This word is made up from 'shadow' or 'shade' (der Schatten) and der Parker. So a Schattenparker is literally somebody who parks their car in the shade in order to avoid it heating up in the sun.
While this may sound like a sensible idea and not one worth criticizing, this word is used to dismiss someone as a wimp. Parking in the shade to avoid the sun is seen as a sign of weakness.
This criticism definitely contradicts the stereotype that Germans normally favour sensible behaviour.
In fact, it would seem the Germans look lowly on a number of behaviours as there are a vast number of similar German compound words which also mock habits seen as weak.
Here are a few other German compound nouns which are used to insult others…
Der Sockenschläfer- sock sleeper
Der Warmduscher– warm showerer
Der Frühbucher- early booker
Der Chefwitzlacher- someone who laughs at their bosses’ jokes
Der Jeansbügler- jeans ironer
Der Teetrinker -someone who drinks tea
Der Sitzpinkler- (a man) who wees sitting down
Das Weichei– soft egg
Der Handschuhschneeballwerfer- the glove-snowball-thrower (someone who needs to wear gloves when throwing snowballs because the snow is too cold for their hands)
Meanwhile, in case you're wondering, der Schwächling is a non-compound noun that means weakling.
Er macht es nicht, weil er seine Hände nicht schmutzig machen will – Er ist so ein Schattenparker!
He isn't doing it because he doesn’t want to get his hands dirty- he is so weak!
Ich bin kein Schattenparker!
I am not a weakling!