KfW Sustainability Indicator 2013: no more than limited progress

The KfW Sustainability Indicator 2013 is weaker than in the previous year and only just above the average value of the preceding ten years. While the “economy” and “social cohesion” dimensions continued to record positive figures, the environment dimension worsened substantially.

“Germany continues to report a sustained performance. The economic situation on the labour market, in particular, is leading to greater social cohesion, which is very positively reflected in our indicator. At the same time, however, higher energy consumption due to growth and the weather weigh on the environmental balance and mar the overall result. If growth in Germany continues to show increased momentum in 2014, it will once again be a challenge to keep the environment indicator above the 10-year average next year”, said Dr Jörg Zeuner, Chief Economist of the KfW Group.

Economy: situation on the labour market leads to substantial increase

Germany was able in 2012 to keep private and state spending on research and development high. The labour participation rate rose to a fresh all-time high of 53.5%. This makes a key contribution to the good result of the economy dimension of the KfW Sustainability Indicator, which now exceeds the average for the preceding ten years by 0.6 points. By contrast, the persistently low level of investment activity by the state and by companies gives cause for concern.

“Despite good financing conditions, the net investment ratio stands at only 2.6%. This is too low for a sustained performance in Germany”, said Dr Zeuner.

Environment: progress becoming more difficult

The environment dimension fell to an all-time low in 2012 (-0.5 points). The decline was due to the weather-related increase in energy consumption and to the pro rata increase in the use of brown coal and hard coal, which led to rising greenhouse gas emissions and lower energy productivity. The trend of raw material productivity recorded a deterioration for the first time in 2012. On a positive note, noise pollution was improved while land consumption was reduced. “As renewable energies continue to expand, the targeted objectives of the energy turnaround require, in particular, a faster pace in the improvement of energy efficiency”, said Dr Zeuner.

Social cohesion: falling unemployment helping participation and integration

The social cohesion dimension continued the positive performance seen in previous years and at 0.4 remained only 0.1 points below the previous year's figure. Boosted by the good performance on the labour market the social participation of all population groups improved.

The percentage of the long-term unemployed was encouragingly low, and in 2012 people of foreign origin were better integrated into the labour market than in the previous years. Although the percentage of people with low qualifications (25 to 30 year olds without an educational qualification) has fallen further, it remains too high at just under one quarter. The ageing society is likely to have made a major contribution to the increase in the incidences of illness requiring hospital treatment.

The KfW Sustainability Indicator

The KfW Sustainability Indicator provides quantitative information on the progress made in the sustainable development in Germany. Appropriate key topics were identified for the areas of the economy, the environment and social cohesion and backed by the appropriate basic indicators. In total, three key topics with 24 basic indicators were selected.

The progress in the sustainability situation was measured using changes in these basic indicators over time. The common benchmark for all basic indicators is to be at least as good as or better than the average score of the more recent past, which is defined as a sliding ten-year period prior to the relevant reference year. The individual information is consolidated into an overall value of the KfW Sustainability Indicator by applying a scoring method.

The full results and information on the make-up of the KfW Sustainability Indicator 2013 are available for download at www.kfw.de/nachhaltigkeitsindikator.

Contact:
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Tel. +49 (0)69 7431 4400, Fax: +49 (0)69 7431 3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de