Germany: Government rolls back due diligence law

Germany softens its supply chain law amid business pressure and a desire to align it with revisions to the EU’s CSDDD. Meanwhile Volkswagen Brazil faces historic fine for  alleged forced labour abuses in the 1970s–80s

The key points: Germany plans to soften its Supply Chain Act (LkSG), which came into effect in January 2023, following pressure from businesses about administrative burdens. The proposed changes aim to align Germany’s law with revisions to the EU’s Corporate Sustainability Due Diligence Directive (CSDDD). 

Meanwhile, Volkswagen Brazil faces a historic ruling for forced labour abuses from decades ago at its ranch, with a significant damages award and a public apology ordered.

Why this matters: Expect further recalibrations in due diligence laws both at national and EU levels.

The takeaway from the Brazil situation is this: know what is going on in your supply chains, even if not required to do so by the law. If there are labour abuses in the chain, they will come to light at some point, even if years after the event. The Volkswagen case underscores that labour abuses in supply chains—even historical ones—can lead to major legal and reputational consequences, emphasizing the importance of supply chain oversight

What might happen next: Companies should anticipate increasing scrutiny not only for current compliance but also for past practices. Legal accountability cases like Volkswagen’s may encourage more proactive supply chain monitoring.

Read Freshfields briefing note on the proposed changes to the German law

See Reuters report on Volkswagen Brazil situation