IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i11p8745-d1158461.html
   My bibliography  Save this article

Analyzing the Role of Banks in Providing Green Finance for Retail Customers: The Case of Germany

Author

Listed:
  • Marc Ringel

    (European Chair for Sustainable Development and Climate Transition, Institut d ’Etudes Politiques (Sciences Po) Paris, 13 Rue de l’Université, 75007 Paris, France
    Energy and Environmental Economics, Nuertingen Geislingen University, Parkstr. 4, 73312 Geislingen, Germany)

  • Saranda Mjekic

    (Energy and Environmental Economics, Nuertingen Geislingen University, Parkstr. 4, 73312 Geislingen, Germany)

Abstract

Our study investigates the role of banks in mobilizing investments in the energy transition with German retail customers. Based on a screening of a representative sample of 329 banks and follow-up in-depth interviews with 12 sector experts, our study shows that there are hardly any sustainable finance products offered. This is due to high transaction costs, missing information about energy projects and missing financial products which allow the bundling of small deposits and de-risking. To develop market supply for this segment, sector experts call for increased transparency in clean energy projects. Standardized, comprehensive and comparable labels or certifications for financial products seem to be necessary to lower uncertainty barriers with retail customers. EU action such as the Taxonomy Regulation is seen as necessary, but not sufficient to meet this demand. The German case delivers insights for other countries in Europe and globally, as sustainability finance challenges all signatories of the Paris Climate Agreement.

Suggested Citation

  • Marc Ringel & Saranda Mjekic, 2023. "Analyzing the Role of Banks in Providing Green Finance for Retail Customers: The Case of Germany," Sustainability, MDPI, vol. 15(11), pages 1-24, May.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:11:p:8745-:d:1158461
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/11/8745/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/11/8745/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Florian Egli & Bjarne Steffen & Tobias S. Schmidt, 2018. "A dynamic analysis of financing conditions for renewable energy technologies," Nature Energy, Nature, vol. 3(12), pages 1084-1092, December.
    2. Kathleen Krause & Dirk Battenfeld, 2019. "Coming Out of the Niche? Social Banking in Germany: An Empirical Analysis of Consumer Characteristics and Market Size," Journal of Business Ethics, Springer, vol. 155(3), pages 889-911, March.
    3. Schreiner, Lena & Madlener, Reinhard, 2022. "Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany," Energy Economics, Elsevier, vol. 107(C).
    4. Mazzucato, Mariana & Semieniuk, Gregor, 2018. "Financing renewable energy: Who is financing what and why it matters," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 8-22.
    5. Neil Gunningham, 2020. "A Quiet Revolution: Central Banks, Financial Regulators, and Climate Finance," Sustainability, MDPI, vol. 12(22), pages 1-22, November.
    6. Salm, Sarah & Hille, Stefanie Lena & Wüstenhagen, Rolf, 2016. "What are retail investors' risk-return preferences towards renewable energy projects? A choice experiment in Germany," Energy Policy, Elsevier, vol. 97(C), pages 310-320.
    7. Gaoke Liao & Peng Hou & Xiaoyan Shen & Khaldoon Albitar, 2021. "The impact of economic policy uncertainty on stock returns: The role of corporate environmental responsibility engagement," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4386-4392, July.
    8. Toyo Kawabata, 2019. "What are the determinants for financial institutions to mobilise climate finance?," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 9(4), pages 263-281, October.
    9. David L. McCollum & Wenji Zhou & Christoph Bertram & Harmen-Sytze Boer & Valentina Bosetti & Sebastian Busch & Jacques Després & Laurent Drouet & Johannes Emmerling & Marianne Fay & Oliver Fricko & Sh, 2018. "Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals," Nature Energy, Nature, vol. 3(7), pages 589-599, July.
    10. Rohit Pathania & Arnab Bose, 2014. "An analysis of the role of finance in energy transitions," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 4(3), pages 266-271, July.
    11. Polzin, Friedemann & Egli, Florian & Steffen, Bjarne & Schmidt, Tobias S., 2019. "How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective," Applied Energy, Elsevier, vol. 236(C), pages 1249-1268.
    12. Rogers, J.C. & Simmons, E.A. & Convery, I. & Weatherall, A., 2008. "Public perceptions of opportunities for community-based renewable energy projects," Energy Policy, Elsevier, vol. 36(11), pages 4217-4226, November.
    13. Polzin, Friedemann & Sanders, Mark & Serebriakova, Alexandra, 2021. "Finance in global transition scenarios: Mapping investments by technology into finance needs by source," Energy Economics, Elsevier, vol. 99(C).
    14. Diluiso, Francesca & Annicchiarico, Barbara & Kalkuhl, Matthias & Minx, Jan C., 2021. "Climate actions and macro-financial stability: The role of central banks," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    15. Polzin, Friedemann & Sanders, Mark, 2020. "How to finance the transition to low-carbon energy in Europe?," Energy Policy, Elsevier, vol. 147(C).
    16. Aguilar, Francisco X. & Cai, Zhen, 2010. "Exploratory analysis of prospects for renewable energy private investment in the U.S," Energy Economics, Elsevier, vol. 32(6), pages 1245-1252, November.
    17. Yujun Cui & Sean Geobey & Olaf Weber & Haiying Lin, 2018. "The Impact of Green Lending on Credit Risk in China," Sustainability, MDPI, vol. 10(6), pages 1-16, June.
    18. David L. McCollum & Wenji Zhou & Christoph Bertram & Harmen-Sytze Boer & Valentina Bosetti & Sebastian Busch & Jacques Després & Laurent Drouet & Johannes Emmerling & Marianne Fay & Oliver Fricko & Sh, 2018. "Author Correction: Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals," Nature Energy, Nature, vol. 3(8), pages 699-699, August.
    19. Huidong Sun & Mustafa Raza Rabbani & Naveed Ahmad & Muhammad Safdar Sial & Guping Cheng & Malik Zia-Ud-Din & Qinghua Fu, 2020. "CSR, Co-Creation and Green Consumer Loyalty: Are Green Banking Initiatives Important? A Moderated Mediation Approach from an Emerging Economy," Sustainability, MDPI, vol. 12(24), pages 1-22, December.
    20. Egli, Florian, 2020. "Renewable energy investment risk: An investigation of changes over time and the underlying drivers," Energy Policy, Elsevier, vol. 140(C).
    21. Mathews, John A. & Kidney, Sean & Mallon, Karl & Hughes, Mark, 2010. "Mobilizing private finance to drive an energy industrial revolution," Energy Policy, Elsevier, vol. 38(7), pages 3263-3265, July.
    22. Jakob Thomä & Hugues Chenet, 2017. "Transition risks and market failure: a theoretical discourse on why financial models and economic agents may misprice risk related to the transition to a low-carbon economy," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 7(1), pages 82-98, January.
    23. Carsten Erner & Michael Goedde-Menke & Michael Oberste, 2016. "Financial literacy of high school students: Evidence from Germany," The Journal of Economic Education, Taylor & Francis Journals, vol. 47(2), pages 95-105, April.
    24. Zhenghui Li & Gaoke Liao & Khaldoon Albitar, 2020. "Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1045-1055, March.
    25. Geddes, Anna & Schmidt, Tobias S. & Steffen, Bjarne, 2018. "The multiple roles of state investment banks in low-carbon energy finance: An analysis of Australia, the UK and Germany," Energy Policy, Elsevier, vol. 115(C), pages 158-170.
    26. Ilmi Granoff & J. Ryan Hogarth & Alan Miller, 2016. "Nested barriers to low-carbon infrastructure investment," Nature Climate Change, Nature, vol. 6(12), pages 1065-1071, December.
    27. Huang, Zhehao & Dong, Hao & Jia, Shuaishuai, 2022. "Equilibrium pricing for carbon emission in response to the target of carbon emission peaking," Energy Economics, Elsevier, vol. 112(C).
    28. Cao, Xiao & Jin, Cheng & Ma, Wenjie, 2021. "Motivation of Chinese commercial banks to issue green bonds: Financing costs or regulatory arbitrage?," China Economic Review, Elsevier, vol. 66(C).
    29. Fang Zhang, 2022. "The policy coordinator role of national development banks in scaling climate finance: Evidence from the renewable energy sector," Climate Policy, Taylor & Francis Journals, vol. 22(6), pages 754-769, July.
    30. Timo Busch, 2020. "Industrial ecology, climate adaptation, and financial risk," Journal of Industrial Ecology, Yale University, vol. 24(2), pages 285-290, April.
    31. Wüstenhagen, Rolf & Menichetti, Emanuela, 2012. "Strategic choices for renewable energy investment: Conceptual framework and opportunities for further research," Energy Policy, Elsevier, vol. 40(C), pages 1-10.
    32. Andrea Masini & Emanuela Menichetti, 2013. "Investment Decisions in the Renewable Energy Sector: An Analysis of Non-Financial Drivers," Working Papers hal-01947453, HAL.
    33. Anuschka Hilke & Lisa Ryan, 2012. "Mobilising Investment in Energy Efficiency: Economic Instruments for Low‐energy Buildings," IEA Energy Papers 2012/10, OECD Publishing.
    34. Steffen, Bjarne, 2018. "The importance of project finance for renewable energy projects," Energy Economics, Elsevier, vol. 69(C), pages 280-294.
    35. Brummer, Vasco, 2018. "Community energy – benefits and barriers: A comparative literature review of Community Energy in the UK, Germany and the USA, the benefits it provides for society and the barriers it faces," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 187-196.
    36. Kristin Heinemann & Bernhard Zwergel & Stefan Gold & Stefan Seuring & Christian Klein, 2018. "Exploring the Supply-Demand-Discrepancy of Sustainable Financial Products in Germany from a Financial Advisor’s Point of View," Sustainability, MDPI, vol. 10(4), pages 1-20, March.
    37. Li, Zhenghui & Huang, Zimei & Su, Yaya, 2023. "New media environment, environmental regulation and corporate green technology innovation:Evidence from China," Energy Economics, Elsevier, vol. 119(C).
    38. Masini, Andrea & Menichetti, Emanuela, 2013. "Investment decisions in the renewable energy sector: An analysis of non-financial drivers," Technological Forecasting and Social Change, Elsevier, vol. 80(3), pages 510-524.
    39. Masini, Andrea & Menichetti , Emanuela, 2013. "Investment Decisions in the Renewable Energy Sector: An Analysis of Non-Financial Drivers," HEC Research Papers Series 976, HEC Paris.
    40. Stephen Hall & Timothy J Foxon & Ronan Bolton, 2017. "Investing in low-carbon transitions: energy finance as an adaptive market," Climate Policy, Taylor & Francis Journals, vol. 17(3), pages 280-298, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Weicheng Xu & Xiaoyi Feng & Yiying Zhu, 2023. "The Impact of Green Finance on Carbon Emissions in China: An Energy Consumption Optimization Perspective," Sustainability, MDPI, vol. 15(13), pages 1-23, July.
    2. Chun-Che Huang & Wen-Yau Liang & Horng-Fu Chuang & Tzu-Liang (Bill) Tseng & Yi-Chun Shen, 2024. "Incremental Green Investment Rule Induction Using Intelligent Rough Sets from an Energy Perspective," Sustainability, MDPI, vol. 16(9), pages 1-22, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Polzin, Friedemann & Sanders, Mark & Serebriakova, Alexandra, 2021. "Finance in global transition scenarios: Mapping investments by technology into finance needs by source," Energy Economics, Elsevier, vol. 99(C).
    2. Sarah Hafner & Olivia James & Aled Jones, 2019. "A Scoping Review of Barriers to Investment in Climate Change Solutions," Sustainability, MDPI, vol. 11(11), pages 1-19, June.
    3. Nadia Ameli & Paul Drummond & Alexander Bisaro & Michael Grubb & Hugues Chenet, 2020. "Climate finance and disclosure for institutional investors: why transparency is not enough," Climatic Change, Springer, vol. 160(4), pages 565-589, June.
    4. Zhang, Fang, 2023. "Does not having an NDB disadvantage a country in finance mobilization for the energy transition? A comparative analysis of the solar PV deployment in the United States, Germany and China," Energy Policy, Elsevier, vol. 172(C).
    5. Waidelich, Paul & Steffen, Bjarne, 2024. "Renewable energy financing by state investment banks: Evidence from OECD countries," Energy Economics, Elsevier, vol. 132(C).
    6. Polzin, Friedemann & Sanders, Mark, 2020. "How to finance the transition to low-carbon energy in Europe?," Energy Policy, Elsevier, vol. 147(C).
    7. Gregor Semieniuk & Emanuele Campiglio & Jean‐Francois Mercure & Ulrich Volz & Neil R. Edwards, 2021. "Low‐carbon transition risks for finance," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 12(1), January.
    8. Curtin, Joseph & McInerney, Celine & Ó Gallachóir, Brian, 2017. "Financial incentives to mobilise local citizens as investors in low-carbon technologies: A systematic literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 534-547.
    9. Thomas Baldauf & Patrick Jochem, 2024. "Project finance or corporate finance for renewable energy? an agent-based insight," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 19(4), pages 759-805, October.
    10. Bhatnagar, S. & Sharma, D., 2022. "Evolution of green finance and its enablers: A bibliometric analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 162(C).
    11. Steffen, Bjarne, 2020. "Estimating the cost of capital for renewable energy projects," Energy Economics, Elsevier, vol. 88(C).
    12. Bauwens, Thomas, 2019. "Analyzing the determinants of the size of investments by community renewable energy members: Findings and policy implications from Flanders," Energy Policy, Elsevier, vol. 129(C), pages 841-852.
    13. Gumber, Anurag & Zana, Riccardo & Steffen, Bjarne, 2024. "A global analysis of renewable energy project commissioning timelines," Applied Energy, Elsevier, vol. 358(C).
    14. Salm, Sarah & Hille, Stefanie Lena & Wüstenhagen, Rolf, 2016. "What are retail investors' risk-return preferences towards renewable energy projects? A choice experiment in Germany," Energy Policy, Elsevier, vol. 97(C), pages 310-320.
    15. Deleidi, Matteo & Mazzucato, Mariana & Semieniuk, Gregor, 2020. "Neither crowding in nor out: Public direct investment mobilising private investment into renewable electricity projects," Energy Policy, Elsevier, vol. 140(C).
    16. Monasterolo, Irene & de Angelis, Luca, 2020. "Blind to carbon risk? An analysis of stock market reaction to the Paris Agreement," Ecological Economics, Elsevier, vol. 170(C).
    17. Đukan, Mak & Kitzing, Lena, 2023. "A bigger bang for the buck: The impact of risk reduction on renewable energy support payments in Europe," Energy Policy, Elsevier, vol. 173(C).
    18. Egli, Florian, 2020. "Renewable energy investment risk: An investigation of changes over time and the underlying drivers," Energy Policy, Elsevier, vol. 140(C).
    19. Lin, Boqiang & Li, Minyang, 2024. "Micro Mechanisms Driving China's Clean Energy Flourish: Business Expansion and Financing," International Review of Financial Analysis, Elsevier, vol. 92(C).
    20. Evangelia Karasmanaki & Evangelos Grigoroudis & Spyridon Galatsidas & Georgios Tsantopoulos, 2023. "Citizen Satisfaction with Renewable Energy Investments: A Multi-Criteria Satisfaction Analysis," Energies, MDPI, vol. 16(10), pages 1-20, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:11:p:8745-:d:1158461. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.