Importance of sustainability gains ground for German businesses
Clean Energy Wire
Sustainability in Germany is now firmly mainstreamed in the business sector, according to a survey by state investment and development bank KfW. Over half (53%) of German businesses consider sustainability as a high or very high priority for their company, with 70 percent expecting the topic to be of high importance in three to five years’ time. According to KfW’s Business Survey 2024, some 70 percent of businesses addressing the topic note customer demands and social responsibility as the main reasons for engaging more intensively with sustainability. Legal regulations and a desire to reduce operating costs were also listed as key motivations for the majority of enterprises to engage with the issue. However, many companies are having trouble deepening their sustainability commitments. Insufficient human resources (58 percent) and lack of financial resources (45 percent) in particular were mentioned by companies as a major barrier.
The topic is playing an increasingly important role in loan negotiations. Some 27 percent of enterprises in loan negotiations in the 12 months prior to the survey noted that sustainability was addressed during the negotiations, up from 18 percent of businesses in the previous survey in 2022. Four out of 10 companies anticipate that transparency requirements around sustainability will increase in future loan negotiations. At present, however, only one in three businesses consider themselves well or very well positioned or prepared for the issue.
Sustainability generally encompasses ecology, social issues and responsible corporate governance. It covers greenhouse gas emission reductions and energy and resource efficiency as well as the promotion of equal opportunities and the protection of human rights along the value chain. A report earlier this year found that younger generations of employees in particular are driving German companies' sustainability efforts. However, a separate poll found that sustainability issues have slid down the list of German managers’ priorities.
