Germany’s commitment to climate action is facing a concerning setback, according to a newly released report from the state-owned development bank KfW. The “Climate Barometer” compiled through a survey of over 13,000 businesses conducted by market research firm GfK between February and June 2025, reveals a significant contraction in climate-related investments, particularly among the nation’s largest corporations.
After a period of substantial growth between 2021 and 2023, overall climate investment by the German economy has dipped from €85 billion in 2023 to €80 billion last year. The decline is overwhelmingly driven by a scaling back of investment by large enterprises, which reduced their climate spending from €50 billion to €42 billion within the same timeframe. While smaller and medium-sized businesses marginally increased their efforts, the retreat by corporate giants raises serious questions about Germany’s ability to meet its climate targets.
The report underscores a shift in corporate priorities, with KfW’s chief economist Dirk Schumacher highlighting that “other issues now take precedence over climate protection”. This sentiment is reflected in a diminishing perception of customer demand for climate action. Only a third of large companies now believe their customers expect climate initiatives, a sharp decline from over 45% in previous years.
Critics are already pointing to a lack of consistent political incentives and regulatory pressure as potential drivers of this shift. While Germany has pledged ambitious climate goals, the perceived uncertainty surrounding future policies and the cost of transitioning to a greener economy may be contributing to corporate hesitancy. This report serves as a stark reminder that Germany’s green transition is not guaranteed and requires a renewed commitment from both policymakers and the private sector to avoid a significant derailment of national climate ambitions. The data raises significant political questions regarding the effectiveness of current strategies and the need for robust, long-term policies to incentivize corporate climate action.
