German companies increase focus on adapting to climate change consequences

German companies are increasingly investing in adaptation measures like flood protections and new cooling systems for offices and factories in their efforts to deal with the consequences of climate change, according to a survey by business daily Handelsblatt. The four main areas of concern that surveyed companies highlighted were heat, lack of water, flooding and storms.

Warmer temperatures not only require more cooling in offices, they can also impact production: energy company EnBW has to shut down certain power plant units on the Neckar if the river gets warmer than 22.5 degrees Celsius. The floods in the Ahr Valley in 2021 washed away the grid infrastructure, prompting energy company E.ON to change their approach and to now build in higher-lying places.

“Over the next two decades, climate change will become a highly relevant factor for companies' results,” climate expert Jens Burchardt from Boston Consulting Group (BCG) told Handelsblatt. Calculations by BCG show that climate impacts could affect up to 25 percent of profits.

A recent report by the UN said that, under current government plans, emission reductions by 2030 would not be enough to meet the 1.5-degree Celsius global warming limit set out by the Paris Agreement. Experts are thus highlighting the importance of adapting to a world of higher temperatures, as well as continuing mitigation efforts.

Germany set its first national legally binding climate adaptation targets earlier this month, with covered areas including human health, infrastructure, urban development and the economy. The European Environment Agency (EEA) published the first European Climate Risk Assessment in March 2024 and concluded that Europe is not prepared for the rapidly growing climate risks it faces, with risks outpacing developments in policy making.