25 Mar 2020, 16:00
The challenge for government, banks and citizens to raise billions through green finance

Too big to just stand by - Germany's financial sector faces climate challenge

The German finance sector is among the largest in the world and crucial to the strong industrial base that underpins the country's prosperity. But despite Germany's longstanding experience with the energy transition, its financial sector has yet to pull its full weight in contributing to a smooth continuation of the Energiewende and a rapid reduction of greenhouse gas emissions. Having been considered a latecomer to the concept of green and sustainable financing, the German government is now working to fully integrate it into its climate and energy policy. At the same time, the country's financial industry, which boasts leading insurers and banks, faces the juggling act of adapting to climate targets without relinquishing freedom of action. In addition, private citizens will have to better educate themselves in financial matters if their climate action ambitions are to match with corresponding investment practices. [UPDATES Factsheet on Germany's Sustainable Finance Committee]

High-profile advisory group lays out proposals for Germany's sustainable finance push

In order to establish a coherent strategy for aligning public and private investment decisions in the country with international climate and sustainability targets, Germany has set up a Sustainable Finance Committee of experts from the financial sector, business, science and civil society in 2019. It presented a first interim report in March 2o2o with initial priorities and fields of action that is open for consultation and supposed to pave the way for a final advisory report by the end of the year. Read the factsheet here. 

Leading from behind – Germany's government sparks green finance to drive climate policy

Addressing climate change and the pros and cons of renewable power have dominated German public debate for almost two decades, but the role of the finance sector in emissions reduction has taken a back seat. Many countries have already geared their financial sectors to address challenges of climate change and take advantage of the impending transition to renewables. Germany's government is now working on a sustainable finance strategy that could eventually see it reveal the climate impact of its spending. Read the article here.

Germany's finance industry struggles to marry climate action and business strategy

Banks, insurers and investment funds in Germany look back at nearly two decades of energy transition – but many of the biggest actors still struggle to embrace its potential as a core business area. While most are well aware of the risks from climate change and of potential losses to their fossil assets from climate policies, the sector is struggling to revamp its green finance approach. Companies have trouble defining desirable investments and they worry about tightening regulation. Read the article here.

Patchy counselling holds German citizens back from investing climate friendly

Citizens have been a crucial driver of Germany's energy transition and many regard sustainability and especially environmental action a crucial feature of sound investments. Yet, the vast majority of savings in the country are not invested along sustainability criteria, a discrepancy that many finance professionals blame on flawed counselling in bank customer pitches and overly complex investment products. New EU regulation is meant to provide a remedy to this shortcoming, but the financial conservatism of many Germans could mean that they are a tough nut to crack in terms of making targeted investments. Read the article here.

German finance sector's push to play catch up on climate action

Integrating the financial sector into national climate and energy policy is a central challenge for Germany to make sure that its emissions reduction and renewables expansion plans are properly funded. The country of the Energiewende for long has neglected the potential of a systematic approach to compelling banks, insurers, fund managers and other financial actors to curtail investments into emissions-intensive projects and instead fund cleaner ones on a large scale. But since green and sustainable finance has started to boom and countries around the world spell out their climate plans in more detail, Germany tries to gain ground and dovetail its financial sector with climate plans. Read the factsheet here.

Germany's green finance key actors at a glance

The integration of climate action and other sustainability criteria in Germany's finance sector is a complex task that involves or affects a multitude of financial market actors. From commercial banks to state control authorities, this factsheet provides an overview of the most relevant actors in Germany and where they stand on reconciling finance and climate action. Read the factsheet here.

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