GERMANY Trends and Developments Contributed by: Stephan Waldhausen, Moritz Pellmann, Justus Anacker and Cristina Hajek Gross, Freshfields
and burdensome, affecting around 5,000 com - panies. In response, the newly elected German government has announced plans to repeal the Act and align with the EU-wide Corporate Sus - tainability Due Diligence Directive (CSDDD, (EU) 2024/1760). While the CSDDD shares similar objectives and due diligence obligations, it includes a civil liability clause, increasing legal exposure for companies. However, after the EU Commission released the “Omnibus” packages on 26 Febru - ary 2025, the CSDDD is likewise facing regu - latory amendments. The Omnibus packages are the EU Commission’s proposals to simplify EU rules, reduce administrative burdens, and enhance competitiveness. Through these legis - lative initiatives, the EU Commission seeks to create a more favourable environment for trade and investments across the EU. Following the Omnibus packages, the CSDDD is currently under revision. The proposed amend - ments include: • limiting due diligence to direct suppliers rather than the entire supply chain; • reducing obligations and thus administrative load for small and medium sized enterprises (SMEs); • relaxing climate plan requirements; • permitting longer intervals between compli - ance audits; and • removing the standardised civil liability provi - sion. The new German government has expressed a strong commitment to adopting the Omni - bus legislative packages. It aims to streamline national procedures by eliminating the require - ment to report to the Federal Office for Eco - nomic Affairs and Export Control (BAFA) and
by reducing associated sanctions. At the same time, it intends to uphold essential due diligence obligations – such as the requirement to regu - larly assess human rights and environmental risks within the company’s own operations and those of its direct suppliers – until the Corporate Sustainability Due Diligence Directive (CSDDD) is fully implemented. At the initiative of the Omnibus packages, the newly adopted Stop-the-Clock Directive ((EU) 2025/794) extends the transposition deadline of the CSDDD to 26 July 2027, with the first appli - cation phase for the largest companies deferred to 26 July 2028 (initially, EU Member States were required to adopt the CSDDD by 26 July 2026, with phased requirements beginning in 2027). This extension provides legislators with addition - al time to finalise substantive amendments to the CSDDD, including simplifying due diligence requirements. For now, companies must remain compliant with existing requirements in Germany while prepar - ing to transition to the simplified EU framework. Close monitoring of regulatory developments will be essential to leverage reduced reporting and compliance burdens as they take effect. Sustainability reporting Sustainability reporting has transitioned from a voluntary initiative to an increasingly expected practice aimed at fostering corporate account - ability and supporting risk management. How - ever, as it becomes more widespread, so does the risk of greenwashing, where companies may present an exaggerated or misleading picture of their environmental and social performance. Amid this shifting environment, debates around the effectiveness and burden of sustainability reporting continue to intensify.
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