Majority of large companies in Germany missing own decarbonisation targets – analysis
Clean Energy Wire / Tagesspiegel
More than half of companies in Germany’s most important stock indices are lagging behind on their self-imposed targets for emission reductions, according to a report published by consultancy KPMG. Of the 160 companies analysed, two thirds have committed to long-term direct emissions reductions, yet 57 percent of those with targets were found to having failed to meet them so far.
The companies’ targets mostly involve Scope 1 and Scope 2 emissions. The former refers to the direct emissions of companies, while the later takes into account indirect emissions resulting from the purchase of energy. Only one third of companies have targets for Scope 3 emissions, which refers to emissions that occur indirectly in the organisation’s upstream and downstream value chain.
Differences emerged between sectors: While almost 67 percent of financial companies are close to their Scope 1 and Scope 2 emission reduction targets, around 17 percent of chemical and material companies are close to theirs. “We must take this development seriously, because as the world's third largest economy, Germany has a major influence on global greenhouse gas emissions,” said Benedikt Herles, director of ESG Insights & Innovation at KPMG Germany.
In-depth interviews were carried out with 30 companies as part of the KMPG report. The majority said that they see long-term potential in decarbonisation and are convinced that increased sustainability will make their business more competitive; eleven percent said they expect a negative effect on long-term profitability. “The decarbonisation of German industry is not failing due to a lack of will. However, many companies are still struggling to put the goals they have set themselves into practice,” said Herles, adding that “the climate transformation remains a major challenge.”
Newspaper Tagesspiegel reported that 11 of the 40 companies in the DAX stock index have set themselves ambitious enough reduction targets to be compatible with Germany’s climate targets. An analysis from earlier this year found that the 40 large companies listed in the German DAX stock market index had reduced their emissions by a combined 4 percent along the entire value chain in 2023.
