German companies are planning significant investments to minimise climate risks

• 43 per cent of companies in Germany plan to invest ten per cent or more of their annual turnover in the "green transformation"; however, only five per cent of companies would be prepared to forego turnover or margins in order to reduce climate risks
• 15 per cent of the companies surveyed rate their impact on climate risks and consequences as high; they cite the following as the top 3 climate risks for their companies: change in demand (45 per cent), scarcity of resources (42 per cent) and damage to infrastructure (31 per cent)
• Less than half of industrial companies from the mechanical and plant engineering and automotive sectors in Germany fully consider climate risks in their own risk management system; 73 per cent see additional business potential in the development of products and services to mitigate the consequential damage of climate change and expect a potential of over 200 billion euros in the next ten years

Heatwaves, heavy rain, dry spells and storms: German companies are more willing to make investments as a result of extreme weather events in order to reduce climate risks or minimise the consequential damage caused by climate change. This is the conclusion of the study "Climate Risks and Consequential Damage of Climate Change 2023" by KPMG AG Wirtschaftsprüfungsgesellschaft, which was conducted in collaboration with the VDMA. The study, for which over 200 top decision-makers from the mechanical and plant engineering and automotive sectors were surveyed, shows that many companies in Germany are already taking climate risks into account in their strategy and have initiated measures to reduce consequential damage. According to the survey, 43 per cent of the companies surveyed would be prepared to spend ten per cent of their annual turnover on investments in the "green transformation". Large companies (54 per cent) with a turnover of more than one billion euros are particularly keen to invest heavily in green technologies. Investment priorities include the use of renewable energies, money for energy management and plant optimisation.

In contrast, companies cannot imagine foregoing turnover in order to reduce climate risks or mitigate the consequences of climate change. Only five per cent of the companies surveyed stated that they would be prepared to forgo more than ten per cent of their turnover and/or profit margin. 13 per cent would also be prepared to sell particularly climate-damaging parts of the company or business units.

Even though the willingness to invest is increasing, only 15 per cent of respondents rate the impact of their own company on climate change as high. Conversely, however, 28 per cent of participants are already feeling the effects of climate change and its risks and consequences on their own company and business model (28 per cent). For example, 45 per cent of the companies surveyed are currently adapting their product and service portfolio to meet consumers' desire for greater sustainability. 42 per cent are also feeling the effects of climate change on their raw material and energy supply in Germany, while 31 per cent have already suffered damage to their infrastructure, for example to buildings. There are also effects on the workforce: 30 per cent of companies have noticed negative effects on the health of their employees due to heatwaves, for example.

The increasing pressure on companies to act on climate change is also reflected in their risk management: almost every second company (44 per cent) actively manages climate-related opportunities and risks and sees this climate risk management as a competitive advantage. Only 10 per cent of companies stated that they only do what is necessary and only 3 per cent only fulfil the legal requirements. Even if there is still a need for optimisation, climate risk management is becoming more prevalent in medium-sized industries such as mechanical engineering.

"It is good that half of those surveyed already take climate risks into account in their risk management systems. However, regardless of whether it concerns their own sites or supply chains, climate risks must be quickly incorporated into the management systems of all companies," says Matthias Zelinger, Head of the Competence Centre Climate and Energy at the VDMA.

When it comes to managing climate risks, a paradigm shift can increasingly be observed among companies: Many of those surveyed no longer only see the necessary investments to solve current environmental problems, but also hope for new sales potential. According to the survey, 73 per cent of companies see additional business potential amounting to EUR 206 billion over the next ten years in the development of products and services to mitigate the consequential damage caused by climate change. One in four companies (25 per cent) has already tapped into new sales potential.

You can find more information about the study here:

Clemens Reisbeck

Deputy Head Corporate Communications
KPMG AG Wirtschaftsprüfungsgesellschaft

T +49 89 9282 1722
creisbeck@kpmg.com