New report: Is Germany ready for the future?

E3G´s new report “Is Germany ready for the future? The case for action in a climate-changed world.”, supported by EIT Climate-KIC, finds that Germany faces massive and potentially disruptive changes in the coming years. The report assesses the readiness of Germany’s economic, financial and political system in the face of 21st-century challenges, including climate change, digitalisation, a slowing macroeconomy and geopolitical conflicts.

Germany’s prosperity and stability over recent decades have been grounded in a policy of incremental change, committed to preserving the status quo. However, with major disruptive trends in technology, geopolitics, macroeconomics, finance and climate, this approach will no longer work. The question is not if Germany will change, but to what extent it can shape the change and reap the benefits.

In this report, E3G describes this challenge and suggest some policy actions. The following contents are discussed:

• Chapter 1 examines some of the major trends that are reshaping the global economic and political system as well as their links to the climate crisis.

• Chapter 2 takes an in-depth look at the role that the financial sector can play in responding to these challenges.

• Chapter 3 presents case studies on lessons that can be learnt from four other countries.

• Chapter 4 provides a detailed assessment of how the analysed trends are affecting Germany today and how its actions on sustainable finance compare to those of other geographies.

• Chapter 5 makes recommendations on how cross-cutting actions today can help avoid a loss of assets and significant costs of inaction for Germany and the world in the future.

Key Findings

To successfully find its place in the 21st century, Germany must again confront and acknowledge the social and economic risks that it faces and take control of its destiny through a positive, socially equitable plan that makes the necessary investments in the future. Ambitious climate policy coupled with financial policy innovation can reduce systemic economic risk and ensure competitiveness for German industry, mobilising investment for transformation to a net-zero economy. A cautious reaction of incrementally adapting to a world that is rapidly changing will only lead to more disruptive, less controllable changes in the future. Risk awareness alone will not build prosperity; a positive vision for Germany’s economy and its place in the world, combined with transformative action, is urgently required. Altogether, a set of policies and measures – summarised in “Chapter 5: Recommendations” of the report – can help to make Germany, deeply rooted in the European Union, ready for a fundamentally different future. A future that is climate-safe, digital, geopolitically balanced, and economically successful.

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About E3G, EIT Climate-KIC partner E3G is an independent climate change think tank accelerating the transition to a climate-safe world. More information on www.e3g.org.