German Supply Chain Due Diligence Act (LkSG) Compliance

Human Rights & Supply Chain Due Diligence Laws

LkSG compliance requires continuous human rights and environmental risk analysis across your entire supply chain—with documented preventive measures, remedial actions, and a functioning grievance mechanism. BAFA conducts active compliance sweeps. Core due diligence obligations remain fully enforceable despite reporting amendments. Certivo automates supplier due diligence evidence collection from risk assessment to audit-ready documentation.

You Have 1,000+ Employees in Germany. Can You Prove Due Diligence Across Every Tier of Your Supply Chain?

Regulation Overview

• Jurisdiction: Germany (applies to companies with headquarters, principal place of business, or branch office in Germany)
• Regulatory Body: Federal Office for Economic Affairs and Export Control (BAFA)
• Regulation Number: BGBl. I 2021 S. 2959 (Lieferkettensorgfaltspflichtengesetz)
• Effective Date: January 1, 2023 (≥3,000 employees); January 1, 2024 (≥1,000 employees)
• Key Threshold: Companies with ≥1,000 employees in Germany, including foreign branches

What is the LkSG?

The German Supply Chain Due Diligence Act is Germany's landmark mandatory human rights and environmental due diligence law. For supply chain compliance teams, it requires risk management systems that identify, prevent, and remediate human rights and environmental violations across direct and indirect supplier relationships. The LkSG applies to all companies with 1,000 or more employees and a registered presence in Germany—including German subsidiaries and branches of foreign multinationals. Core due diligence obligations remain fully in force as of 2026, including risk analysis, preventive measures, remedial actions, grievance mechanisms, and seven-year documentation retention. BAFA continues risk-based ex officio enforcement. LkSG compliance requires supplier-level evidence—risk assessments, corrective action plans, and grievance records—from every tier of your supply chain. When BAFA initiates a compliance sweep, your documentation must demonstrate a functioning due diligence system.

Key Components / Sub-Frameworks

Obligations

• Risk Management System (§4): Mandatory for own operations and entire supply chain
• Risk Analysis (§5): At least annual; ad hoc for indirect suppliers upon substantiated knowledge
• Preventive Measures (§6): Actions to prevent identified risks
• Remedial Actions (§7): Immediate corrective action; remediation plans; relationship termination as last resort
• Grievance Mechanism (§8): Must be operational, accessible, and documented
• Documentation & Retention (§10): Retained for at least seven years; available to BAFA on request

Key Compliance Requirements

• Who Must Comply:
  • Companies headquartered in Germany with ≥1,000 employees
  • Foreign companies with branch offices in Germany employing ≥1,000 staff
  • German subsidiaries of international corporations meeting the employee threshold
  • Companies assembling supply chains through direct and indirect suppliers globally
  • Businesses supplying to in-scope companies facing contractual due diligence flowdown
  • Companies bidding for German public procurement contracts

Key Statistics

• Human rights conventions referenced in LkSG due diligence scope: 11
• Supplier evidence extraction accuracy from due diligence declarations: 99.2%
• Supplier response rate with CORA-powered campaigns: 95%

Frequently Asked Questions

• Which companies are subject to the German Supply Chain Due Diligence Act?

  • The LkSG applies to any company with its headquarters, principal place of business, administrative seat, or a branch office in Germany employing 1,000 or more people. This includes German subsidiaries and branches of foreign multinationals.

• What are the penalties for LkSG non-compliance?

  • BAFA can impose fines up to €8 million, or up to 2% of global annual turnover for companies with more than €400 million in revenue. Serious violations can result in exclusion from German public procurement contracts for up to three years.

• How does Certivo support ongoing LkSG due diligence obligations?

  • Certivo automates the collection, validation, and documentation of supplier due diligence evidence required under LkSG §§4–10.

Return on Investment

• Reduction in Compliance Labor: 80%
• Time to BAFA Response: 4 hours