In 2023, businesses in Germany increased their investments in climate solutions, reaching a total of EUR 85 billion. This marked a 12.1% increase from the previous year, with an inflation-adjusted rise of 5.3%. Large enterprises primarily drove this positive trend, contributing EUR 50 billion to climate solutions—an increase of EUR 11 billion from the prior year, which translates to a price-adjusted growth of 19%. In contrast, small and medium-sized enterprises (SMEs) invested EUR 35 billion, down from EUR 36 billion the previous year, representing a decrease of 10% on a price-adjusted basis.
These insights come from the KfW Climate Barometer, published for the third time this year. The barometer is currently the only representative database tracking German businesses' investment behavior towards climate neutrality. The survey involved 9,662 enterprises between mid-February and mid-June.
Despite these investments, the number of businesses investing in improving their climate footprint dropped significantly in 2023 to about 340,000 out of approximately 3.8 million enterprises in Germany. This represents a decline to just 9%, compared to 13% in 2022 and as high as 23% in 2021. SMEs experienced the most significant drop but increased their average investment by 38% to EUR 146,000.
"Climate action remains high up on KfW’s agenda," said Stefan Wintels, CEO of KfW. "Since 2017, we have committed some EUR 320 billion for climate and environmental finance, and in 2024 it will be around EUR 30 billion."
Wintels emphasized the need for reliable frameworks and more support schemes to help SMEs reach net zero amid economic challenges that limit their capacity for climate investments.
The KfW Climate Barometer identified several barriers hindering investment in climate action: uncertainty about cost-effectiveness (47%), lack of financial resources (37%), and lengthy planning and approval procedures (36%).
Enterprises that did invest focused mainly on climate-friendly mobility like electric vehicles and charging infrastructure. Other areas included renewable energy generation or storage and improving energy efficiency in existing buildings.
For Germany to achieve its goal of climate neutrality by 2045, private sector investment needs to average around EUR 120 billion annually—plus any price increases over time—indicating an annual shortfall of at least EUR 35 billion.
Despite current challenges, there is optimism as one-fourth of all enterprises plan to increase their climate investments over the next three years.
The business survey was conducted by GfK GmbH on behalf of KfW Group with participation from both small-medium sized enterprises and large companies between February and June this year.