Following the publication of Omnibus I (Directive (EU) 2026/470, in force 18 March 2026), the EU's supply-chain due diligence framework has been substantially recalibrated. For companies operating in Germany, the key changes narrow the CSRD scope to undertakings with more than 1,000 employees and more than EUR 450 million in net turnover, with a separate threshold for non-EU groups, while CSDDD transposition obligations now extend to 26 July 2028. Understanding what these adjustments mean in practice – and where the remaining risks lie – is essential for any international business with German operations or a German holding structure.
The Omnibus I Recalibration: What Changed and Why Germany Is Different
Omnibus I did not dissolve the supply-chain due diligence framework; it reconfigured its perimeter. Germany entered this recalibration as the only EU member state that had already enacted national supply-chain legislation – the Lieferkettensorgfaltspflichtengesetz (LkSG) – years before the CSDDD was finalised. That pre-existing layer creates a compliance environment that is unlike any other EU jurisdiction: businesses in Germany must track both the narrowing EU thresholds and the continued operation of the LkSG, which remains in force and is enforced by the Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA).
The EU-level background can be summarised briefly. The CSDDD, adopted in 2024, imposed human rights and environmental due diligence obligations across corporate value chains. Omnibus I, published 26 February 2026 and in force from 18 March 2026, amended both the CSDDD and CSRD to reduce compliance burden, principally by raising the size thresholds and extending transposition deadlines. Member states now have until 26 July 2028 to transpose the revised CSDDD into national law, and until 19 March 2027 to transpose the CSRD amendments.
Germany's transposition of the CSDDD remains pending. Until the revised directive is transposed, the LkSG continues to govern supply-chain due diligence for companies meeting its own thresholds. Legal teams should not assume that the Omnibus I deadline extension creates a compliance-free window: BAFA enforcement of the LkSG is active, and the interplay between LkSG obligations and incoming CSDDD requirements will require careful sequencing.
Who Is in Scope: Thresholds After Omnibus I
The revised CSRD scope established by Omnibus I applies to:
- EU undertakings with more than 1,000 employees and more than EUR 450 million in net turnover.
- Non-EU groups generating more than EUR 450 million in EU net turnover and having an EU subsidiary or branch exceeding EUR 200 million in net turnover.
For German GmbH and AG structures that form part of a larger international group, the threshold analysis must be conducted at group level, not merely at the level of the German entity. A German subsidiary that sits below the thresholds individually may nonetheless trigger reporting and due diligence obligations because its parent or the consolidated group crosses one of the figures above. Holding company structures that were established in Germany for tax or regulatory reasons – including those involving a Handelsregister-registered intermediate holding – need a fresh scope assessment in light of these revised numbers.
The Commission has been tasked with revising the European Sustainability Reporting Standards (ESRS) by delegated act. Until those revised standards are published and adopted, companies should resist locking in reporting templates that may need to be redesigned. Where a company re-domiciliation or restructuring is under consideration, the timing of that exercise relative to the ESRS revision timeline is a material planning variable.
If you are reassessing whether your German structure falls within the revised scope, our team can assist with a threshold analysis and group mapping. Reach out at info@ferrazwhitmore.com or visit our contacts page.
Step-by-Step Compliance Procedure for Germany
Step 1 – Scope and Gap Analysis
Begin with a documented scope determination: identify whether the consolidated group, the German entity, or both cross the Omnibus I thresholds. Map existing LkSG compliance measures against CSDDD requirements to identify gaps. This analysis should account for corporate governance arrangements, including any Geschäftsführer or supervisory board mandates that bear formal responsibility for due diligence under the LkSG.
Step 2 – Policy Integration and Supplier Mapping
Under both the LkSG and the forthcoming CSDDD transposition, in-scope companies must maintain a human rights and environmental due diligence policy. For Germany, this policy should already be operational if the company meets the LkSG thresholds. The Omnibus I amendments do not reduce the substantive due diligence standard for companies already in scope under national law; they principally affect companies that were in scope under CSRD but not LkSG.
Supplier mapping should document direct (Tier 1) suppliers as a minimum, with risk-based procedures for indirect supply chains. German courts – including case law developed through the Bundesgerichtshof – have increasingly examined the adequacy of documented risk assessments in commercial disputes, reinforcing the need for contemporaneous records rather than retrospective reconstruction.
Step 3 – Risk Assessment and Prioritisation
Risk assessments must be proportionate and documented. BAFA has issued guidance on risk-based prioritisation under the LkSG; that guidance remains relevant as a practical standard even as CSDDD transposition proceeds. Identify high-risk sectors, geographies and supplier categories, and document the methodology used so that it can withstand regulatory scrutiny.
Step 4 – Preventive and Remedial Measures
Contractual provisions with suppliers – representations, audit rights, termination triggers – form the core preventive layer. Remedial measures must be defined in advance: companies that discover a violation and lack a documented response plan are at greater regulatory and reputational risk. Under the LkSG, companies are required to establish a complaints mechanism, and this requirement is expected to continue under the CSDDD transposition.
Step 5 – Reporting and Documentation
In-scope companies under the CSRD (as amended by Omnibus I) must report in accordance with the ESRS, subject to revision by delegated act. For Germany, the annual LkSG report must be submitted to BAFA and published on the company's website. These two reporting streams – CSRD sustainability reporting and LkSG/CSDDD supply-chain reporting – are distinct in format and addressee, and conflating them is a common error made by foreign clients unfamiliar with the dual German framework.
Step 6 – Internal Governance and Training
Assign clear internal responsibility. Under the LkSG, a designated human rights officer (Menschenrechtsbeauftragter) is required for in-scope companies. Governance arrangements documented in the Handelsregister filing and the articles of association should reflect who bears formal oversight responsibility. Annual training for procurement and legal teams reduces the risk of process failures that BAFA may treat as systematic deficiencies.
Realistic Timelines
The CSDDD transposition deadline is 26 July 2028. The CSRD amendments must be transposed by 19 March 2027. However, companies with existing LkSG obligations cannot treat the 2028 deadline as the start of their compliance journey – those obligations are live now. For companies newly brought into scope by the LkSG thresholds (or currently assessing scope under the revised Omnibus I figures), a realistic implementation timeline for a mid-sized international group with German operations is typically several months from the point of scope confirmation to a documented, operational compliance programme.
Where a group is considering company re-domiciliation or a restructuring of its German holding company to manage scope, such a transaction must be planned to account for Handelsregister procedures, any applicable Mahnverfahren or creditor protection requirements, and the need to avoid a gap period during which neither the old nor the new structure has operational compliance measures in place.
Cost Drivers and Budgeting Considerations
Cost drivers under the revised framework include: supplier audit programmes; legal review of procurement contracts to embed due diligence clauses; technology platforms for supplier data collection and risk scoring; internal training; and external legal and advisory fees for the scope analysis and policy design phases. Omnibus I explicitly acknowledges compliance cost as a driver of the threshold recalibration, and the revised ESRS are expected to simplify the reporting datapoint requirements. However, for companies already subject to the LkSG, cost reduction from Omnibus I is marginal – the substantive German law obligations remain unchanged pending national transposition.
For tax structuring questions arising from a restructuring connected to CSDDD compliance – for example, where a company re-domiciliation affects the beneficial ownership registration requirements or the tax residency of a holding entity – our tax law team in Germany can provide coordinated advice. Details are available at our Germany tax law service page.
Common Errors Made by Foreign Clients
- Assuming LkSG obligations have been suspended. They have not. BAFA enforcement continues irrespective of Omnibus I or CSDDD transposition timelines.
- Applying group thresholds incorrectly. Threshold analysis must account for the consolidated group, not only the German entity in isolation. A German GmbH that is a subsidiary of a non-EU group with more than EUR 450 million in EU turnover may be in scope even if the German entity alone is below the threshold.
- Conflating CSRD reporting with LkSG/CSDDD supply-chain due diligence. These are separate legal obligations with different addressees, deadlines and content requirements. Sustainability reports submitted for CSRD purposes do not satisfy the LkSG annual report obligation to BAFA.
- Delaying supplier contract updates. Contractual due diligence provisions take time to negotiate and implement across a supply chain. Companies that defer this work until close to the CSDDD transposition deadline consistently find themselves under-prepared.
- Overlooking beneficial ownership implications of restructuring. Where a holding company restructuring is used to manage CSDDD scope, changes to the beneficial ownership register (Transparenzregister) must be filed promptly. Failures here attract separate regulatory risk unrelated to supply-chain due diligence.
- Using generic EU-level compliance templates. Germany's dual framework – LkSG plus incoming CSDDD – means that templates drafted for other EU jurisdictions may not satisfy BAFA's expectations or reflect German-specific procedural requirements.
Decision Checklist
- Has the group conducted a scope determination under both LkSG thresholds and the revised Omnibus I CSRD/CSDDD thresholds?
- Is there a designated human rights officer in place for LkSG-in-scope entities?
- Has a supplier risk mapping exercise been completed and documented?
- Are procurement contracts updated to include due diligence representations and audit rights?
- Is there an operational complaints mechanism accessible to affected stakeholders?
- Has the LkSG annual report been submitted to BAFA and published on the company website?
- Has a gap analysis been run between current LkSG measures and anticipated CSDDD requirements post-transposition?
- Are beneficial ownership filings in the Transparenzregister current and accurate?
- Has internal governance been updated so that formal due diligence responsibility is clearly assigned and documented in corporate records?
How Ferraz & Whitmore Can Assist
Our corporate law team advises international businesses on the full lifecycle of supply-chain due diligence compliance in Germany: from initial scope determination and gap analysis, through policy design and supplier contract review, to ongoing regulatory engagement with BAFA. We also advise on holding company structures, company re-domiciliation and the corporate governance arrangements that underpin a defensible compliance programme. Further information is available at our Germany corporate law service page.
For companies that operate across multiple EU jurisdictions and wish to understand how the German framework compares to developments elsewhere, our guide on CSDDD and Omnibus I in France provides a useful reference point for cross-border compliance planning.
To discuss your company's specific position under the revised framework, please contact us at info@ferrazwhitmore.com or through our contacts page. We are available to assist with both immediate compliance questions and longer-term structural planning.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.