| Dear readers,
Sustainability is becoming increasingly important for the economy – in many areas it is emerging as a decisive factor. But how can the green transition succeed and how can environmental goals be implemented effectively and in concrete terms?
The new issue of ZEW Monthly on the topic of “Environment and Climate” highlights the key drivers: effective incentives, transparent rules and the interplay between the state, business and the financial world. Find out how green standards and public procurement promote innovation, what role the financial sector plays in sustainable investment and how solar subsidy schemes can be optimised for greater impact.
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 | | | RESEARCH ON ENVIRONMENT AND CLIMATE |
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↗ ENVIRONMENTALLY FRIENDLY STANDARDS IN TENDER PROCEDURES ARE NOT ALWAYS BENEFICIAL
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| In a recent study, ZEW economist Bastian Krieger analyses the effects of public procurement policies and voluntary standards on the introduction of environmentally friendly products by businesses. The study shows that while both types of measures increase the likelihood of environmental innovation when implemented individually, their simultaneous application can have an inhibiting effect on innovation. The findings provide important impulses for a sustainable innovation policy and an effective organisation of public procurement.
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| More about the study
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↗ FINANCIAL SECTOR AND CLIMATE TARGETS: MUCH REMAINS TO BE DONE
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| It is uncertain whether the financial sector is adequately contributing to the realisation of climate targets. Most importantly, it remains unclear which channels are best suited to empower the financial sector in driving a sustainable transformation of the economy. The joint ZEW and ifo Institute project Green Financial Intermediation – From Demand to Impact (INTERACT) analyses how the financial sector can more effectively support sustainable investments. The results show that ESG ratings and financial literacy have a crucial impact on green investments and that green bond issuances encourage banks to adopt a more climate-friendly lending policy.
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| More about the project
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↗ UPFRONT SUBSIDIES PREFERABLE TO FEED-IN TARIFFS
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| For homeowners or landlords, the decision to install photovoltaic (PV) systems largely depends on whether the investment proves worthwhile. Subsidies play an important role, as does the timing of installation. A representative study by ZEW Mannheim now reveals that an upfront subsidy is more effective than a retrospective one. Furthermore, high administrative burdens in particular discourage landlords from installing more PV systems. “Property owners significantly undervalue the future benefits of PV systems,” says ZEW economist Sebastian Rausch.
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| More about the study
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| | ↗ GERMAN ECONOMY STAGNATES IN 2025: NO INCREASE IN INFLATION RISK
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| The generational change in US trade policy has shaken global markets. Following the announcement in February 2025 of tariffs of 25 per cent or more on steel and aluminium, even more comprehensive import tariffs were added on 2 April, known as “Liberation Day”. These include a general base tariff of 10 per cent on all imports and additional “reciprocal tariffs” on certain countries, which can be as high as 125 per cent. The possible effects on prices and the risk of recession in Germany, the eurozone and the US were subject of the special question included in the ZEW Financial Market Survey.
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↗ RELIABLE MONETARY POLICY IN UNCERTAIN TIMES
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| The tensions in international trade policy, the new geopolitical realities and their financial policy implications pose challenges for Europe. How should the central banks of the Eurosystem deal with the high level of uncertainty? How can a robust monetary policy maintain its function as an anchor of stability in these turbulent times? The President of the Deutsche Bundesbank, Dr. Joachim Nagel, discussed these questions with ZEW President Achim Wambach at a lecture event at ZEW Mannheim on 27 May.
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↗ HEINZ KÖNIG AWARD 2025 PRESENTED TO THREE YOUNG RESEARCHERS
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| For 25 years now, ZEW Mannheim has been presenting the Heinz König Award for outstanding scientific work by young scholars. This year, there are three prize winners. The first prize, which is endowed with 2,500 euros, goes to David Leite from the Paris School of Economics for his paper “The Firm as Tax Shelter: Micro Evidence and Aggregate Implications of Consumption Through the Firm”. Leite demonstrates how business owners falsely declare personal expenses as tax-deductible business costs. He concludes that the overall scale of this form of tax avoidance is considerable.
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↗ GERMANY’S PATH TO COMPETITIVENESS
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| Baden-Württemberg is one of the most economically strong regions in Europe. Yet the location is under pressure: The economic environment is changing as geopolitical tensions increase. At the same time, numerous companies are considering ways to tackle these challenges. These developments were discussed by the Minister President of Baden-Württemberg, Winfried Kretschmann, and ZEW President Achim Wambach in a panel at the BW-Bank Stuttgart on 2 June.
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| More about the topic
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The heat transition is a challenge – but also an opportunity. In an interview with MVV's customer magazine, ZEW President Achim Wambach explains how private households, businesses, and policymakers can help shape the transition in an effective and equitable way.
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| Read the full opinion piece
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| | | | → CONTACT FOR QUESTIONS OR SUGGESTIONS ON THE CONTENT | |
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| | | | | ZEW – Leibniz Centre for European Economic Research
L7, 1 · 68161 Mannheim
Phone: +49 (0)621/1235-01
E-mail: zewmonthly@zew.de
Website: www.zew.de
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| | | | | Executive Directors:
Professor Achim Wambach, PhD; Claudia von Schuttenbach
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