The LkSG requires large German companies to identify and prevent human rights and environmental risks in their supply chains. Although the law does not directly bind Turkish companies, German buyers pass these obligations on to their Turkish suppliers by contract — in practice, the effect reaches all the way down to the Turkish leg of the supply chain.
Overview
The Lieferkettensorgfaltspflichtengesetz (LkSG) is a German law that entered into force on 1 January 2023 and imposes on companies a duty of due diligence regarding human rights and certain environmental standards throughout their supply chains. Its purpose is to prevent human rights violations and environmental harm at any link in the global value chain of production.
The law imposes not an obligation of result but a best-efforts obligation: companies are expected not to eliminate risks entirely but to identify and manage them through reasonable measures. This distinction also shapes the compliance strategy of Turkish suppliers.
Scope and thresholds
The law has come into effect in stages and is based on an employee-number threshold:
| Period | Covered companies |
|---|---|
| 01.01.2023 | Companies with ≥ 3,000 employees in Germany |
| 01.01.2024 | Companies with ≥ 1,000 employees in Germany |
| Indirect scope | Domestic/foreign suppliers to covered companies (by contract) |
Turkish companies are not the direct addressees of the law; however, German buyers pass their due diligence obligations down the supply chain through contracts in order to ensure their own compliance.
Critical point for the Turkish side
The practical risk of non-compliance for a Turkish supplier is not an administrative fine but the German customer terminating the contract or placing no new orders. Compliance is therefore a matter of the sustainability of the commercial relationship.
Sanctions
In Germany, breaches of these obligations are supervised and sanctioned by the Federal Office for Economic Affairs and Export Control (BAFA):
| Sanction | Scope |
|---|---|
| Administrative fine | Depending on the severity of the breach; turnover-based caps may apply |
| Exclusion from public tenders | Up to three years for fines above a certain threshold |
| Commercial consequence | Termination of the contract, cessation of orders, reputational loss |
Impact on suppliers in Türkiye
In your relationship with your German customer you will typically encounter the following requests and clauses:
- Acceptance of a Code of Conduct annex and its flow-down through the supply chain,
- Audit, information-provision and self-assessment obligations,
- Corrective-measure commitments and a right of termination in the event of breach,
- Access to a complaints mechanism and a duty to cooperate.
We balance these demands against your sector and your customers’ expectations, ensuring that you both remain compliant and avoid taking on excessive obligations.
Relationship with the EU level (CSDDD)
The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) establishes a framework similar to the LkSG across the EU; Omnibus I (2026), however, narrowed its scope to companies with 5,000 employees and EUR 1.5 billion turnover — narrower than the LkSG. Germany plans to run the LkSG as a transitional regime until CSDDD transposition (deadline 26.07.2028; application from 26.07.2029). Reading the German and EU regimes together requires a sustainable, rather than one-off, compliance design.
Transition and timeline
The threshold dropped to 1,000 employees in 2024; as the scope widens, expectations towards second- and third-tier suppliers are also increasing. With the transposition of the CSDDD into national law, the scope of these obligations will be reshaped in the period ahead.
Sanctions
Depending on the type of breach, BAFA may impose administrative fines of up to EUR 8 million, and for large companies (those with annual turnover exceeding EUR 400 million) up to 2% of annual turnover. Serious breaches may also lead to exclusion from public tenders for up to three years. For a Turkish supplier, however, the practical sanction is contractual: the loss of orders by a supplier that fails an audit.
Related content
Read this entry together with its EU-level successor CSDDD and its reporting counterpart CSRD. We build compliance programmes in our ESG & Sustainability focus area and publish current analyses in our Knowledge Centre.
