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The Promotion of Sustainable Financing by the EU - Effects on the German Mittelstand

Orderer: Sparkasse Siegen, Volksbank Südwestfalen and IHK Siegen

Economic policy is currently adjusting the economic framework conditions to counteract climate change. At the European level, this is regulated by the so-called European Green Deal. The European Green Deal includes a bundle of measures presented by the EU Commission in 2019 and adopted by the European Parliament a year later. Its main goal is to create a competitive, climate-neutral economy in Europe by 2050.

An essential measure of the European Green Deal is the "Renewed sustainable finance strategy." This strategy aims to reorient capital flows towards a more sustainable economy. In addition to the financial economy, companies in the real economy are also affected by implementing this strategy.

In order to channel investments specifically into sustainable activities, investors first need reliable information on the sustainability of various economic activities. To create such transparency, the European Commission is pursuing three interconnected approaches. First, non-financial reporting obligations of large companies are extended to ESG (Environment, Social, Governance) criteria. Second, the European Commission established the EU Taxonomy. Third, the EU Commission obliges financial service providers to use corporate sustainability information to calculate and publish the level of sustainability of their investment portfolio.

So far, it is unclear what tangible impact the measures will have on the Mittelstand economy.

The study aims to examine the impact of European legislation on sustainable financing on the Mittelstand economy. Specifically, to analyse to what extent and, if so, how Mittelstand companies are directly or indirectly affected by the regulation. Additionally, it needs to be clarified whether the obligation of financial institutions to provide sustainability information influences the financial relationships between the Mittelstand and lenders.

Expert interviews and a company survey will be conducted in the Siegen region to analyse these effects.

Duration of the project: End of August 2022

Contact:Jonas Löher