Bureaucracy a major impediment to companies striving for decarbonisation in Germany – survey

A survey by consulting firm EY has found that only one in five companies considers Germany a compelling place to decarbonise production – with excessive bureaucracy the biggest hurdle to implementing change. The consultancy surveyed over 200 firms, 30 percent of which had an annual turnover of more than 1 billion euros. Three quarters cited red tape as a major hurdle to cutting emissions from production, while 63 percent complained of high energy prices. Obtaining permits for green industrial development in Germany often is a “multi-year odyssey,” said Simon Fahrenholz, EY’s head of sustainability consulting for strategy and transactions. “Germany is in danger of falling behind on the decarbonised reshaping of production,” Fahrenholz argued.

However, the survey found that only one in eight companies was considering moving operations abroad. Twenty-eight percent viewed Scandinavia as the best region to go green, putting it at the top of international rankings, ahead of Germany in second place. Less than one in ten rated North America as the most attractive region for decarbonisation – despite the United States’ Inflation Reduction Act (IRA), which EY said entails as “a very attractive and successful support programme”.

Nearly two thirds of the of companies surveyed were using public funds to decarbonise. Fahrenholz again blamed paperwork on the take-up not being higher – with many companies unaware of what subsidies are available, and those who do access them often relying on external consultants to navigate complicated application procedures. “Small and medium-sized companies in particular are missing out on billions in potential funding,” Fahrenholz said. Sustainability managers were employed by 62 percent of companies but 42 percent cited a lack of expertise within the company as an obstacle to decarbonisation. A quarter had no roadmap or action plans in place to cut emissions. And while 46 percent said they were aiming for a net-zero carbon balance, and a further 16 percent wanted to achieve a “climate-positive” carbon balance, most only counted Scope 1 and Scope 2 emissions in their short- and medium-term climate targets, rather than taking responsibility for the entire value chain.