Businesses in Germany have reduced their investments in climate action, with total domestic spending falling by 5.5 percent to EUR 80 billion last year compared to EUR 85 billion the previous year. Adjusted for price changes, this represents a decrease of 7.8 percent. The proportion of business investment dedicated to climate measures was 16.5 percent in 2024, slightly down from 17 percent in 2023, but still higher than levels seen in 2021 and 2022.
These results come from the latest KfW Climate Barometer, produced annually by KfW Research. The report provides a representative overview of German businesses' investment behavior related to climate action, covering companies ranging from micro-businesses to large enterprises.
The decline in climate-related investment was mainly driven by large enterprises, which spent only EUR 42 billion on greenhouse gas mitigation measures—down from EUR 50 billion the previous year. This is an 18.5 percent reduction in real terms. In contrast, small and medium-sized enterprises (SMEs) increased their total climate investment by EUR 3 billion to reach EUR 38 billion, marking a real-term increase of 7.8 percent.
Dr Dirk Schumacher, Chief Economist of KfW, commented: “The difficult economic situation and growing international competitive pressure are a burden on many enterprises and reducing their scope for investing in climate solutions. More large enterprises than before are reporting that they see other issues as more important than climate action. Businesses are also aware that customers are demanding less climate action from them and responding accordingly.”
Despite the drop in overall volume among large firms, the share of these businesses investing in climate measures rose to a record high of 86 percent in 2024—up three percentage points from the previous year—although average investment per company fell significantly.
Among SMEs, there was also an increase in participation: the share investing in climate measures reached nearly double that of the prior year at 15 percent. However, average spending per SME decreased from EUR 146,000 to EUR 91,000 over the same period.
The most common areas for investment were renewable electricity generation and storage projects; over half (52 percent) of businesses made such investments—a significant rise compared to last year. Improvements to building energy efficiency were implemented by about one-third (35 percent) of investors—a notable increase as well—while green mobility initiatives such as electric vehicle purchases or charging infrastructure installations were reported by nearly one-third (32 percent), which is lower than last year's figures.
“If we want to achieve the climate objectives, we need to step up our investment significantly. Our survey shows that businesses need a reliable framework for their climate action investments. They also see lengthy planning and approval processes as a major impediment to their activities. In order to encourage more climate investment in the business sector, policymakers should directly address these impediments,” said Dr Dirk Schumacher.
In terms of policy preferences for supporting future investments, surveyed companies prioritized lower electricity prices (70 percent), streamlined planning and approval procedures (67 percent), tax incentives (65 percent), and expanded energy infrastructure like power grids (63 percent).
The data for this year's KfW Climate Barometer is based on responses collected between February and June 2025 from over thirteen thousand SMEs and nearly two hundred large firms through a survey conducted by GfK GmbH on behalf of KfW Group.
KfW continues its support for SMEs through various promotional programs commissioned by Germany's Federal Government.