government uses this legal framework remains to be seen. If the level of protection is lowered during implementation, legal action against the Federal Government is not excluded.