German Companies Show Only Modest Climate Protection Investment Growth Through 2027

Recent analyses from the Ifo Institute underscore a cautious approach among German companies toward investing in climate protection measures between 2025 and 2027. Investments are projected to rise slightly from an average of 9.3% in 2025 to 10.6% in 2026, before marginally declining to 10.5% in 2027. This tempered growth is considered insufficient for achieving Germany’s ambitious emissions targets, especially under the pressure of comprehensive economic transformation.

Sectoral differences are significant: the services sector plans the highest climate investment share at 12.2% in 2026, followed by the construction industry intending to increase its share to 11.2% in 2027. Meanwhile, manufacturing and retail sectors lag, with climate investments at 8.8% and 8.5% respectively. Factors constraining more robust investment include geopolitical risks, weakened competitiveness in export markets, persistent economic policy uncertainty, and fluctuation in CO₂ pricing.

While companies hesitate, German households demonstrate increasing commitment to climate-friendly technologies, with 66% willing to invest—up from 59% the previous year. Demand for electric vehicles and solar panels is rising, though adoption remains uneven, markedly lower among renters compared to homeowners. This economic divide complicates energy transition efforts, emphasizing the need for targeted policy support.

Ifo researcher Gerome Wolf highlighted that despite some growth, companies have not planned major jumps in climate investments, citing the volatile economic context and political uncertainty as key barriers. The future trajectory of climate investments will depend heavily on political stability, energy prices, and regulatory frameworks, crucial factors to bolster German companies’ transition toward sustainability.