German Businesses Amplify Climate Investments, but SMEs Face Challenges, Reports KfW Research

German Businesses Amplify Climate Investments, but SMEs Face Challenges, Reports KfW Research

(IN BRIEF) German businesses increased climate-related investments to €85 billion in 2023, a 12.1% rise from 2022, driven primarily by large enterprises. While large firms invested €50 billion (a 19% inflation-adjusted growth), SME investments fell to €35 billion, down 10% when adjusted for inflation. The KfW Climate Barometer reveals that only 9% of businesses engaged in climate investments, down from 13% in 2022, but those investing boosted their average contributions significantly. Key barriers include concerns about cost-effectiveness, financial constraints, and lengthy approval processes. To achieve net zero by 2045, annual investments must reach €120 billion, leaving a €35 billion shortfall. Despite challenges, one-fourth of businesses plan to expand their climate investments in the next three years.

(PRESS RELEASE) FRANKFURT, 27-Nov-2024 — /EuropaWire/ — In a pivotal stride towards addressing climate challenges, German businesses increased their climate-related investments to €85 billion in 2023, marking a 12.1% rise compared to the previous year, as revealed by KfW Research’s latest Climate Barometer. When adjusted for inflation, this represents a real growth of 5.3%. However, the progress remains uneven, as large enterprises lead the way while small and medium-sized enterprises (SMEs) grapple with hurdles.

According to the findings, large enterprises invested €50 billion last year—an increase of €11 billion compared to 2022 and a price-adjusted growth of 19%. In contrast, SMEs contributed €35 billion to climate-positive projects, down from €36 billion the previous year, reflecting a 10% decline after adjusting for inflation.

The KfW Climate Barometer, now in its third edition, is the only representative database capturing the investment behavior of German enterprises on their path to climate neutrality. It surveys businesses ranging from micro-enterprises to industry giants. This year’s edition compiled insights from 9,662 businesses between February and June, offering a comprehensive snapshot of corporate climate initiatives.

Interestingly, while fewer businesses—around 340,000 out of 3.8 million—invested in climate solutions in 2023, those that did showed an increase in their investment intensity. The average investment per SME rose sharply by 38% to €146,000. Yet, the proportion of businesses engaging in climate investments fell to 9%, down from 13% in 2022 and 23% in 2021.

KfW CEO Stefan Wintels emphasized the urgency of scaling up climate efforts, stating, “Climate action remains a top priority for KfW. Since 2017, we have committed approximately €320 billion to climate and environmental finance, with around €30 billion allocated for 2024.” He highlighted the need for reliable frameworks and enhanced support schemes, especially for SMEs, to overcome economic pressures and structural barriers.

The survey uncovered key obstacles to climate investment, with 47% of enterprises citing uncertainty about cost-effectiveness, 37% pointing to limited financial resources, and 36% highlighting lengthy planning and approval processes. Despite these challenges, enterprises investing in climate solutions focused primarily on climate-friendly mobility, including electric vehicles and charging infrastructure. Other areas of investment included renewable energy generation and storage as well as energy efficiency improvements in buildings.

Looking ahead, the path to net zero by 2045 demands intensified efforts. To meet this goal, German enterprises need to invest an average of €120 billion annually—adjusted for price increases—leaving an estimated €35 billion annual shortfall. However, optimism persists, with one-fourth of enterprises planning to expand their climate investments over the next three years, signaling renewed momentum.

The full findings of the KfW Climate Barometer, compiled by GfK GmbH, can be accessed at KfW Climate Barometer. The study reflects responses from 9,556 SMEs and 106 large enterprises.

KfW Group continues to support SMEs through a range of government-backed promotional programs. More details can be found at Support for Enterprises | KfW.

KfW is one of the major financiers of climate action worldwide. Further information is available at

KfW_COP_2024(PDF, 69 KB, accessible)

Media Contact:

Ms. Nina Luttmer
+49 69 7431 41336
nina.luttmer@kfw.de

SOURCE: KfW Group