GERMANY Law and Practice Contributed by: Friedrich Gebert, Hannah Düwel, Bernhard Gröhe and Clara Schmidt, ARQIS Partnerschaftsgesellschaft mbB
climate change. Instead, offences such as soil pol - lution, air pollution or causing noise, vibrations and non-ionising radiation are punished with prison sen - tences of up to ten years. Fines are imposed for less serious offences. Non-Financial Reporting Certain companies must submit a so-called non- financial statement (see 4.1 Liability for Climate Change and ESG Reporting for further details). The non-financial statement in accordance with Section 289b of the Commercial Code must also include dis - closures on environmental matters. Violations in this context can lead to sanctions. Pursuant to Section 331 (1) and (2) of the HGB, any - one who, as a member of the authorised representa - tive body or the supervisory board, knowingly misrep - resents or fails to disclose material facts concerning the corporation is liable to a prison sentence of up to three years. This explicitly includes non-financial reporting. Consequently, anyone who makes incorrect disclosures in the context of sustainability reporting under the current non-financial reporting requirements or, in the future, under the CSRD, may be liable to prosecution under the HGB. In addition, there is a risk of fines under Section 334 (1) No 3 and No 4, HGB. These provisions apply to any member of the authorised representative body or supervisory board of a corporation who commits violations of the national regulations on non-financial reporting (Section 289 et seq, HGB), which serve, among other things, to implement the CSRD. In such cases, companies may be subject to fines of up to EUR2 million or twice the economic benefit obtained through the offence. In the case of a capital market- oriented corporation, the fine can even be up to EUR10 million or 5% of the total annual turnover of the previous financial year. 4.3 Shareholder or Parent Company Liability Liability can only be considered under the conditions stated in 4.2 Directors’ Climate Change Liability . Under German law, shareholders and parent com - panies are generally not liable for company actions due to the principle of separate legal personality. Exceptions apply only in rare cases, such as unlawful
instructions or when specific legal duties are assumed under climate or environmental law. 4.4 Social Context In Germany, climate change policy is strongly influ - enced by growing public expectations for ambitious decarbonisation measures, increased corporate accountability and greater transparency regarding environmental impacts. Climate change is increas - ingly seen as a legal and regulatory obligation, not a voluntary sustainability policy, reinforced by frame - works such as the CSRD, EU Taxonomy and related climate legislation. At the same time, there is strong societal expectation that industry, especially high- emission sectors, takes responsibility for enabling the transition without undermining competitiveness or jobs. Financial markets add further pressure, as ESG expectations from investors have made climate risk a mainstream financial risk factor, affecting access to capital. In parallel, rising climate litigation and strong - er disclosure requirements increase concerns about legal liability and reputational risk. In recent years, however, political debates around competitiveness, energy costs and regulatory burden have contribut - ed to a somewhat more balanced tone, and parts of the ESG momentum, particularly in public discourse, appear to have moderated compared to the stronger emphasis seen in earlier phases of the transition. In Germany, climate change due diligence is not yet uniformly or explicitly mandated by law in the context of mergers and acquisitions (M&A), finance, or real estate transactions. However, in general, ESG com - pliance has become more important in the context of corporate transactions. Besides the LkSG and the CSRD, the EU Taxonomy Regulation (Regulation (EU) 2020/852) sets the frame - work for sustainable finance and contains additional reporting obligations. It is a market transparency tool that classifies economic activities that are aligned with a net zero trajectory by 2050 and broader environmen - tal goals besides climate. It aims to support the 2030 climate goals by fostering direct investments in sus - 5. Transactions 5.1 Due Diligence
33 CHAMBERS.COM
Powered by FlippingBook