Sustainable business in Germany: What we (don't) know!

The central objectives of this project are to systematically analyze (scientific) studies on sustainable business in Germany, to draw up an overall balance sheet of companies operating sustainably, to identify and describe beacons of sustainable businesses, and to present systematic gaps and methodological challenges to be derived from this.

Systematic analysis of (scientific) studies on sustainable business in Germany: The German Sustainability Strategy, as well as the Climate Protection Plan 2050, served as guideposts to determine key areas for the sustainable development of the German economy. The focus was therefore placed on the following sectors: energy, transportation, construction, industry, agriculture, waste, the environmental, and financial sectors.

The development of emissions is a key indicator for determining the trend of ecological sustainability in the economy. Viewing at the energy, industrial, transportation, construction, agricultural, and waste sectors, there is a continuous downward trend in emissions, except for the transportation sector. However, greenhouse gas emissions are still at a relatively high level and far from the goal of greenhouse gas neutrality by 2050. It should also be noted that only greenhouse gas emissions that occurred domestically are included in the calculation. Greenhouse gas emissions caused, for example, by the manufacture of primary products abroad or by the transport of people and goods from abroad to Germany are not taken into account. With higher employment growth compared to the overall economy, the environmental sector not only brings ecological benefits but also brings job opportunities to the labor market. In the financial sector, the investment volume in sustainable investments has increased more than tenfold in the last decade and stood at 183.5 billion euros in 2019. However, with a share of around 5.4% of the total fund market, sustainable funds and mandates still play a subordinate role. Without going into all the sectors analyzed here, it can be summarised with a view to the company level that the topic of sustainability is more firmly anchored in larger and resource-intensive companies. In terms of start-up activity in Germany, about 15% of start-ups are in the green economy sector.

The overall balance of companies operating sustainably in Germany: The overall balance of sustainable German companies includes an estimate of the economic power of sustainable economic activity, expressed in terms of companies, gross value added (GVA), investments, innovative power (patent applications), turnover, jobs and tax contributions per sector. For this purpose, in a first step, the data on the economic sectors were compiled primarily from the Destatis database of the Federal Statistical Office. In a second step, a company pool of sustainability-oriented companies (n=5,837) was formed based on certain criteria. The share of sustainability-oriented companies in the basic population of all German companies thus amounts to 0.15%. This data will also be presented separately for all economic sectors. The first scenario can be characterized as a "safe" scenario, as these companies were identified on the basis of certain rather strict criteria. In the next step, a second scenario was developed on the data basis of sustainability-oriented labels and seals (e.g. organic seal, MSC label, green button) as well as start-ups. The companies in this scenario correspond to about 0.32% of all German companies (n=12,505). For the third scenario, the data from the identified studies as well as the surveys of the Federal Statistical Office were used and combined, which corresponds to approximately 6.82% of all German companies.

Table 1: Overview of data from the sustainable economy scenarios

Lighthouses of sustainable management "Made in Germany": The pool of companies created for Scenario 1 also served as a basis for the selection of good practice examples of sustainable management. Each company in the pool fulfills certain criteria (DNK, EMAS, GRI, Global Compact, membership of industry association for sustainability, etc.), which serve as indicators of sustainability orientation. By scoring the criteria, 10 examples were selected from three different categories: a.) companies in transformation, b.) companies with sustainability in their core business, and c.) start-ups and small companies. Each of the companies is portrayed with a focus on its particular strengths (e.g. digital responsibility at Deutsche Telekom, sustainable supply chains at Tchibo). For the three categories, an additional podcast is created for the respective selected company, which presents the special aspects of the companies and discusses them in an interview with company representatives. These companies are Tchibo GmbH, VAUDE Sport GmbH & Co. KG, and Africa Green Tec AG (please find below the podcast link).

Potentials and recommendations for action: More than 3,000,000 German companies tend to eke out a shadowy existence in terms of their sustainability orientation. There is huge potential among companies that cannot yet be characterized as sustainability-oriented. Small and medium-sized enterprises (SMEs) makeup around 90 % of entrepreneurship and can play a significant role in the transformation. Moreover, many sustainability-oriented companies are located at the end of the value chain. Thus, there is great potential to accelerate transformation at the beginning and in the middle of the value chain. Self-commitments in the corporate context are only partially effective. Governmental regulatory efforts are thus of particular importance to advance the necessary basic conditions for a sustainable transformation of the economy.

The study can be downloaded under the following link:

https://www.nachhaltigkeitsrat.de/wp-content/uploads/2021/05/2105012_Studie_Stand_nachhaltiges_Wirtschaften_Deutschland.pdf

Please find the podcast series under the following link:

https://www.nachhaltigkeitsrat.de/aktuelles/nachhaltiges-wirtschaften-in-deutschland-was-wir-nicht-wissen/

Leadership: Prof. Dr. Remmer Sassen

Editing: Dr. Leyla Azizi, Colin Bien, and Vera Braun

Duration: 01.10.2020 to 31.03.2021

Project Partner: German Council for Sustainable Development, Gesellschaft für Wissens- und Technologietransfer

Funding: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, on behalf of the Federal Chancellery.