The export economy in Germany and Europe is facing multiple challenges that are driven by various megatrends and that amplify each other. These include in particular the increasing geopolitical tensions and regional conflicts, the crisis of democracy, low global economic momentum, the transformation of the global economy through rapid digitisation, and demographic change. The international environment for exporters is increasingly fragmented: The multilateral trade system has eroded, and protectionism and trade conflicts make foreign trade more difficult. In particular, the economic and political rise of countries like China and India is also shifting the global balance of power. This leads to a re-evaluation of supply chains and trading partners. In addition, digitisation is not only revolutionising production processes and business models, but is also intensifying global competition by opening up new markets for companies in many countries around the world. Key sectors in the German export industry, such as vehicle construction, mechanical engineering and electrical engineering, expect a decline in orders from abroad this year.
Green transformation as a challenge and an opportunity
These structural disruptions are accompanied by the issue of decarbonising the economy. The global climate debate is dominated by the pressing concern over global warming and the loss of biodiversity, the need for a transition to renewable energies, and the innovative concept of the circular economy. Sustainability has become a key issue for companies that goes far beyond compliance and is an integral part of their corporate strategy. For the German export economy, the green transformation is both a major challenge and a significant opportunity. The export-oriented medium-sized companies and the “hidden champions” play a particularly important role in Germany – because of what they mean for innovation and employment. With their expertise in technology and innovation, these companies can be at the forefront of the development and export of environmentally friendly products and technologies, despite or precisely because of the high pressure to adapt. However, the green transformation requires significant investment, for example, in more efficient use of energy, and a fundamental rebalancing of traditional industries and production processes. In addition, there is the need to diversify supply chains and reduce international dependencies when importing critical raw materials.
Financing as a key element
The financing of the green transformation plays a key role in this realignment. The European Commission expects an investment requirement of more than EUR 600 billion per year for the European Union alone by 2030 on the way to climate neutrality. This includes a variety of segments, including renewable energy, energy efficiency, infrastructure, clean technologies, and the sustainable transition of industrial processes. Just over one-third of the investment requirement is likely to come from so-called additional investments. In order to finance the transformation, both public and private sources of financing are crucial. Private players, such as commercial banks, mutual funds and private investors, play a key role in providing capital for innovative projects. Public finance players, such as government export credit agencies, public development banks and multilateral financial institutions, provide grants, equity, loans and guarantees to support projects in high-risk countries. A wide range of financial products are required to cover the broad range of financing needs, including green bonds, sustainability credits, project financing and specialised funds. These products must be tailored to the specific requirements and risk profiles of the projects to ensure effective and sustainable financing. Availability and access to these financing opportunities are critical to enable organisations to make the necessary investments and successfully navigate the challenges of the green transformation.
Export finance and green transformation
Attractive export finance helps German and European exporters to compete internationally while also promoting the shift towards more sustainable business practices. It enables the implementation of major projects in the area of green transformation, which are often associated with high initial investments and long amortisation periods. In Germany, and especially for SMEs, commercial banks continue to be a key pillar, as they are available to large and small companies as finance partners. However, government export finance is also playing an increasingly important role. Many export credit agencies have expanded their offering to include new products specifically designed to meet the needs of the green transformation. For example, Export Development Canada’s sustainable financing guarantee is a risk-sharing solution with commercial banks. EKN in Sweden has developed a new credit guarantee with 100% coverage to facilitate the financing of green exports and transformation projects in export companies. In Spain, the new Green Investment Policy of the Spanish Export Credit Agency (CESCE) aims to finance climate-relevant foreign investments of Spanish companies. It covers both political and commercial risks. The international framework for state export finance in the area of green transformation is complex and incomplete. However, positive developments such as the modernised OECD consensus and the establishment of the Net-Zero Export Credit Agencies Alliance (NZECA) are important milestones. They signal a growing global commitment to sustainable financing and highlight the need for a coordinated international approach to ensure effective support of the green transformation. At the launch of the COP28 world climate conference in Dubai, NZECA members committed to reducing greenhouse gas emissions from their operations, by 2050 or earlier, to a level consistent with a maximum temperature rise of 1.5°C above pre-industrial levels by 2100. In addition, they will publish emissions data annually to prove their measures to fulfil these obligations. These developments contribute to standardisation and pave the way for a sustainable global export finance landscape./p>
The role of AKA
AKA plays a key role in supporting the green transformation for German and European exporters. The green transformation gives the bank the opportunity to open up new business areas and position itself as one of the forerunners in green export finance. AKA can thus further expand its credit expertise, strengthen its reputation as a specialised bank and high-performance partner alongside companies and banks, and benefit from long-term investment opportunities in sustainable technologies and infrastructure. Expanded cooperation with European export credit agencies will enable more customised finance solutions to be offered in the future, tailored to the specific needs of exporters in a world of change. These partnerships facilitate the financing of sustainable projects and open up access to new markets. AKA thus has the opportunity to act as a bridge between the needs of the export economy and the goals of sustainable economic development.