Germany

Germany adopted its first National Strategy for Sustainable Development in 2002 and has subsequently updated the document on a regular basis. The last update is from 2021. The strategy makes sustainability a guiding principle for national policies and is underpinned by specific targets and sustainability indicators, which are subjected to evaluation that result in regular progress reports. The strategy is implemented operationally via cross-cutting initiatives on biodiversity, climate change, energy and resource efficiency. The Strategy includes 65 indicators monitored by the federal Statistics Office. The latest version of the strategy calls for greenhouse gases emissions cuts of 40 per cent by 2020 and by 80 to 85 percent by 2050. In addition, by 2050 renewables are to account for 60 per cent of the total energy mix. Germany is internationally well placed as a sustainability pioneer, but should embrace more ambitious goals and pursue them with greater determination and efficacy. For instance, during the last available review of the plan, Germany was missing the targets for over 40% of the indictors, including significantly greenhouse gas emissions.

In addition, Germany approved in 2016 a Climate Action Plan 2050 (Klimaschutzplan 2050) which outlines measures by which the nation commits to meet its various national greenhouse gas emissions reduction goals through to 2050 and is aligned with its international commitments under the 2016 Paris Climate Agreement.

In 2019, the German government implemented the Climate Action Programme 2030. The heart of the program is the Climate Change Act with a binding reduction target of 55 percent of greenhouse gases in 2030 and a mandatory monitoring as well as a national CO2 price for transport and building from 2021 on.

In terms of worker participation in corporate governance, Germanys co-determination model is a model to be emulated. The rights of workers to participate in management is enshrined in law since the passage of the Codetermination Act of 1976. The law allows workers to elect representatives for almost half of the supervisory board of directors and applies to public and private companies that have over 2,000 employees. For smaller companies, those with between 500 and 2,000 employees, workers are entitled to appoint one-third of the supervisory board must be elected. More recently, gender specific issues have been incorporated into this cooperative model of corporate governance via the passage of the Act for the Equal Participation of Women and Men in Management Positions in the private sector and public service (2015) aims to improve the share of women in management positions by mandating gender specific quotas in governance bodies. Under the legislation, more than 100 companies that are traded publically in stock exchanges and that have co-determination will be required to set aside at least 30% of the new board seats for women from 2016 (this increases to 50% by 2018). Medium-sized companies are required to set their own targets to increase the proportion of women on their supervisory boards and boards of directors as well as at the top management levels. In addition, the Federal Equal Opportunities Act and the Federal Act on Appointment to Federal Bodies has been recently amended to increase the proportion of women in management positions in government service. This legislation is intended to redress the generally poor position exhibited by German companies in terms of gender equal participation in corporate governance bodies. For instance, the Gender Diversity Index published by European Women on Boards (EWOB) ranks Germany in the lower tier of countries analysed (16 European Countries included in the STOXX Europe 600). In the analysis, Germany ranked below average for almost all the indicators measured. In addition, in 2019 only 30% of executive positions in the country were held by women. Germany ranked in the lower third of all EU Member States.

In the public realm, although Germany has in place a robust system for public consultation in the legislative and policy review process, it does not include a specific gender perspective.

Several stakeholder groups, including the business community, were actively involved in the development of the German Sustainable Development Strategy. A formal independent body known as the German Council for Sustainable Development (RNE), which includes relevant figures from the business community, advises the Federal Government on issues of sustainability policy. While the German Sustainable Development Strategy formally recognised and emphasises the key role to be played by the business sector in the achievement of the sustainability goals laid out in the document, there are only a limited number of formal incentives, tools and/or mechanisms for driving the use of the as a strategy and management tool among German businesses. One such tool is the Sustainability Code, a standardised framework and web-based tool developed in 2017 to allow business to report on how their activities impact on the environment and society. The tool allows companies to comply to the European Directive for non-financial reporting.

As part of a EU backed initiative, Germany has taken initial steps to incorporate non-economic or financial standards into national accounting practices based on the multiple capitals concept. For instance, a Regulation on European Environmental Economic Accounts adopted in 2011 by the European Parliament and European Council requires Member States to regularly report on air emissions accounts, environmental taxes by economic activity and economy-wide material flow accounts to the European Statistical Office (Eurostat). The current focus of this regulation is aligned with the U.N.s SEEA Central Framework (UN) is an international statistical standard for measuring the environment and its relationship with the economy. In addition, Germany is an active participant reporting aligned with The Economics of Ecosystems and Biodiversity (TEEB) framework. Germany has published a TEEB-DE framework with four main reports are based on existing analyses, strategies and case studies that highlight the importance of natural services for human wellbeing in Germany. In addition, the German Council for Sustainable Development (RNE) emphazises that an indicator for measuring sustainable economic performance (beyond GDP) should be included into the national sustainable development strategy. The National Welfare Index could be a well-suited indicator for that purpose. However, beyond this initial reporting and accounting on the natural capital component, Germany has not taken steps to incorporate reporting on other capital areas, such as human, social, cultural and physical, in a systematic and rigorous process.

After a prolonged period of taking a rather cautious approach to the full integration of the finance sector as a strategic lever for achieving the nations climate related goals, recent developments in Germany point to a rapid acceleration of green finance as a focal point in the countrys decarbonisation plan. In early 2019, State Secretaries Committee for Sustainable Development (made up of the state secretaries from each of the 14 governmental ministries) released a resolution calling for measures to make Germany a leading player in the growing green finance landscape. The resolution calls on the finance, environment and economy ministries to develop a strategy for improving oversight of the environmental and social impacts of the financial sector and to appoint a board of sustainable finance advisers from the financial sector, civil society organisations and from research institutions. Prior to these developments, reviews by civil society and environmental groups calling for a greater role for the finance sector in facilitating a transition to a net zero carbon future, including WWF and the Green and Sustainable Finance Cluster of Germany, have criticised the German governments general inaction in the promotion of a sustainable finance sector. Recent positive developments suggest that the German government is ramping up its efforts to develop comprehensive sustainable finance strategy. For instance, Germans Climate Action Programme 2030 launched in September of 2019, highlights the strategic role of financial policy in advancing the nations climate targets and includes specific measures in this direction, most notably the commitment to issuing green state bonds and align public investment funds with overall sustainability principles. This lead to issuance of Green Federal securities with a total volume of 11.5 bn in 2020. The German government further continues to invest in green bonds via its state-owned bank KfW ("Kreditanstalt f Wiederaufbau"), where the bank's portfolio has reached its 2 bn green bond portfolio target in 2021 under the mandate of the German Federal Ministry for the Environment and will maintain at a level of 2-2.5 billion. In addition, the government has set up a Sustainable Finance Advisory Council (SFC) comprised of members from the financial industry, industrial companies and civil society organisations to develop the strategy to align the financial sector with the nations sustainable development goals. As such, Germany has much catching up to do with leading nations, as only about 3% of investment activities in the country are considered sustainable.

Germany has been a pioneer in the use of fiscal policy to drive environmental and sustainability goals, having implemented its first eco-tax on petrol and heating fuels in 1999. The additional public income from the eco-tax is used to contribute to the public pension scheme, contributing to lower non-wage labour costs. Since then, the eco-tax has underdone a series of increases, but has not been complemented with additional fiscal and monetary green instruments. This will change with the national emission trading scheme, where its revenues will flow into the federal government's Energy and Climate Fund, which finances a wide range of measures in the fields of climate protection, energy efficiency and renewable energies. Furtheremore, these reveneus will be used to reduce the EEG surcharge in order to lower the electricity costs for consumers. Currently, Germany lags behind its European counterparts in funds raised via environmental taxes. According to the latest data available, environmental taxes account for 4,6 % of total revenues from taxes and social contributions, significantly lower than the UE average of 6,1%. In addition, although the country has made progress with the issuance of Green bonds in 2020, it has lagged behind in this area to several peer countries, such as France and Ireland, which have more actively explored the use of green and sustainable monetary instruments to promote their long range sustainability goals.

German financial institutions participate in the annual stress tests conducted within the European Union under the auspices of the European Banking Authority. The testing covers financial risks but does not yet consider climate related and wider social risks. However, the European Central Bank (ECB) has announced plans to conduct its first supervisory climate stress test on EU banks over the course of 2022. The test builds on the results of the central bank's economy-wide climate stress test released in September 2021, and will assess the vulnerability and preparedness of individual financial institutions - forming a major milestone of the ECB's Climate Plan.

Other promising developments specifically from Germanys central bank, Duetsche Bundesbank, include a central review of the management of climate risks by financial institutions and a report assessing the stability of the German financial system which included for the first time a dedicated chapter on climate risk.

As of 01 January 2021, the German government has established a price for greenhouse gas emissions in the transport and building sectors as part of its efforts to meet its climate related goals set out in its Sustainable Development Strategy. The plan calls for a fixed price at the initial stages, followed by incremental increases on a yearly basis, until an auction process is established in 2026. The plan was established as law via the 2019 fuels emissions trade law which introduced a CO? price on fuels used predominantly for heating and transport. The scheme complements Germans participation European Emissions Trading System (EU ETS), which sets an overall limit on greenhouse gas emissions from power stations, energy-intensive industries and commercial aviation.

Key stakeholder and citizen groups have played an important role in development and updating of Germanys Sustainable Development Strategy. As part of the oversight structure of the Strategys implementation and monitoring, the government sanctioned the formation of the German Council for Sustainable Development, which features prominent individuals from various areas of society. The role of the Council is to provide information and advice to the government and the public. As part of this, the Council commissions of periodic peer review of the Sustainable Development Strategy. More recently in 2018, the federal government convened the Commission on Growth, Structural Change and Employment, comprised of members from industry and the economy, science, environmental associations and unions, to develop a social consensus around structural changes to energy and climate policy in Germany. While Germanys current Sustainable Development Strategy touches upon various key economic sectors of the economy, particularly the energy sector, agriculture, water management and transportation, the significant revision to the Strategys design and focus that occurred in 2016 to align to wit the 17 sustainable development goals has weakened the sectoral focus of the document.

Germany`s Climate Action Plan 2050 does include emissions reduction targets for key economic sectors including energy, buildings, transportation, industry, and agriculture.

The climate programm 2030 with its climate protection act also includes a Council of Experts on Climate Change, which will support the Government with the implementation of the climate protection act. By doing so, the Council examines the estimate of greenhouse gas emissions for the previous year submitted by the Federal Environment Agency and the assumptions underlying the information on the greenhouse gas reduction effect of immediate measures and climate protection programs. The Council of Experts will also give its opinion when the German government amends the permissible annual emission levels in the climate protection act, updates the climate protection plan and adopts further climate protection programs. In addition, the German Bundestag or the Federal Government may commission the Expert Council to prepare special reports.

In Germany, there is currently no specific legal form for social purpose businesses, forcing them to use a wide range of legal forms, many of which do not necessarily match the definition of social entrepreneurs put forward by the European Commission.

For instance, according to the Social Entrepreneurship Monitor report, conducted and provided by the Social Entrepreneurship Network Deutschland social purpose businesses in Germany mainly opt to form as a private limited company (22,3%), although other legal forms are also chosen (for instance, one-man businesses and registered associations, each with a nearly 13% share).

Although there have been some attempts to provide publically backed funding schemes for social and green businesses, there success has been hindered by the apparent difficulty to easily access the funding streams. For instance, in 2012 Germanys Development Bank created a program to invest in social enterprises, but the lack of a specific legal form for social business blocked its successful implementation, forcing it to close in 2014. Since 2015, a European Recovery Programme Venture Capital Fund has replaced this fund, but its use is rather limited. This has forced social purpose businesses in Germany to overwhelmingly turn to private funding streams for seed and growth financing. According to the recent published Social Entrepreneurship Monitor in Germany, nearly half of social businesses identify the lack of a specific legal form as a major obstacle to enterprise develop and growth.

While Germany has been an international leader in several areas of sustainability policy, most notably renewable energy development and deployment, it has shown very little movement in terms of the emerging concept of carbon budgeting in the past. Carbon budgets have emerged as a scientific concept from the IPCCs 2014 Synthesis Report on Climate Change and refer to the cumulative amount of CO2 emissions permitted over a period of time to keep within an established temperature threshold. Internationally, countries such as France and the UK have led the way, each having established legally binding carbon budgets in recent years.

However, with its climate protection act established in 2019 the German government introduced the concept of emission budgets on a sectoral level. Each sector now has a binding emission budget for every year until 2030. The budget reduces linearly in a annual basis - except for the sector energy, where the reduction is "ideally constant". If a sector misses its own target, the responsible ministry is obliged to act swiftly with an emergency program to reach targets in the future. The difference of a target miss or overshoot will be "evenly spread over the remaining annual budgets of the sector" until 2030. In 2025, the German government needs to establish emission budget targets for 2031 and the following years. Overall, the emission budgets are in line with the -55% national emission goal for 2030.

Nevertheless, the emission budgets are not sufficient to reach the Paris Agreement 1.5C goal. Also in light of the new EU-wide emisson target, Germany needs to do more but is likely to adapts its emission budget targets accordingly.

Germany is generally considered to be an international frontrunner in terms of the promotion, development and adoption of renewable energy alternatives. In 2000, with the adoption of the Renewable Energy Sources Act, the German government made a long-term commitment to bring down the costs of renewable energy sources. The legislation provided a vision for a clear transition to renewable energy, making Germany a world market leader for some areas of renewable energy technology (such as wind and photovoltaics). In addition, innovative funding mechanism such as feed-in tariffs have created a distributed system that have been widely adopted by other EU member members. In 2020, for instance, Germany produced slightly less than 46% of its electricity from renewable sources.

The Climate action program 2030 aims to reduce emissions by 55% below 1990 levels by 2030. According to Germany's Climate Action Plan 2050, emissions are to be reduced by 80% to 95% by 2050. Key for achieving these goals are renewable energies. By 2030, 65% of gross electricity consumption and 30% of total final energy consumption should be supplied by renewable energy sources. By 2050, both power generation and consumption should be climate-neutral in Germany. In addition, Germany is set to phase out electricity production from nuclear power plants by 2022 and from coal powered plants by 2038. In the field of energy efficiency, Germany intends to reduce primary energy consumption by 20% by 2020 and 50% by 2050 compared with 2008.

Germany has been a frontrunner in the introduction of measures to promote the use of renewable energies and reduce the nations carbon emissions. The adoption of the Renewable Energy Sources Act in 2000 incentivised the development and deployment of renewable energy technology included several provisions (most notably the use of technology-specific feed-in tariff assuring priority feed-in to electricity from renewable energy sources included in a 2017 modification of the law) which spurred the growth of green jobs in the energy sector. Germanys National Strategy for Sustainable Development has been accompanied by the development of labour market programmes aimed specifically at green job growth. The government, through the German Federal Agency for the Environment (UBA) [Umweltbundesamt], reports on a bi-annual basis data on the gross employment effects of environmental protection (denominated as environmental employment). In the latest report published in March of 2020 titled Employment in environmental protection: Development and macroeconomic importance, notes the growth in environmental jobs in Germany in the past decades while noting a slow-down in the growth rate over the last several years. For instance, in 2017, the last year for which data is available, environmental jobs totalled 2.85 million and represented 6,4 % of total employment. This level has remained largely stagnant since 2012. Despite having a significant number of green jobs, employment has not been the main objective at the policy and legislative level. As such, the creation of environmental jobs has generally been an indirect consequence of Germanys sustainable growth policies, rather than a central focus. In this sense, no national targets exist in this area.

Although as a rich country Germany has implemented a social safety net system to reduce the overall poverty rate via income supports and transfers, economic inequality has been in the rise in recent years. While the national government acknowledges some links between poverty and environmental problems particularly in the area of energy poverty there are few clear examples of the governments leadership in considering interlinkages between the environment and health and economic deprivation. In terms of energy poverty, the government has implemented policies to counteract the effect of the nations relatively high energy costs that have arisen from the German Renewable Energy Acts (EEG) surcharge and electricity tax (e.g. the stimulus program due to the Corona crisis included govermantal support in order to reduce the EEG surcharge). In response to these high energy costs, that disproportionately affect lower income households, the national government has addressed energy poverty as part of comprehensive set of social policies intended to tackle poverty in general and has included energy affordability as part of the goals of the German energy transition. These policies have had success in this respect as recent surveys suggest that less than 3% of German households have trouble keeping their home adequately warns, a level well below the EU average.

The formulation of Germanys Sustainable Development Strategy featured a robust dialogue-oriented process to involve relevant stakeholders. Germany's National Sustainable Development Strategy (GSDS) emphasises that a broad societal consensus on the SDGs is a precondition for achieving them. In addition, the Strategy emphasises that a wide societal consensus on the SDGs is a necessary for achieving them. Most recently, in June 2018 members of various stakeholder groups - public, associations and civil society organisations were invited to contribute their ideas and suggestions to the process of updated the Sustainable Development Strategy GSDS. During this process, 1,500 citizens participated in dialogue conferences held in 2019 and 2020.

Since 2009 there has been an obligatory sustainability check for all new laws and regulations. The 2008 update of the National Sustainability Strategy, incorporated a requirement to conduct a systematic review of new laws with regard to sustainability aspects. To support this, the federal government established procedures for conducting these assessments in an amendment to the Joint Rules of Procedure for Federal Ministries, which already included procedures for conducting regulatory impact assessment. The Federal Ministry of the Interior has issued a toolkit that lists the Sustainability Strategy indicators that are to be assesses during the review process. However, this sustainability assessment applies only to the legislative process and is not applicable during the political decision-making process that includes drafting of strategies, programs, or budgets.

In addition, Germany follows European and international requirements with the implementation of environmental impact assessments when it comes to a decision making process concerning permits for industrial facilities and infrastructure measures and when it comes to environmental plans and programs. By doing so, the country satisfies the Aarhus Convention for modern environmental policy. Regulations for environmental impact assessments are regulated in the Act on the Assessment of Environmental Impacts (Gesetz er die Umweltvertrlichkeit - UVPG). In addition, the Act includes provisions for the Strategic environmental assessment, which complements the environmental impact assessments and is usually carried out at an earlier stage (e.g. planning stage).

Germanys current social and employment welfare system is governed by the Hartz IV reforms sponsored by the then coalition ruling party led by the Social Democratic Party (SPD) in 2003. The Hartz IV reforms remain controversial as they significantly toughened the conditions under which people could claim welfare or unemployment benefits, requiring recipients to demonstrate that they are actively looking for work or enrolled in an approved training programs. Under the new regime, the employment advisor is empowered to withhold benefits if the beneficiary refuses a job and the benefits are set at rates intended to secure a socio-cultural minimum, but are not considered overly generous. Recent calls from poverty rights activists and civil society groups to soften or humanise the system have gone unheeded by the government as the reforms are seen as a key factor in the low unemployment level enjoined by the country in recent years. However, some experimentation with innovative social safety net alternatives have emerged, albeit with government backing to date. For instance, a joint research project by German Institute for Economic Research Mein Grundeinkommen (My Basic Income), a Berlin based non-profit organization in collaboration with researchers from the University of Cologne and the Max Planck Institute for Research on Collective Goods has recently been launched the study the effects of the implementation of a universal basic income in the German context. Funded by private donors organized by Mein Grundeinkommen, the pilot project which is expected to reach 120 citizens over a three-year period is intended to study the effect of such a poverty reduction scheme on the recipients wellbeing as well as its larger economic effects. Participants will receive 1,200 each month for three years and will be compared to a control group of 1,380 people who will not receive the payments. Few linkages, however, have been drawn between this social innovation experimentation and environmental sustainability.

In 2016, the Ministry for Economic Cooperation and Development launched a plan of action for marine conservation and sustainable fisheries, that featured a budgetary allocation of over EUR 180 million and was clearly aligned with SDG 14. These recent initiatives are meant to bolster and complement the Ministry's implementation of its 10-point Plan of Action for Marine Conservation and Sustainable Fisheries.

According to the German Sustainable Development Strategy, the protection of domestic biodiversity is key to achieve SDG 15. By doing so, the German government implements the Federal Biodiversity Program since 2011. In 2020, the program's financial envelope amounts to around 45 million. Among other measures and instruments, the 2020 Forest Strategy is an importent element for achieving SDG 15. As a successor, the government is currently working on a 2050 forest strategy.

As part of a EU backed initiative, Germany has taken initial steps to incorporate non-economic or financial standards into national accounting practices based on the multiple capitals concept. For instance, a Regulation on European Environmental Economic Accounts adopted in 2011 by the European Parliament and European Council requires Member States to regularly report on air emissions accounts, environmental taxes by economic activity and economy-wide material flow accounts to the European Statistical Office (Eurostat). The current focus of this regulation is aligned with the U.N.s SEEA Central Framework (UN) is an international statistical standard for measuring the environment and its relationship with the economy. In addition, Germany is an active participant reporting aligned with The Economics of Ecosystems and Biodiversity (TEEB) framework. Germany has published a TEEB-DE framework with four main reports are based on existing analyses, strategies and case studies that highlight the importance of natural services for human wellbeing in Germany, and cover the following topics: Natural Capital and Climate Policy Synergies and Conflicts, Capturing the Value of Ecosystem Services in Rural Areas, Ecosystem Services in the City Protecting Health and Enhancing Quality of Life and Natural Capital Germany: New Policy Options A Synthesis. In addition, the German Council for Sustainable Development (RNE) emphazises that an indicator for measuring sustainable economic performance (beyond GDP) should be included into the national sustainable development strategy. The National Welfare Index could be a well-suited indicator for that purpose. However, this effort is mainly done under the auspices of these European and UN backed initiatives and the German government has currently not elevated and incorporated these efforts into a comprehensive and coherent national capitals based accounting system, nor have they used these alternative metrics to guide national policy development and monitoring.

German participates in several international initiatives to develop natural accounting measures at the country level (UN SEEA Central Framework; UE TEEB Framework) but have thus far failed to fully incorporate and integrate such measures into a comprehensive and coherent national accounting framework. As such, no independent expert body has been created and commissioned with fully developing national standards and methodology for a true natural capitals based accounting regime.

Germany has been a pioneer in the use of fiscal policy to drive environmental and sustainability goals, having implemented its first eco-tax on petrol and heating fuels in 1999. The additional public income from the eco-tax is used to contribute to the public pension scheme, contributing to lower non-wage labour costs. Since then, the eco-tax has underdone a series of increases, but has not been complemented with additional fiscal and monetary green instruments. This will change with the national emission trading scheme, where its revenues will flow into the federal government's Energy and Climate Fund, which finances a wide range of measures in the fields of climate protection, energy efficiency and renewable energies. Furtheremore, these reveneus will be used to reduce the EEG surcharge in order to lower the electricity costs for consumers. Currently, Germany lags behind its European counterparts in funds raised via environmental taxes. According to the latest data available, environmental taxes account for 4,6 % of total revenues from taxes and social contributions, significantly lower than the UE average of 6,1%. In addition, although the country has made progress with the issuance of Green bonds in 2020, it has lagged behind in this area to several peer countries, such as France and Ireland, which have more actively explored the use of green and sustainable monetary instruments to promote their long range sustainability goals.