Germany’s support of an EU proposal that would require firms to take action if they discovered human rights violations in their supply chains has come into question after one of the country’s ruling parties sided with business groups that oppose the legislation.

According to Reuters, Christian Lindner, Germany’s Federal Minister of Finance and the leader of the pro-business party Free Democrats, expressly criticized the proposal earlier this week, citing concerns that the law would create significant bureaucratic processes and legal uncertainties.

"Now is not the time for an additional supply chain directive," Lindner said January 23.

The presidents of four business associations — the employer organization BDA (Confederation of German Employers' Associations), industry bodies BDI (Federation of German Industries) and DIHK (Association of German Chambers of Industry and Commerce) and the skilled trade lobby ZDH (German Confederation of Skilled Crafts and Small Businesses) — sent a letter to German Chancellor Olaf Scholz asking him to veto the proposal because the law was "neither practicable nor proportionate."

The Federation of German Industries published a study January 25 that showed how even a more lenient national supply chain law that took effect last year prompted companies to shrink their supplier networks or consider leaving some countries entirely.

"The one-year balance sheet is sobering. The enormous bureaucratic effort generated by the law is driving many companies, especially small and medium-sized enterprises, to the brink of despair," said BDI president Siegfried Russwurm while commenting on the results of the survey.

A spokesperson for the German government said that discussions on the proposal are still ongoing.