Towards a sustainable economy - Second report on sustainability by the Federal Ministry for Economic Affairs and Energy - BMWi
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Towards a sustainable
economy
Second report on sustainability by the Federal Ministry
for Economic Affairs and Energy
bmwi.de
Imprint Publisher Federal Ministry for Economic Affairs and Energy Public Relations Division 11019 Berlin www.bmwi.de Status April 2021 This publication is available for download only. Design PRpetuum GmbH, 80801 Munich Picture credits istock: Ballun / p. 5 troyek / p. 20 Adobe Stock: Oleksii Sergieiev / p. 12 VRD / p. 27 BMWi / p. 4, 37 Central ordering service for publications of the Federal Government: Email: publikationen@bundesregierung.de Tel.: +49 30 182722721 Fax: +49 30 18102722721 This publication is issued by the Federal Ministry of Economic Affairs and Energy as part of its public relations work. The publication is distributed free of charge and is not intended for sale. It may not be used by political parties or by election campaigners or election assistants during an election campaign for the purpose of election advertising. This applies to elections to the Bundestag, the Landtag and local elections as well as to elections to European Parliament.
1
Contents
List of figures .................................................................................................................................................................................................................................................................................................................................. 2
Introduction ....................................................................................................................................................................................................................................................................................................................................... 3
Chapter 1: E
conomic policy sets a policy framework for developing
the economy in line with the sustainable development goals ........................... 5
Chapter 2: Supporting companies’ efforts to become more sustainable ....................... 12
Chapter 3: I nnovation and digitalisation are drivers for sustainable
development .......................................................................................................................................................................................................................................................... 20
Chapter 4: Mitigating climate change and delivering clean energy ................................................... 27
Chapter 5: S ustainability in the Federal Ministry for Economic Affairs
and Energy ................................................................................................................................................................................................................................................................... 37
2
List of figures
Figure 1: The Federal Funding System...........................................................................................................................................................................................................................8
Figure 2: Measures under the Structural Strengthening Act for Mining Regions..............................................9
Figure 3: Concept of the circular economy....................................................................................................................................................................................................16
Figure 4: GAIA-X to strengthen data sovereignty, data security and data protection......................23
Figure 5: Digitalisation – a pillar of sustainability..........................................................................................................................................................................24
Figure 6: Percentage share in gross electricity consumption...........................................................................................................................29
Figure 7: EEG 2021 and Offshore Wind Act: ambitious expansion targets for 2030............................30
Figure 8: D
evelopment of primary energy consumption, electricity generation,
energy efficiency and economic growth........................................................................................................................................................................32
3
Introduction
Germany and Europe are facing major challenges. Sustainable Development Strategy. The National
Protecting our climate and the environment will Sustainable Development Strategy is being imple-
require decisive action. The digital transformation mented against the backdrop of the European
is radically changing the world of business and work, Commission’s European Green Deal, which aims
and society as a whole. Demographic change is at making the European Union climate-neutral by
increasing the need to act to recruit skilled work- 2050 and sets out sector-specific initiatives for
ers, and is prompting new questions for the welfare de-carbonising the economy. The European Green
systems. In addition, the fight against the COVID-19 Deal is also a comprehensive growth strategy that
pandemic is creating huge challenges for Germany, seeks to build a competitive and resilient economy
Europe and the international community. However, by combining climate and environmental action
these challenges could also be a great opportunity with economic stimuli.
for a sustainable transformation. Sustainable action
can help prevent new crises and make our economy In order to both master the enormous challenges
and society more resilient. We need to put economic that lie ahead and meet the sustainable development
growth on a sustainable footing. There are economic, goals, innovation and investment are required. This
ecological and social aspects to this. We want people is key for adding value to the economy and for pro-
to be able to live in dignity whilst at the same time tecting our prosperity. The use of market-based
protecting our natural resources in the long term. approaches can help link up SDG 8 (Decent work
and economic growth) with the other sustainable
The United Nations’ 2030 Agenda for Sustainable development goals in a number of different areas.
Development with its 17 sustainable development A good example for this is the European emissions
goals or in short SDGs serves as a guideline for tack- trading system, which provides market-based incen-
ling these challenges. In order to implement the 2030 tives for boosting climate action (SDG 13: Climate
Agenda goals, the Federal Government decided in action). Policies focusing on the sustainable trans-
March 2021 to enhance its National Sustainable formation of the economy not only help achieve
Development Strategy. The Federal Ministry for economic, ecological and social sustainability goals,
Economic Affairs and Energy (BMWi) has actively but also modernise the economy and society.
contributed to this enhancement of the National
4 INTRODUCTION
Within the Federal Government, the Federal Min policy environment that is needed in Germany to
istry for Economic Affairs and Energy has the lead boost sustainable development across the board.
responsibility for the implementation of SDG 7 Chapter 2 shows the wide range of measures the
(Affordable and clean energy) and SDG 8 (Decent ministry is undertaking to help individual industries
work and economic growth). As will be shown in become more sustainable. In light of the particular
this report, it is also committed to pursuing the other importance of innovation and digitalisation, chap-
SDGs by making specific contributions towards ter 3 focuses on the ministry’s initiatives in this area.
their attainment. Chapter 4 then goes on to present the ministry’s
wide range of activities for transforming our energy
Each chapter of this report presents activities under- system as the basis for meeting SDG 7. Finally, chap-
taken by the Federal Ministry for Economic Affairs ter 5 explores how the ministry is adhering to the
and Energy which contributes to the implementa- principle of sustainability in its own administrative
tion of SDG 8. Chapter 1 describes the economic actions and on its premises.5 Chapter 1 Economic policy sets a policy framework for developing the economy in line with the sustainable development goals
6 C H A P T E R 1: E CO N O M I C P O L I C Y S E T S A P O L I C Y F R A M E W O R K F O R D E V E LO P I N G
T H E E CO N O M Y I N L I N E W I T H T H E S U S TA I N A B L E D E V E LO P M E N T G O A L S
Economic policy seeks to provide a framework that allows us to successfully tackle the major
societal challenges like demographic change, climate action and digitalisation whilst at the same
time safeguarding the competitiveness of Germany’s economy.
Before being exposed to the external economic shock of employment and competitive companies, it
triggered by the COVID-19 pandemic, Germany had becomes easier to make the necessary shift towards
seen a decade of uninterrupted economic growth. a climate-neutral economy as it raises acceptance
Between 2010 and 2019, gross domestic product among the population and companies and creates
(in price-adjusted terms) had increased by 1.9% on the necessary technical and financial capacities.
average each year. This positive development was In simple terms, economic growth is the result of
also reflected by some of the other indicators used innovation and investment. It reflects economic
in the National Sustainable Development Strategy activity and efforts to improve, enhance and enable
for measuring progress towards achieving SDG 8 new business models, processes and products. With-
such as the level of public debt. In the same time out innovation and technological progress, we will
period, Germany reduced its level of debt from not be able to master the challenges that lie ahead.
82.4% to 59.8%, complying with the Maastricht debt This is particularly true when it comes to making
rule – which serves as the target for this indicator – our economy and society more environmentally
for the first time since 2002. friendly.
However, economic policy is not just looking at
Economic growth – the basis for sustain- increases in gross domestic product and other indi-
able development cators related to SDG 8 such as net borrowing, the
level of government debt and the employment ratio.
In order to ensure a development that is economi- The concept of ‘welfare’ has also many more aspects
cally and ecologically viable in the long term, the to it – including social and ecological developments –
Economic Affairs Ministry advocates a sustainable that play a key role for economic policy decision-
economic policy. Economic growth is making a key making. This is why the Economic Affairs Ministry
contribution to a society’s prosperity and people’s advocates supplementing the traditional analysis
quality of life. It is an important basis for rising of GDP development in the national economic
incomes, new and secure jobs and an effective wel- reports such as the Annual Economic Report by
fare state, and gives the public sector more room to additional aspects.
act. If economic growth coincides with high levelsC H A P T E R 1: E CO N O M I C P O L I C Y S E T S A P O L I C Y F R A M E W O R K F O R D E V E LO P I N G 7
T H E E CO N O M Y I N L I N E W I T H T H E S U S TA I N A B L E D E V E LO P M E N T G O A L S
Putting public procurement on a sustain- offices in cases where products and services that
able footing are particularly relevant for the climate are being
procured.
The public sector buys large amounts of products
and services, making it an important market partici Since October 2020, the new nationwide procure-
pant that also serves as a role model for private- ment statistics have recorded data on whether pro-
sector players. The Economic Affairs Ministry there- curement offices are actually making use of the
fore advocates designing procurement policy in a newly created room for taking sustainability crite-
way that ensures that the aspect of sustainability is ria into account.
taken into account in the public sector’s procure-
ment activities. In March 2020, the Federal Govern- In order to provide public-sector clients with the
ment adopted the revised version of the General information they need about potential legal grounds
Administrative Regulation on the Procurement of for excluding a bidder from a procurement proce-
Energy-Efficient Services that had been presented dure – such as economic crime or other serious
by the Economic Affairs Ministry. With this revision criminal offences – the Competition Register is
of the Administrative Regulation, the Federal Gov- currently being established at the Bundeskartellamt
ernment is ensuring a high level of energy efficiency and is to be launched during the course of 2021.
in the Federal Government’s procurement processes. The establishment of the Competition Register thus
Procurement officers are required to always buy the has a direct impact on achieving SDG 16.3 on cor-
goods and products that have the highest energy ruption prevention.
efficiency class available on the label within the
meaning of the EU’s regulation on energy labelling.
Alternatively, in cases where there are (currently) Fostering regional development
no products on the market that provide this high a
level of energy efficiency, the product with the The Economic Affairs Ministry is making use of its
highest achievable level of energy efficiency is to regional policy instruments to support regions that
be bought. This rule applies irrespective of whether are structurally weak and work towards a conver-
a contract is awarded as part of a purely national or gence of living standards across Germany. By pro-
European tender procedure. moting private-sector investment and business-
related infrastructure, the disadvantages of these
Picking up on another requirement from the Climate regions are to be offset and regional differences in
Action Programme 2030, the Federal Government economic development thus reduced. This is an
is planning to devise – before the federal election important contribution to implementing SDGs 8
in September 2021 – an administrative regulation and 11 and in particular SDG 10. On 1 January 2020,
that will make climate-friendly procurement a the Federal Funding System for Structural Devel-
requirement for Federal Government procurement opment Regions was launched, reorganising and8 C H A P T E R 1: E CO N O M I C P O L I C Y S E T S A P O L I C Y F R A M E W O R K F O R D E V E LO P I N G
T H E E CO N O M Y I N L I N E W I T H T H E S U S TA I N A B L E D E V E LO P M E N T G O A L S
Figure 1: The Federal Funding System
Common definition Joint coordination
of structurally weak regions and reporting
(regional indicator model)
Federal Funding System for
Structural Development Regions:
Includes more than 20 funding programmes
Newly developed programmes Existing funding programmes
Regional scope has been extended to include all structurally weak regions
Funding preferences for structurally weak regions
Source: Federal Ministry for Economic Affairs and Energy
pooling regional assistance schemes to create a assistance until 2038 for significant investments
unified system. Funding programmes formerly aimed at promoting structural change. In addition,
restricted to eastern Germany have been extended up to €26 billion has been earmarked for further
to cover all structurally weak regions, no matter measures within the remit of the Federal Govern-
whether these are located in the eastern or western ment, including top-ups for research and funding
part of the country. Also, funding measures that are programmes, the expansion of transport infra-
available nation-wide are being equipped with spe- structure projects, and the establishment of federal
cial terms which offer targeted support for regional institutions in the areas affected. Additionally,
economic development (cf. Figure 1). some selected hard-coal-mining regions and the
former mining region of Helmstedt will receive up
Phasing out coal-fired power is one of the greatest to €1.09 billion. The Free State of Thuringia will
economic and societal challenges for the decades receive up to €90 million from the funds allocated
to come. The Federal Government’s Structural to the mining area of Central Germany (Mittel
Strengthening Act for Mining Regions is opening deutsches Revier) to provide assistance to its Alten-
up long-term prospects for coal-mining regions burger Land district. A joint coordination body of
that are affected by structural change, focusing on the Federation and the Länder will ensure that the
a sustainable development that combines ecologi- funding for the lignite-mining areas is disbursed.
cal, economic and social aspects. Lignite-mining Figure 2 provides an overview of the measures
areas will receive up to €14 billion in financial described.C H A P T E R 1: E CO N O M I C P O L I C Y S E T S A P O L I C Y F R A M E W O R K F O R D E V E LO P I N G 9
T H E E CO N O M Y I N L I N E W I T H T H E S U S TA I N A B L E D E V E LO P M E N T G O A L S
Figure 2: Measures under the Structural Strengthening Act for Mining Regions
Up to €1 billion for hard coal
Pillar 1: Pillar 2: mining sites that have been
Financial assistance Federal Government measures particularly hard hit, up to €90
million for the former mining
region of Helmstedt, and up to
Financial assistance (pursuant Measures undertaken by the €90 million for the Altenburger
to Art. 104b German Basic Law) Federal Government as part of Land1 district.
+
of up to €14 billion for the period new programmes and projects
up until 2038 for particularly and top-ups of existing pro-
important investments in the grammes of up to €26 billion Federal-Länder coordinating
Länder and municipalities. up until 2038. body
Decisions on projects will be Decisions on projects will be
made by the Länder. made by the relevant Ministries. Measures to expedite
planning
Examples: Expansion of an Example: Federal institutions,
industrial park, environmental Federal Government program- Linked to phase-out of coal-
rehabilitation mes and infrastructure fired electricity generation
1 From funds allocated to the mining area of Mitteldeutsches Revier in accordance with Art. 3(1) No.3 of the Investment Act for Mining Regions (InvKG).
Source: Federal Ministry for Economic Affairs and Energy
The regional and structural policy measures Fostering SME development, cutting red
undertaken by the Economic Affairs Ministry also tape and closing the skills gap
strengthen the ‘Leave no one behind’ (LNOB) prin-
ciple set out in the 2030 Agenda for Sustainable One of the key characteristics of the German econ-
Development. This principle describes the respon- omy is the importance of SMEs: more than 99% of
sibility of society to include everyone as it moves all German companies are small and medium-sized
towards sustainable development. LNOB aims to enterprises. These companies account for more than
enable social, economic and political inclusion half of our economic output and almost 60% of
and to provide equal opportunities to all people. jobs. Approx. 82% of apprentices in Germany do
their vocational training in an SME. SMEs’ business
practices are marked by continuity and long-term
planning. This means that they are highly respon-
sible in their dealings with staff, customers and
business partners. It also means that these firms
are deeply rooted in their region. German SMEs
also perform well on innovation. All of this means10 C H A P T E R 1: E CO N O M I C P O L I C Y S E T S A P O L I C Y F R A M E W O R K F O R D E V E LO P I N G
T H E E CO N O M Y I N L I N E W I T H T H E S U S TA I N A B L E D E V E LO P M E N T G O A L S
that SMEs are contributing in many ways towards As demographic change and digitalisation progress,
achieving SDGs 8, 9, 11 and 12. The Economic Affairs securing a sufficient supply of skilled labour will
Ministry wants Germany’s SMEs to embrace new be one of the most important challenges that the
challenges and remain vibrant, strong, and innova- German economy and all stakeholders from the
tive. This is why the ministry is working on many political, business and scientific arena will be fac-
levels to strengthen SMEs’ competitiveness, their ing in the decades to come. Closing the skills gap
capacity to innovate, and their ability to create jobs. is an issue that is relevant for SDGs 8 and 9 and for
This helps make further progress on implementing SDGs 4, 1, 2 and 10. The skills gap faced by many
SDGs 8 and 9. industries and regions is a barrier to growth. The
impact of the COVID-19 pandemic will not funda-
In order to relieve pressure on the economy, the mentally change this situation in the medium to
Economic Affairs Ministry advocates cutting red long term. Even though the demand for labour has
tape for both individuals and companies. The third dropped in many business sectors, it seems that the
Bureaucracy Reduction Act (BEG III) is relieving crisis is not considerably affecting occupations
companies of a financial burden of more than where there is a skills gap (such as occupations in
€1.1 billion per year. The Act makes use of the the construction, software and IT services sectors).
opportunities of digitalisation to cut out much of In order to ensure that companies will continue to
the paperwork in many areas. Key elements include be able to make full use of their potential, the Fed-
the introduction of the electronic incapacity for eral Government is intensifying its focus on train-
work notification, improved rules for the retention ing and skills development programmes for skilled
of tax-related data processing systems, and digital professionals in Germany as well as measures to
alternatives to paper-based registration forms in improve the compatibility of work and family life.
hotels. Also, people starting out in business will The Centre of excellence for securing the supply of
only need to submit their advance VAT return once skilled labour (KOFA), which is receiving funding
a quarter – rather than once a month. The major from the Economic Affairs Ministry, serves as the
part of the Act entered into force in January 2020, contact point for all questions surrounding the
with a number of individual provisions becoming recruitment, retention and training of employees,
effective in the period up until January 2022. particularly for SMEs, which are facing specialC H A P T E R 1: E CO N O M I C P O L I C Y S E T S A P O L I C Y F R A M E W O R K F O R D E V E LO P I N G 11
T H E E CO N O M Y I N L I N E W I T H T H E S U S TA I N A B L E D E V E LO P M E N T G O A L S
challenges in this area. Another key pillar of the Developing a sustainability reporting
Federal Government’s efforts to secure a sufficient framework for businesses that is practi-
supply of skilled labour is the recruitment of addi- cally feasible
tional labour from across the European Union. In
addition, measures aimed at attracting labour from Corporate sustainability reporting is an important
third countries are to be stepped up. Important ini- lever for fostering sustainable development. Sus-
tiatives here include the Make it in Germany web tainability reports – which supplement the manda-
portal – a central contact point and source of infor- tory financial reports – disclose information to
mation for skilled professionals and companies – business partners, investors and the public about a
the advisory services provided by the Central Advi- company’s activities and their economic, social and
sory Service for the Recognition of Professional ecological impact on the environment and society,
Qualifications for skilled professionals from abroad and about the impact of external changes such as
who are interested in working in Germany, and climate change on a company’s activities and its
pilot projects aimed at proactively recruiting business model. Sustainability reports are often
skilled professionals from third countries. compiled as separate reports and elaborate on the
non-financial information provided in the man-
agement report. Some companies are required by
law to prepare a sustainability report, for example
to comply with their obligations under the Act to
Strengthen Companies’ Non-Financial Reporting
in their Management or Group Management Report
(CSR Directive Implementation Act), whilst others
choose to submit a report voluntarily.12
Chapter 2
Supporting companies’ efforts to
become more sustainableC H A P T E R 2: S U P P O RT I N G CO M PA N I E S ’ E F F O RT S TO B E CO M E M O R E S U S TA I N A B L E 13
Providing funding for initiatives by indi- This will require developing innovative vehicles,
vidual sectors that promote sustainable drive systems and components and ensuring that
economic activity electric vehicles are integrated in the electricity
grids and the transport networks. The German
The German industrial sector has served for dec- industrial sector needs to maintain its technologi-
ades as the basis for economic growth and secure cal leadership also in the field of electric mobility,
jobs. Its strong research activities are spurring the and to successfully sell its electric vehicles and the
development of innovative and high-quality prod- systems, components and services associated with
ucts that are sought after globally. The industrial them on the German and international markets.
sector is thus making an important contribution to The expansion of the charging infrastructure creates
achieving SDGs 8, 9 and 12. Given its fundamental the preconditions for successful electric mobility.
importance for the German economy, the industrial Under the Electric Mobility Infrastructure in Build-
sector also has a special responsibility to address ings Act (GEIG), buildings are to be equipped with
global challenges such as climate change (SDG 13). ducting and charging infrastructure for electric
The Economic Affairs Ministry is supporting the mobility. The Act will make a contribution to pro-
industrial sector as it adapts to these challenges. moting the use of electric vehicles. Targeted fleet
The Steel Action Concept is a good example here. replacement programmes and premiums for elec-
Its aim is to ensure strong, internationally com tric vehicles are facilitating the shift to lower-emis-
petitive and climate-neutral steel production in sion vehicles. Targeted incentives for investment in
Germany in the long term. Transforming the pro- new technologies are also being set by the additional
duction processes in the steel industry is an impor- funding made available for research and innovation
tant step towards making the industrial sector cli- in the field of battery cell manufacturing, the sup-
mate neutral and a structural policy opportunity plier industry for vehicles, shipping and aviation.
to safeguard Germany as a steel production hub in These measures accelerate progress towards SDG 13,
the long term. This is why the Federal Government as well as SDGs 9 and 11.
is providing support to the German steel industry
for implementing projects that promote low-carbon, The Federal Government Coordinator for the Mari-
carbon-neutral and zero-carbon steel production. time Industry – a position that has been based at the
Economic Affairs Ministry since 2000 – is advocat-
Climate action entails a shift to low-emission mobil- ing a more sustainable shipping sector, for example
ity. The automotive industry is facing a massive by providing targeted funding for the introduction
change which will require it to be innovative. Ger- of climate-friendly fuels and propulsion systems for
many wants to become not only a lead market for ships. In order to mitigate climate change and meet
but also a leading provider of electric mobility. the emission reduction targets set by the International14 C H A P T E R 2: S U P P O RT I N G CO M PA N I E S ’ E F F O RT S TO B E CO M E M O R E S U S TA I N A B L E
Maritime Organisation (IMO), new innovative Another important sector of the German economy –
engines that can run on less carbon-intensive or not least in terms of the number of jobs and train-
zero-carbon fuels need to be developed. The Coor- ing places it provides and its contribution to rural
dinator for the Maritime Industry is seeking to speed development – is tourism. The global and German
up the technological development in Germany and tourism industries have suffered severe losses as a
to provide funding for this. Under the Maritime result of the COVID-19 pandemic. The Economic
Research Programme, €54 million is being made Affairs Ministry will continue to closely follow
available in 2021 for research and development developments in this sector and provide support.
projects and €30 million for the Innovative Ship- The tourism industry can have a positive effect on
building Safeguards Competitive Jobs funding pro- the development of other economic sectors such as
gramme. The Maritime Agenda 2025 calls for the hospitality, retail and all local supply structures.
development of international environmental stand- Development of the tourism industry thus not
ards that will help to prevent distortions of compe- only accelerates progress towards SDG 8 but also
tition within the industry. These measures help SDGs 10 and 11. The development of the local
accelerate progress towards SDGs 13 and 9 and also tourism industries falls within the responsibility of
contribute to the achievement of SDG 14. the Länder. However, to account for the national
importance of a large number of tourism-related
The Economic Affairs Ministry and in particular aspects, Germany created the office of the Federal
the Federal Government Coordinator of German Government Commissioner for Tourism at the end
Aerospace Policy based there are providing support of 2005 – a role which is based at the Economic
for the aviation industry – which has been hard Affairs Ministry. In order to ensure the success of
hit by the COVID-19 pandemic – to shift to more the German tourism industry in the long term, key
climate-friendly technologies. One of the most im points for a national tourism strategy were adopted
portant programmes here is the Federal Govern- in 2019. The strategy has three goals: Firstly, domes-
ment’s German Aviation Research Programme tic value added is to be increased, thus fostering
(LuFo VI). One of its funding priorities is climate- economic growth. Secondly, the quality of life of
friendly technologies, for example in the area of the people living in Germany is to be improved on
hybrid-electric flight. Key enabling technologies a lasting basis. Thirdly, tourism is to make a contri-
here are hybrid propulsion systems based on hydro- bution to economic and social stability around the
gen in combination with fuel cells and battery sys- world.
tems. These measures, too, help accelerate progress
in particular towards SDG 13, but also SDG 9.C H A P T E R 2: S U P P O RT I N G CO M PA N I E S ’ E F F O RT S TO B E CO M E M O R E S U S TA I N A B L E 15 The development of retail trade is a key element in Making efficient use of resources and the sustainable development of cities and munici- boosting the circular economy palities. Even before the start of the COVID-19 pandemic, demographic change, changed con- The State Secretaries’ committee on sustainable sumer behaviour, technological innovation, and development in its decision of 26 October 2020 digitalisation had caused structural change in retail asked the Economic Affairs Ministry to identify trade. This change has been accelerated by the fundamental economic policy issues where action COVID-19 pandemic. In order to flag up new pros- could be taken to move towards a circular economy pects in this structural change, the Economic by taking into account the large number of existing Affairs Ministry has developed the Retail Dialogue projects and strategies, including standards, and by Platform and, in October 2020, set up the Round working with the other ministries and the business Table on Reviving City Centres – a process that seeks and professional associations. The circular economy to prevent city centres becoming ghost towns and is about establishing and closing materials cycles counteract supply deficits in rural areas. The work- within the limits of technical and economic feasi- shops organised by the Economic Affairs Ministry bility, thus minimising the use of non-renewable are encouraging the development of creative solu- resources and the level of waste and harmful emis- tions, dialogue on best practices and the linking sions. In a broader sense, the concept of the circu- up of different stakeholders from city centres. The lar economy covers not only technical aspects, but digital transformation is posing particular chal- also economic issues such as business models lenges for small and medium-sized retail shop (sharing economy/platform economy), (intellectual) operators. This is why the ‘Mittelstand 4.0 Centre of property, the data economy, regional economic Excellence for Retail’ was launched in July 2019. structures and public procurement. Figure 3 visual- Here, interested entrepreneurs can receive free-of- ises the concept of the circular economy. The Eco- charge support on digitalisation in the form of nomic Affairs Ministry is currently working towards online courses, workshops, business consultations implementing the decision adopted by the State and podcasts. This accelerates progress towards Secretaries’ committee’s decision. SDGs 8, 10, 11 and 12.
16 C H A P T E R 2 : S U P P O RT I N G CO M PA N I E S ’ E F F O RT S TO B E CO M E M O R E S U S TA I N A B L E
Figure 3: Concept of the circular economy
Source: Weber, T./Stuchtey, M. (Eds.): Deutschland auf dem Weg zur Circular Economy – Erkenntnisse aus europäischen Strategien (Vorstudie), München 2019
(Germany on its way to a circular economy – conclusions drawn from European strategies (preliminary study), Munich 2019)
Lightweighting is a key enabling technology and Forum. The Economic Affairs Ministry’s measures
a design philosophy that aims at reducing a prod- on lightweighting are a further contribution
uct’s weight whilst at the same time improving its towards achieving SDG 12.
properties. It thus promotes resource efficiency.
The Economic Affairs Ministry is helping compa- The Economic Affairs Ministry’s Industrial Bioeco-
nies implement lightweighting solutions by foster- nomy Funding Programme supports the transfer of
ing an efficient transfer of knowledge across differ- bioeconomic products and procedures from the lab
ent technologies between industry stakeholders. to industrial practice. The industrial bioeconomy
The Lightweighting Initiative, with the various fora is a game changing technology and can boost the
and networking opportunities it provides, serves as development towards a closed and climate-friendly
a central contact point for German businesses. This circular economy. It allows for the development of
initiative is being supplemented by additional tar- completely new products and manufacturing pro-
geted funding measures and the Lightweighting cedures that are based on the sustainable use of
resources, the replacement of fossil resources with
biological ones and the use of waste. This initiative
primarily helps achieve SDGs 12 and 13.
Raw materials are an essential basis for the gener-
ation of industrial output in both Germany andC H A P T E R 2: S U P P O RT I N G CO M PA N I E S ’ E F F O RT S TO B E CO M E M O R E S U S TA I N A B L E 17
Europe. For Germany as a technology hub, a secure German position and representing it at European
supply of raw materials is key. This also entails the and international level. The European Commis-
responsibility to work towards a sustainable and sion’s new trade strategy, which was published in
socially acceptable extraction and a sparing use of February 2021, seeks to support the European
raw materials. In January 2020, the Federal Govern- Union’s economic recovery from the COVID-19
ment adopted its Raw Materials Strategy. One of pandemic. It focuses both on the modernisation of
the Strategy’s aims is to help companies achieve a the World Trade Organisation (WTO) and on
secure and sustainable supply of raw materials. strengthening the bilateral trade agenda, and also
This accelerates progress towards a number of SDGs looks at environmental and digital issues. The Eco-
(particularly SDG 12, but also SDGs 1, 3, 14, and 15). nomic Affairs Ministry strongly supports this within
its field of competence, thus making a contribution
to the achievement of a number of SDGs at inter-
Assuming responsibility for sustainable national level.
development in international trade
relations Companies operating at an international level also
carry a responsibility for complying with sustain
For many years, Germany has been one of the glob- ability and human rights standards. This is also set
ally leading nations in the international trade of out in the United Nations Guiding Principles on
goods and services. Germany accounts for more Business and Human Rights. Taking this into account,
than seven percent of global trade. Large parts of the Federal Government adopted the National
the German economy are dependent on exports, Action Plan for Business and Human Rights (NAP)
which also highlights the importance of interna- in 2016, which clearly states that companies are
tional trade for employment. One in four jobs in expected to comply with their human rights obli-
Germany depends directly or indirectly on exports. gations including along their global value chains.
The Economic Affairs Ministry therefore advocates The Economic Affairs Ministry is actively involved
open markets that are guided by clear rules. In the in the national and European law-making activities
area of trade policy – a matter that falls within the undertaken in this area, advocating the establish-
competence of the European Union – the ministry ment of clear and practicable rules that will foster
has the lead responsibility for developing the a joint global understanding of corporate social
responsibility on human rights, create legal certainty
for companies, empower the persons affected, and
deliver a level playing field. By doing so, the Economic
Affairs Ministry is contributing to the achievement
of SDGs 8 and 17.18 C H A P T E R 2: S U P P O RT I N G CO M PA N I E S ’ E F F O RT S TO B E CO M E M O R E S U S TA I N A B L E The Federal Government supports German compa- For example, the German Environmental Technolo- nies’ activities in foreign markets. The Economic gies Export Initiative supports manufacturers and Affairs Ministry has a wide range of different instru- service providers in the fields of sustainable water ments for this. The German chambers of commerce management, recycling, sustainable mobility, clean abroad, which are receiving funding from the min- air, and noise control in their efforts to break into istry, have a great level of expertise and are well markets abroad, particularly those of emerging econ- connected in the countries where they are based. omies and developing countries. In light of tighten- They therefore serve as the first point of contact ing regulations on healthcare systems around the for companies interested in developing and explor- world, the Healthcare Export Initiative allows small ing the potential of markets abroad. This holds par- and medium-sized enterprises to master foreign ticularly true for fast-growing and new sustainabil- market mechanisms and place their goods and ser- ity markets. The chambers build networks with key vices onto markets abroad. It thus promotes a sus- stakeholders from government, the authorities and tainable modernisation and expansion of healthcare the business sector and link these up with the right systems around the world. The Economic Affairs German experts. This leads to the establishment of Ministry’s Energy Export Initiative helps German flagship projects and robust cooperation projects providers of climate-friendly energy solutions enter which supplement and reinforce the Federal Gov- new markets abroad. When approving this initiative, ernment’s funding activities. The Economic Affairs the Bundestag stated that a key objective for this Ministry’s Market Entry Programme (MEP) and its initiative was to combat climate change by export- Export Initiatives support small and medium- ing climate-friendly energy technology ‘made in sized companies as they venture onto new markets, Germany’ and related services to countries across develop existing ones, and build a sustainable pres- the world. The Africa Business Network is facilitat- ence and networks. The Export Initiatives are also ing the export of innovative sustainable technolo- designed to transfer sustainable innovations to gies to Africa, for example under its healthcare new markets and target regions. This helps create industry projects in North Africa, its food process- new jobs both in Germany and abroad. The Eco- ing projects in West Africa, and through its water nomic Affairs Ministry’s measures in this area sup- sector expert who is based at the German-Arab port achievement of SDGs 3, 6, 7, and 13, and, indi- Chamber of Industry and Commerce in Cairo. rectly also other SDGs such as SDGs 1, 8, and 9.
C H A P T E R 2: S U P P O RT I N G CO M PA N I E S ’ E F F O RT S TO B E CO M E M O R E S U S TA I N A B L E 19 The Federal Government is helping companies finance their export projects by providing them with export credit guarantees (better known as Hermes guarantees). The aspect of sustainability has long played an important role in the govern- ment’s assessment of whether an export project is eligible for funding. The focus here in on SDGs 8 and 9; however, SDGs 7 and 10 are also important. The environmental, social and human rights stan dards ensure that this is not at the expense of other SDGs. At the time this report is being conducted, considerable work is being undertaken to adapt the Hermes instrument to Germany’s climate policy targets (SDG 13). It is important to note that the instrument is self-sustaining and therefore finan- cially sustainable.
20
Chapter 3
Innovation and digitalisation are
drivers for sustainable developmentC H A P T E R 3: I N N O VAT I O N A N D D I G I TA L I S AT I O N A R E D R I V E R S F O R S U S TA I N A B L E D E V E LO P M E N T 21
Back in November 2019, the State Secretaries’ com- in the computing and storage capacities needed and
mittee on sustainable development highlighted the will thus require the further expansion of comput-
importance of consistently taking into account ing centre infrastructure. In order to ensure that as
sustainability aspects in the innovation process digitalisation picks up speed, achievement of the
right from the start, particularly in the context of climate targets is not undermined, our digital infra-
digitalisation. This is to ensure that opportunities structure needs to become highly energy-efficient.
for sustainable development are being used and The Economic Affairs Ministry is seeking to set up
risks for communities and the environment avoided. a voluntary register for computing centres by coor-
Additionally, it is to strengthen companies’ capacity dinating closely with the industry. Its aim is to make
to innovate and contribute to a more widespread available data on the energy use and energy effi-
use of innovations. Digitalisation offers major oppor- ciency of large computing centres in Germany, and
tunities for sustainable development. The use of if possible across Europe, and thus create competi-
digital technology can bring about change that will tion for the highest level of efficiency among the
help meet the goals set out under the National Sus- operators.
tainable Development Strategy. Digital technologies
are a requirement for making the energy transition The Economic Affairs Ministry believes that well-
and the transport transition possible. They are a functioning competition is key for a positive devel-
prerequisite for low-energy and resource-efficient opment of the economy and therefore for the
production processes, help us optimise the circular implementation of SDG 8. The rising level of digi-
economy, improve the level of security, and enable talisation is leading to a shift in economic power,
elderly people to lead self-determined lives in their creating new challenges for competition policy.
own homes. However, the impact of new technolo- Large digital and platform businesses benefit from
gies can sometimes be ambivalent, leading to eco- network effects and economies of scale and can
nomic, social and ecological consequences that are thus gain considerable market power and extend it
in conflict with the sustainable development goals. across market boundaries. As a result, digital mar-
kets often have a tendency towards monopolisa-
In 2020, the Digital Summit and its large network tion. In order to ensure effective competition and
discussed how digitalisation could become a driv- free access to digital markets, the Economic Affairs
ing force for sustainable development. The Digital Ministry prepared the ARC (Act against Restraints
Summit raised awareness for the full range of oppor- of Competition) Digitisation Act, which entered
tunities opened up by digitalisation and organised into force at the beginning of 2021. It provides for a
events, exhibitions and showcases to inspire partici- well-targeted, pro-active and digital competition
pants to emulate its approaches. It also discussed law. Markets, including digital markets, need to
the use of energy and resources of the digital systems continue to be contestable. Competition rules need
themselves, which is related to a considerable rise to be effectively enforced. Amongst other things,
the ARC Digitisation Act provides for stricter rules
for platforms of overarching cross-market signifi-
cance and improved data access for competitors.
Ensuring that markets remain open and contesta-
ble and improving data access will also drive for-
ward the development of innovations in this area,
which in turn will help achieve SDG 9.22 C H A P T E R 3: I N N O VAT I O N A N D D I G I TA L I S AT I O N A R E D R I V E R S F O R S U S TA I N A B L E D E V E LO P M E N T
As our economy and society become increasingly The industrial sector is making ever stronger use of
interconnected, digital security is becoming ever digital technologies to enhance products and pro-
more important. As part of the GAIA-X project, the duction services. Industrie 4.0 combines produc-
Economic Affairs Ministry is working towards the tion methods with state-of-the-art information
establishment of an open, secure and interconnected and communications technology. This helps adapt
European data and infrastructure ecosystem that products to customers’ individual needs. Customi-
meets the highest standards of data privacy and sation reduces overproduction and the mismatch
control over one’s personal data (cf. Figure 4). The between supply and demand, thus lowering resource
aim is to become more digitally sovereign while consumption overall (SDG 12). Smart, digitally con-
fostering innovation. The project seeks to build a nected systems and production processes serve as
reliable infrastructure, boost new business models the technical basis for this. The Economic Affairs
across Europe and thus secure economic output Ministry is helping businesses harness the poten-
and safeguard jobs in Germany and Europe (SDGs 8 tial of technological development. The launch of
and 9). In order to take part in GAIA-X, providers Plattform Industrie 4.0 marked the development of
need to demonstrate that they meet a number of one of the world’s largest Industrie 4.0 networks
criteria not least in terms of compliance, informa- which brings together representatives from busi-
tion security, data privacy and energy efficiency. nesses, professional associations, academia, the
GAIA-X will also help the industry implement sus- unions and politics to develop solutions and rec-
tainability strategies more quickly. Transparency ommendations for action on a wide range of dif-
on energy standards makes it possible for GAIA-X ferent issues. The input paper presented by the
services to be accredited in terms of the energy Platform at the Digital Summit of December 2020
efficiency of computing centres. An integral part of sets out specific use cases for the future of digital,
the GAIA-X philosophy is the inclusion of sustaina- connected and sustainable production (more than
bility and efficiency criteria in the self-descriptions 60 examples of companies). Sustainability is one of
that participating providers are required to submit. Plattform Industrie 4.0’s guiding principles for
Via a catalogue, this enables GAIA-X users to make 2030 and will be increasingly focused on in 2021 in
an informed decision on whether a GAIA-X provider the context of specific use cases. The Economic
meets the minimum requirements for sustainable Affairs Ministry is seeking to expand the work already
digital services, and the users can also filter for other undertaken on the issues of digitalisation and sus-
criteria to which they attach importance. As GAIA-X tainability as part of its bilateral cooperation on
is a European initiative that will pool services and Industrie 4.0 with China.
computing centres from across Europe and beyond,
rules which apply to the entire system could help Digital technology is also becoming an ever more
to bring about harmonisation. In this way, the sus- important factor in the economic success of the
tainability criteria will apply across the whole of German Mittelstand. It helps these SMEs to develop
Europe and even beyond. new business models and raise their efficiency, thus
allowing them to continue to compete or compete
more successfully with large companies. Digitalisa-
tion can contribute to sustainable development in
economic, social and ecological terms (cf. Figure 5).C H A P T E R 3: I N N O VAT I O N A N D D I G I TA L I S AT I O N A R E D R I V E R S F O R S U S TA I N A B L E D E V E LO P M E N T 23
Figure 4: GAIA-X to strengthen data sovereignty, data security and data protection
Se
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GAIA-X
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• Interoperability and
lit
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• Participation terms
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• Necessary central services
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Source: Federal Ministry for Economic Affairs and Energy
The Economic Affairs Ministry has a wide range of gramme, SMEs can receive support at one of the
funding and support measures for SMEs seeking to 26 Mittelstand 4.0 Centres of Excellence which are
digitalise their business. It is also providing informa- spread out across Germany. This support includes
tion and advisory services, not least for start-ups access to expert knowledge, demonstration centres,
and young businesses. Enquiries about the ministry’s best practice examples, information services and
funding toolbox are being answered on a case-by- training courses. One example here is the interac-
case basis by the Ministry’s funding and financing tive guideline helping SMEs assess their businesses’
advisory service, taking into account the enquirer’s ecological and social challenges. This guideline is an
specific needs. The grants provided under the opportunity for SMEs to systematically prioritise
“Digital Now – Investment Funding for SMEs” pro- actions that will improve their businesses’ ecologi-
gramme are to encourage SMEs to invest more in cal and social sustainability and to develop effective
digital technology and also in the training and skills follow-up actions. In addition to this, there are also
development of their employees. Under the Eco- AI coaches who inform companies about artificial
nomic Affairs Ministry’s Mittelstand Digital pro- intelligence (AI), help them implement projects and24 C H A P T E R 3: I N N O VAT I O N A N D D I G I TA L I S AT I O N A R E D R I V E R S F O R S U S TA I N A B L E D E V E LO P M E N T
Figure 5: Digitalisation – a pillar of sustainability
• Sustainable knowledge management
• Increasing energy and resource
• New work
efficiency • Corporate digital responsibility
• Sustainable,
models
digital business
Economic Social
• Digital data in sustainability
management
• Sustainable value chain
Ecological
• Sustainable product life cycle
• Optimisation of ecological footprint
Source: Accompanying research group for Mittelstand Digital
develop support offers. The launch of the Germany- to the individual security needs of SMEs, their
wide network of ‘Mittelstand Digital’ centres will employees and decision-makers, and make them
further expand the range of digital support offers available at the national level.
for small and medium-sized enterprises on issues
such as resource efficiency, the circular economy, go-digital is another funding programme by the
resilience, change management and skills devel- Economic Affairs Ministry that helps SMEs digital-
opment/life-long learning with a view to further ise their business. Its three modules, namely IT
strengthening companies’ viability. The ‘IT security security, digital market development and digital-
in Commerce’ funding initiative is making SMEs ised business processes, are aimed specifically at
more aware of the issue of IT security and, via a wide small and medium-sized companies in the com-
range of different measures, is helping them adopt mercial and skilled crafts sectors. The programme
an adequate and sustainable level of IT security. promotes practical advisory services for companies
The mission of the IT security transfer office is to wishing to keep pace with technological and social
pool existing IT security support offers, adapt these developments in the areas of online sales, digitali-
sation of day-to-day business and IT security. The
Economic Affairs Ministry’s measures in this area
are a further contribution towards achieving
SDGs 8 and 9.C H A P T E R 3: I N N O VAT I O N A N D D I G I TA L I S AT I O N A R E D R I V E R S F O R S U S TA I N A B L E D E V E LO P M E N T 25
Digital technologies and data-driven efficiency tunity to further strengthen the PlanQK community
gains are key for meeting the sustainable develop- with the aim of establishing a commercial QC plat-
ment goals. The Economic Affairs Ministry’s fund- form. The aforementioned measures are mainly
ing for excellence in the area of digital technology contributing to the achievement of SDG 9. Use of
encourages the commercial exploitation of scien- the new technologies will also promote progress
tific results and findings. By launching the AI inno- towards other SDGs.
vation competition, the ministry has taken on a
leading role in the implementation of the Federal Microelectronics is a key cross-sectoral industry
Government’s AI Strategy. The programme targets for digitalisation. High-performance chips and
large-scale powerful alliances between the business microelectronics components are an essential part
sector and academia which are able to influence of our modern lives. The Economic Affairs Ministry
entire industries. The envisaged solutions are to is therefore making available up to €1 billion for
provide important impetus for building new, inno- the development of new microelectronics prod-
vative, digital ecosystems in areas of application ucts. Under the Important Project of Common
and industries that are relevant for the German European Interest (IPCEI) on Microelectronics,
economy. The subjects covered range from indus- Germany, France, Italy and the UK have been
try/manufacturing, healthcare, smart living, trade, working for a long time on maintaining and en
agriculture, mobility and construction all the way hancing European capabilities and expertise. From
to quantum computing. Some of the projects an economic and geopolitical (or security policy)
which are receiving funding (such as Agri-Gaia and viewpoint, it is indispensable for Germany and
NaLamKI) are being created on the basis of GAIA-X. Europe to strengthen and enhance their microelec-
tronics capabilities. At the end of Germany’s Presi-
The Economic Affairs Ministry’s measures on dency of the Council of the European Union in
quantum computing aim at tapping the potential December 2020, 20 EU Member States in their joint
of this new technology for use in businesses at an declaration entitled “A Joint Initiative on Processors
early stage. This includes in particular providing and semiconductor technologies” agreed to further
easy access to expertise and algorithms and taking strengthen European value chains in this area and
into account the needs of small and medium-sized to set up another IPCEI as a funding mechanism for
enterprises (Making SMEs fit for QC). The ongoing this. The activities on microelectronics are another
PlanQK – platform and ecosystem for quantum- contribution towards the achievement of SDG 9.
based artificial intelligence – project, which is being
funded by the Economic Affairs Ministry, is currently Small and medium-sized enterprises often have
the largest community-building project in Germany deep roots in the region where they are based. It is
that maps the software and user sides of quantum therefore important to enable cities and regions to
computing in an ideal manner. There is an oppor- make use of the opportunities of the digital trans-
formation. Digital technology is changing interac-
tions in many areas, including in education, energy,
transport and the public sector. In order to help
cities and regions to develop into ‘smart’ cities and
regions, the Economic Affairs Ministry has developed
the Stadt.Land.Digital (‘Urban.Rural.Digital’) initia-
tive. The initiative provides support, informationYou can also read
