KfW Research: Sustainability is gaining in importance in loan negotiations with larger SMEs

• Sustainability aspects were addressed in 37 per cent of loan discussions with large SMEs
• Relevance is particularly high for manufacturers
• Issue will continue to grow in importance

Climate action and sustainability may have slipped out of the public eye somewhat in recent months. However, German banks are taking climate risks more and more into account in their lending to businesses for regulatory reasons. In the German ‘Mittelstand’, this is being felt in particular by larger SMEs with 50 and more employees. Thus, 37 per cent of large SMEs that were in loan negotiations in 2024 reported that sustainability was addressed in their talks with banks and savings banks. That was three percentage points more than a year ago. The same was reported by 24 per cent of enterprises with ten to 49 employees, compared with 21 per cent in 2023.

These are the findings of a special analysis of the KfW SME Panel 2025. A good 13,000 SMEs from all economic sectors took part in the representative survey between February and June 2025.

It revealed that banks and savings banks interviewed manufacturing enterprises on sustainability issues particularly often. In this sector, 24 per cent of small and medium-sized enterprises that were in loan negotiations reported this, after 20 per cent in the previous year. In the construction sector it was 15 per cent, three percentage points more than in 2023. In commerce it was 13 per cent, which was even five percentage points more than a year ago.

In total, 15 per cent of SMEs that were in loan discussions in 2024 reported that sustainability aspects were addressed by banks and savings banks – roughly as many as in 2023. The reason for this consistent trend is that the majority of the 3.84 million SMEs are very small businesses. Of those with fewer than five employees, only twelve per cent that were in loan negotiations were asked about sustainability aspects, compared with 13 per cent a year ago.

“We can assume that banks and savings banks will look at sustainability aspects even more closely in loan negotiations in the future because of regulatory requirements. It is therefore vital for SMEs of all size classes to reflect closely on their sustainability profile and capture sustainability data in a structured manner,”

said Dr Juliane Gerstenberger, SME expert at KfW Research.

“For small businesses in particular, it is not easy to cut through and comply with all the sustainability requirements. More clarity and more support is needed here, as are uniform, cross-sectoral standards that appropriately consider the specific needs of small businesses.”

The full study “Nachhaltigkeit gewinnt bei Kreditverhandlungen großer KMU an Bedeutung” (Sustainability is gaining in importance in loan negotiations with large SMEs – in German) can be accessed at Focus on Economics | KfW

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