The heads of the German Christian Democratic Union (CDU), the Christian Social Union in Bavaria (CSU) and the German Social Democratic Party (SPD) presented their plans for their joint Government on April 9, 2025.
With regard to German ESG laws, the three parties announced that the German Supply Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG) will be abolished. It is supposed to be replaced by a new act transposing the European Corporate Supply Due Diligence Directive (CSDDD) with the least amount of bureaucracy required and with a focus on ease of application.
The LkSG’s reporting requirement is supposed to be abolished immediately and completely. Further, non-compliance with the LkSG’s compliance obligations is not to be sanctioned any longer, except in cases of “massive violations of human rights”.
With regard to EU ESG laws, the three parties expressly support the EU Commission’s Omnibus package with respect to the Corporate Sustainability Reporting Directive, CSDDD, Taxonomy and the Carbon Border Adjustment Mechanism (CBAM). Further, they will use Germany’s weight within the EU to push for a “no-risk” category within the EU Deforestation Regulation (EUDR) to ensure that German farmers and forest owners will not have to worry about compliance with the EUDR. Further, all parties commit to refraining from “gold-plating” EU Directives and to avoiding parallel regulations on the EU and German levels going forward.
These plans now need to be formally approved by a party conference of the CDU, by approval of the board of the CSU as well as by a survey among the members of the SPD. Assuming that all parties will sign off on these plans, the new German Government could be in place by early May. We will continue to monitor these developments.
German conservatives under Friedrich Merz agreed a coalition deal with the centre-left Social Democrats (SPD) on Wednesday, aiming to revive growth in Europe's largest economy just as a global trade war threatens recession.
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