German Companies Expect More Red Tape from the Supply Chain Act
German companies expect more bureaucracy as a result of the Supply Chain Act, or Lieferkettengesetz, according to the ifo Business Survey for May. “In manufac-turing in particular, 43 percent of participating companies say they expect nega-tive effects from increased bureaucracy or documentation requirements. The next largest percentage was in wholesale,” says Lisandra Flach, Director of the ifo Center for International Economics.
“Many companies also feel indirectly affected by the law, for example through price increases or through their role as suppliers to large companies,” Flach says. Martin Braml, co-author of the analysis, adds: “Many companies also fear legal risks in questions of liability and doubt how feasible it is to effectively monitor production standards at their suppliers.”
Service providers expect the least impact, presumably due to a lower level of inter-national integration within their value chains. In May, the ifo Institute asked 7,000 companies how great they thought the impact of Germany’s Supply Chain Act would be on their business. The German parliament is debating the Act on Friday.
