For Germany, the ecological transformation represents a substantial change to the structure of its real economy. Russia’s attack on Ukraine has significantly intensified the pressure to adjust because the debate surrounding energy security has increased the urgency of the transformation, especially in those countries that do not have sufficient primary energy sources of their own.

To date, the costs of climate change and energy security have been insufficiently reflected in the costs of energy sources. The largest impulse comes from carbon pricing. In addition, further measures are needed in order to give enterprises, consumers and investors the right incentives for the transformation.

Large parts of the existing capital stock are tied up in carbon-intensive industries and production methods. To put the economy on a sustainable footing, investment is needed in new technologies, often from firms that are still not even represented in the market. There is a considerable need for investment and innovation, with commensurately high entrepreneurial risks and uncertainties.

Private and public funds are necessary to sustainably finance the ecological transformation. Financial institutions market themselves as being keen to play their part in an ecological transformation, but point to what they see as necessary accompanying policy measures. Fiscal programmes are intended to relieve firms and households in part of the costs and risks of the ecological transformation.

At the same time, private and public investors are coming under adjustment pressure. Banks play an important role in financing the German economy. The banking sector is highly competitive, which is squeezing banks’ profitability. Digitalisation is intensifying competition from new providers and forcing traditional intermediaries to invest. Government needs to set new priorities in order to be able to sustainably finance security and energy policy expenditure.

This panel addresses the financing of the ecological transformation. It complements the three previous panels – on the role of enterprises in the ecological transformation, the international coordination of climate policy, and the role of households – and rounds out the series of events.

Panel IV – online event
on 4 July 2022, 17:00-19:00 Uhr (CEST)
transmitted from the European School of Management and Technology (ESMT) in Berlin

Event language: German

„Sustainable finance: how can we finance the ecological transformation?“