Sustainability in the coalition agreement: Reducing bureaucracy
The new coalition of CDU/CSU and SPD wants to reduce bureaucracy in sustainable management – both nationally and at a European level.
German Supply Chain Due Diligence Act (LkSG) to be abolished
Reducing bureaucracy (Chapter 2.2 of the coalition agreement) is a core concern of the new coalition. An immediate action programme with this purpose is planned to relieve the burden on small and medium-sized companies in particular before the end of the year. One of the first measures in this programme is to be the abolition of the German Supply Chain Due Diligence Act (LkSG).
However, this is not expected to provide any significant relief for companies. This is because the plan is not to abolish the law without a replacement – which would not be permissible under EU law in any case. Instead, the existing law is to be replaced by a new law that implements the European equivalent of the German Supply Chain Due Diligence Act (LkSG), the Corporate Sustainability Due Diligence Directive (CSDDD). In some respects, the CSDDD goes even further than the German Supply Chain Due Diligence Act (LkSG). However, the CSDDD is to be "streamlined" as part of the Omnibus proceedings (more on this in a moment), meaning that its ultimate regulatory content cannot be reliably determined yet.
In the meantime, the new coalition has announced that it will be transposed in a way that minimises bureaucracy and makes it easy to enforce. This is placed in a more general context a little later in the coalition agreement: The possibility of "bureaucratic overfulfilment" when transposing EU law into national law is generally ruled out. Parallel regulations at European and national level are rejected. However, the question of when making use of leeway when transposing directives into national law constitutes "bureaucratic overfulfilment" and when it constitutes a welcome addition for practical reasons could still give rise to debate in the future.
Even before the German Supply Chain Due Diligence Act (LkSG) is replaced by the new transposing law, the special reporting obligation under section 10 (2) German Supply Chain Due Diligence Act (LkSG) is to be abolished – without being replaced. However, Article 16 CSDDD and the Corporate Sustainability Reporting Directive (CSRD) also impose similar reporting obligations. Companies would therefore not be wise to hope for too much relief here either.
Ultimately, the existing due diligence obligations under the German Supply Chain Due Diligence Act (LkSG) are generally not expected to be sanctioned until the new law comes into effect, except in the case of severe human rights violations. Caution is advised here: What constitutes a severe human rights violation is an open question. Anyone who sees this passage in the coalition agreement as an invitation to simply ignore their duty of care could be in for an unpleasant surprise.
Many companies have now developed a supply chain management system that is compliant with the German Supply Chain Due Diligence Act (LkSG) and perhaps even with the CSDDD. They are now faced with the difficult question of how to conduct themselves as long as it is not certain what obligations will apply to them in the future. This is also a question of credibility. Often it will be advisable to use the time gained to further optimise existing proceedings and to anchor supply chain management in the specific corporate strategy separately from the pure compliance task. This is because the coalition agreement also states that securing supply chains will become even more important in the future.
Support for the "Omnibus" of the European Commission
Back in February, the European Commission published the "Omnibus I" package, which includes far-reaching simplifications and delays in sustainability reporting, due diligence obligations in the area of sustainability and the taxonomy (see here and here). Consequently, the new coalition expressly supports this project and has announced its commitment to a solution with minimal bureaucracy, particularly for small and medium-sized enterprises. It also wants to create legal and planning certainty and support companies in implementing the law properly.
The new coalition will focus on preventing unnecessary burdens. It gives two specific examples of how it will do this: Firstly, the Deforestation Regulation (EUDR) will de facto not apply in Germany due to the introduction of the "zero-risk variant". Secondly, the planned EU Soil Monitoring Law will be rejected.
The coalition agreement goes into more detail on the carbon border adjustment mechanism (CBAM): The aim here is to advocate for compensation for exports of the products covered by the CBAM. However, if carbon leakage protection through the CBAM does not work effectively, the new coalition wants to protect the competitiveness of export-orientated industries using certificates.
With regard to EU sustainability reporting, the coalition agreement also states that the European Commission's "Omnibus" should be supported in order not only to significantly reduce the various content requirements of EU sustainability reporting, but also to postpone them in terms of time. Against this backdrop, it can be assumed in particular that the "Stop-the-clock" directive, which was formally approved by the European Parliament on 3 April 2025 and by the Council of the European Union on 14 April 2025 and presented by the European Commission as part of the Omnibus I package at the end of February 2025, will be transposed into German law within the implementation period, i.e. by 31 December 2025. The "Stop-the-clock" directive will postpone when the sustainability reporting obligation under the CSRD comes into effect by two years for companies that are required to report for the financial year 2025 (second wave) or 2026 (third wave) in accordance with the original (and currently still applicable) text of the directive (reporting obligation for the financial year 2027 or 2028).
However, the coalition agreement is vague about what otherwise constitutes an "unnecessary burden" or "excessive regulation", particularly in the regulation of sustainable investments (taxonomy), the CSDDD and conflict minerals. Obviously, the legal acts in this regard (as well as others not mentioned at all in the coalition agreement, such as the EU Forced Labour Regulation) will neither be rejected per se, nor is there any demand for deregulation in terms of content – certainly not for large companies. The background to this is certainly also the coalition partners' awareness that extensive deregulation – despite the agreements in other chapters of the coalition agreement – will make it increasingly difficult to achieve the explicitly acknowledged sustainability goals.
The details of this may yet provide much grounds for debate. Companies should therefore keep a close eye on the legislative process and not prematurely expect significant relief.
European legislation will be decisive
National legislative projects in the areas mentioned are therefore not to be expected in this legislative period. The decisive factor will be what happens at the level of European legislation. The coalition agreement at least hints at how Germany will use its influence. However, many other players also have a say in this; surprising twists and turns can still be expected.
