On 25 October, BAFA announced it would delay its review of company reports under the German Supply Chain Due Diligence Act to January 2026. The act has faced significant criticism by politicians recently including Chancellor Scholz for its ‘overly bureaucratic’ requirements.
- On 25 October 2024, the Federal Office of Economics and Export Control (BAFA) which is responsible for implementation of the German Supply Chain Due Diligence Act updated its Frequently Asked Questions with respect to reporting obligations under the Act.
- Reporting deadline – Companies are still advised to submit reports according to the timeline in the Act, meaning that companies with more than 3,000 employees should submit annual reports beginning with the 2023 calendar year, and companies with more than 1,000 employees should submit reports beginning with the 2024 calendar year. However, companies can submit their reports up to four months after the end of the respective calendar year.
- BAFA review of reports – Earlier this year, BAFA announced it would only begin reviewing whether companies had submitted and published reports and penalising those who had not submitted from 1 January 2025. Under the updated FAQ, BAFA announced it will now only check whether reports have been submitted and published from 1 January 2026. BAFA will not impose a sanction even if the report was due before that date.
- If a report is submitted after 1 January 2026, BAFA may send a warning to the company on the late submission or publication, and it can apply a sanction “if necessary”. BAFA does not disclose under which circumstances this would be the case.
- BAFA noted that companies are still required to meet due diligence requirements under the Act and BAFA can monitor and impose sanctions based on its own examinations and complaints raised under the Act.
- BAFA published its 2023 activity report in July 2024 which noted that only 53 companies, of 600 companies in-scope, published reports in 2023. BAFA did not impose any sanctions but instead took a collaborative approach to issues identified in the reporting. BAFA’s activities were instead focused mainly on its own examinations, which is in line with its updated FAQs. We can expect that few reports will be published until the end of 2025. Read more about BAFA’s annual report.
- The Act has been heavily criticised and debated recently in Germany
- On 9 October, the German Parliament rejected a proposal to repeal the Act
- On 22 October, German Chancellor Scholz promised to soften the Act by the end of the year since it is overly bureaucratic
- On 24 October, the German BMZ and DGB published a press release in favour of keeping Act but making it more easy to understand and practical for companies.