GERMANY Trends and Developments Contributed by: Stephan Waldhausen, Moritz Pellmann, Justus Anacker and Cristina Hajek Gross, Freshfields PartG mbB
scope is determined exclusively by the new Omni - bus thresholds of more than 1,000 employees and net turnover exceeding EUR450 million, effectively replacing the previous phased roll-out. According to the EU Commission, these changes exempt around 80% of companies previously within scope. The Ger - man government has announced that it will adapt its CSRD transposition draft bill to reflect these changes. While awaiting Germany’s national transposition law, companies may voluntarily apply the European Sus - tainability Reporting Standards (ESRS), in whole or in part. The ESRS are uniform EU reporting standards that specify the content, structure and methodology of sustainability reporting under the CSRD, covering environmental, social and governance matters. Vol - untary application may enhance transparency and build stakeholder trust. However, it also entails risks, including increased scrutiny and potential allegations of greenwashing. Companies must therefore carefully weigh these considerations. Despite these challenges, many German firms are already choosing to align with the ESRS framework, at least partially, as part of their sustainability reporting strategy. Companies considering this approach should note that the standards are undergoing significant revision. Under the Omnibus I package, the EU Commission is required to adopt a delegated act within six months of the Directive’s entry into force (ie, by 18 September 2026 at the latest), to substantially reform the first set of ESRS. Geopolitical risks Rising geopolitical tensions have become a defining feature of the global economy, reshaping global trade and investment. For German companies, anticipat - ing disruptions to supply chains, market access and competitive positioning has become a constant stra - tegic imperative. Boards should therefore prioritise resilience and robust risk management to adapt to these external pressures. Since 2022, the EU has progressively expanded its sanctions against Russia. The 18th sanctions pack - age, issued in July 2025, included a lower oil price cap, a transaction ban relating to the Nord Stream pipelines and the listing of more than 100 additional
vessels. The 19th package, of 23 October 2025, fur - ther tightened the regime, notably by introducing a phased import ban on Russian liquefied natural gas starting in 2026 and targeting Russia’s alternative pay - ment systems. Although a 20th package planned for February 2026 stalled, the overall trajectory remains one of increasing economic pressure and intensified efforts to prevent sanctions circumvention. Beyond Russia, the EU has also significantly expand - ed its restrictive measures against Iran. In Septem - ber 2025, the EU Council reimposed broad sanctions targeting Iran’s nuclear proliferation activities follow - ing findings of non-compliance. These measures include asset freezes, an investment ban, restrictions on payment transfers and wide-ranging trade restric - tions covering crude oil, natural gas and petrochemi - cal products. In early 2026, the EU further extended its Iran sanctions, citing human rights violations and Iran’s support for Russia’s war against Ukraine. The legal landscape for sanctions enforcement has also tightened significantly. Following the transposi - tion deadline for Directive (EU) 2024/1226, Germany passed legislation that came into force on 6 Febru - ary 2026, substantially reforming its sanctions crimi - nal law under the Foreign Trade and Payments Act ( Außenwirtschaftsgesetz , or AWG). Under the new framework, numerous breaches previously treated as regulatory offences are now criminal acts, and the maximum corporate fine has been increased to EUR40 million. These changes significantly raise liabil - ity risks and necessitate more robust internal sanc - tions compliance systems. More broadly, the geopolitical risk landscape has become increasingly fragmented. Strategic competi - tion between the US and China, particularly in relation to Taiwan and technological sovereignty, is forcing German companies to reassess critical dependencies and navigate complex export control regimes. At the same time, persistent instability in the Middle East continues to pose immediate risks to supply chain reliability and energy costs. For energy-intensive industries in particular, this envi - ronment requires a fundamental reassessment of energy security as a core governance responsibility.
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