Sustainability and regulatory compliance in management control systems: insights from Germany’s Supply Chain Due Diligence Act

Purpose This study aims to investigate how multinational corporations (MNCs) adapt their management control systems (MCSs) to comply with Germany’s Supply Chain Due Diligence Act (LkSG) and address human rights and environmental risks in global supply chains. Design/methodology/approach A qualitative analysis of interviews with 14 professionals from 11 German-based MNCs was conducted using hybrid thematic coding informed by Malmi and Brown’s (2008) MCS framework, Gond et al.’s (2012) sustainability integration mechanisms and institutional and contingency theories. Findings Different control types align with distinct integration mechanisms, and the study introduces adaptation logic to explain variation in how firms implement due diligence obligations across control types. Firms responded to the LkSG through both uniform and hybrid adaptation logics, shaped by institutional pressures and organizational contingencies. Practical implications The findings offer insights for sustainability and compliance managers on reconfiguring MCSs to strengthen due diligence, and for policymakers on designing clear and feasible regulatory frameworks that also support suppliers, including small and medium-sized enterprises (SMEs) along the supply chain. Social implications The study underscores how regulatory compliance and organizational adaptation shape the realization of human rights and environmental outcomes in global supply chains. Originality/value The study advances MC research by analyzing how control systems are reconfigured for legally binding sustainability obligations. It offers a theoretical synthesis linking control types, integration pathways and adaptation logic, and clarifies how MCSs can enable corporate contributions to sustainable development under binding sustainability regulations.