GERMANY Trends and Developments Contributed by: Stephan Waldhausen, Moritz Pellmann, Justus Anacker and Cristina Hajek Gross, Freshfields
work, at least partially, as part of their sustain - ability reporting strategy. Geopolitical risks Geopolitical tensions continue to reshape global trade and investment. German companies must anticipate disruptions to supply chains, market access, and competitive positioning. Boards should prioritise resilience and risk management strategies to adapt to these external pressures. Since 2022, the EU has steadily expanded sanc - tions against Russia. The Council Regulation (EU) 2025/392 of 24 February 2025, amending Regulation (EC) No 765/2006, introduced the 16th sanctions package, including an import ban on Russian aluminium and tighter dual-use export controls. On 14 May 2025, the EU reached political agreement on a 17th package targeting Russia’s so-called “shadow fleet” , expanding export bans, and adding new designations. The package was formally adopted on 20 May 2025, at which point the UK also announced further, wide-ranging sanctions. At the same time, the EU confirmed that a 18th package was already being prepared, with the aim of preventing the reactivation of the Nord Stream gas pipelines, lowering the price cap on Russian oil and further targeting Russia’s financial sector. In parallel, Directive (EU) 2024/1226 requires EU Member States to criminalise: (i) intentional breaches of sanctions; (ii) the circumvention of asset freezes or restrictions on financial ser - vices; and (iii) serious negligence in relation to trade restrictions. Adopted on 24 April 2024, the directive requires transposition into national law by 20 May 2025. Legal entities will be held accountable for violations by personnel in lead - ing positions, whether acting alone or as part of an organisational body.
Germany must adapt its regulations to com - ply with Directive (EU) 2024/1226. Violations of sanctions are governed by the Foreign Trade and Payments Act ( Außenwirtschaftsgesetz , AWG) and the Foreign Trade and Payments Ordinance ( Außenwirtschaftsverordnung , AWV). Although the former German government proposed amendments, its newly elected successor plans to draft its own, likely making previous efforts obsolete. In alignment with this shift, the new government has expressed strong support for the EU’s initiative to strengthen sanctions against Russia. Consequently, companies should focus on developing “asset light” models to minimise exposure in geopolitically risky regions and plan strategic exit options like negotiating put options into contracts or partial sales. To mitigate geopolitical risks, boards should: • diversify supply chains; • strategically review and adapt international contracts; • conduct scenario planning and “What if?” analyses; • develop contingency and exit strategies. Boards should also enhance reporting on geo - political risks to meet the expectations of inves - tors, regulators, and business partners. Leverag - ing internal and external geopolitical expertise will be key to informed decision-making. AI Disruption The integration of AI into corporate operations and decision-making marks a structural shift in governance, comparable in scale to the Indus - trial Revolution but advancing at a significantly faster pace. From predictive analytics to gen - erative models, AI is transforming how compa - nies operate, compete and strategise. It enables operational efficiency, personalised engagement
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