GERMANY Trends and Developments Contributed by: Stephan Waldhausen, Moritz Pellmann, Justus Anacker and Cristina Hajek Gross, Freshfields PartG mbB
In 2026, corporate governance in Germany continues to be reshaped by a combination of regulatory, geo - political and technological disruptions, although the nature and intensity of these challenges have shifted considerably compared to just one year ago. At the same time, scrutiny of business judgement deci - sions has increased. For boards, this demands not only strategic foresight and adaptability, but also the capacity to act decisively in a landscape where the rules themselves are in constant motion. • Legal and strategic uncertainty: regulatory volatil - ity and geopolitical instability are making long-term planning a minefield. EU sustainability standards have undergone major changes, with most still awaiting national transposition. Global conflicts and shifting alliances are altering trade flows, with sanctions imposed or lifted and new economic blocs emerging. In this environment, boards must not only preserve strategic clarity, but also engage in robust scenario planning to test assumptions, prepare for alternative outcomes and support resil - ient decision-making. • Artificial intelligence disruption: AI governance has moved beyond the stage of mere adoption. Boards now face the challenge of governing increasingly autonomous AI agents, integrating AI into their own decision-making processes, and keeping pace with a regulatory environment in rapid flux. As AI capa - bilities grow, the failure to leverage AI tools might itself become difficult to justify under the Business Judgement Rule (BJR). • Data and cybersecurity risks: cyber threats are more sophisticated than ever, making data both an asset and a risk. Boards must treat cybersecurity not as an IT issue, but as a central governance priority. • Complex business judgements: the rate of busi - ness failure is increasing due to inadequate due diligence, poor risk management and poor deci - sion-making. In an increasingly risk-prone and complex business environment, such failings can have far-reaching consequences. To benefit from the protections of the BJR, board members must act on an adequate information basis, avoid or deal with conflicts of interests, and pursue the best interests of the company. Boards that fail to meet
this standard risk not only legal exposure, but also a loss of stakeholder trust. 2026 will test the resilience and adaptability of execu - tive leadership. With Germany at the centre of global regulatory and technological shifts, and geopolitical tensions multiplying, boards must be equipped with the insight and agility to navigate a highly complex and unpredictable landscape. In practice, the most significant personal liability risks for board members arise from business decisions made on an inadequate information basis or without adequate scenario plan - ning, and from deficiencies in compliance systems or in the investigation and response to possible compli - Increasingly diverging regulatory requirements, shift - ing societal norms and geopolitical volatility are cre - ating a landscape of legal and strategic uncertainty. Boards must navigate polarised sustainability debates and evolving geopolitical instabilities with heightened caution and clarity. Sustainability The sustainability agenda is increasingly fragmented. While some advocate climate-first policies, others question the economic impact of heavy regulation. In Germany, corporate sustainability efforts face revi - sions to become less bureaucratic and costly. Supply chain regulation Germany’s Supply Chain Act ( Lieferkettensorgfaltspfli - chtengesetz , or LkSG) has been in force since 1 Janu - ary 2023 and was initially welcomed as a milestone in promoting human rights and environmental standards in global supply chains. However, it has since faced criticism, particularly from the business community, for being overly complex and burdensome, affecting several thousand companies. ance incidents or mismanagement. Legal and Strategic Uncertainty In response, the German government adopted a draft bill on 3 September 2025, which went through its first parliamentary reading on 16 January 2026. The bill introduces interim adjustments (notably the removal of the annual reporting obligation and a tighter focus on sanctioning of serious breaches) as Germany prepares to replace the Act and align with the EU-wide Corpo -
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