German SMEs Rely on Promotional Funds for 22 Percent of Their Climate Investments in 2023, KfW Analysis Shows

German SMEs Rely on Promotional Funds for 22 Percent of Their Climate Investments in 2023, KfW Analysis Shows

(IN BRIEF) The 2023 KfW Climate Barometer special analysis shows that German SMEs now finance 22 percent of their climate investments through public promotional funds—up three points since 2021—while promotional support makes up only 13 percent of overall SME investment. For larger projects over €80,000, promotional grants and loans cover nearly a quarter of costs, with bank loans and internal funds covering the rest. KfW CEO Stefan Wintels emphasizes the need to price climate risks and mobilize private capital, and highlights KfW’s role in closing financing gaps, setting efficiency standards, and supporting early-stage climate-tech ventures to accelerate decarbonisation across Germany.

(PRESS RELEASE) FRANKFURT, 8-Jul-2025 — /EuropaWire/ — A new KfW special analysis of our annual Climate Barometer reveals that German small and medium-sized enterprises (SMEs) are increasingly turning to public promotional funds to finance their climate investments. In 2023, promotional instruments—such as state investment grants and KfW’s low-interest loans—accounted for 22 percent of the funding mix for SMEs’ green transition projects, up from 19 percent in 2021. By contrast, promotional funds represented just 13 percent of total SME investment across all sectors.

The reliance on promotional funding is especially pronounced for larger climate projects exceeding €80,000. In those cases, promotional instruments covered an average of 24 percent of the cost, commercial bank loans 30 percent, and companies’ own resources 44 percent. This underlines that substantial climate measures frequently exceed SMEs’ internal financing capacity, making public support indispensable.

“KfW stands ready to provide financial support to enterprises in transitioning to a sustainable economy,” said Stefan Wintels, Chief Executive Officer of KfW. “Because the market does not yet fully price in climate-related risks and costs, many climate projects remain unattractive to purely private investors. By offering favorable financing conditions, KfW promotional funds help bridge that gap, improve project viability, and mobilise the private capital needed for large-scale decarbonisation.”

As Germany’s promotional bank, KfW helps advance climate technologies by:

• Closing financing gaps with concessional loans and investment grants
• Setting technical efficiency standards (e.g., for energy-efficient construction) that boost transparency and public awareness
• Backing innovative start-ups in the climate-tech sector that might not yet qualify for commercial financing

These measures support rapid market penetration of cutting-edge low-carbon solutions and contribute to Germany’s broader climate goals by ensuring that SMEs can undertake—and successfully complete—vital decarbonisation projects.

Media Contact:

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

SOURCE: KfW

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