October 02, 2025
Ignoring the climate is becoming costlier
A reminder that the environment matters more than ever for Europe.
To the point!
No continent is warming faster than Europe
The multiple geopolitical calamities, the bleak economic situation, growing migration challenges, as well as the aftershocks of the pandemic and inflation crises have caused climate and environmental protection to fade into the background. This trend is not confined to the U.S., where a particularly brazen resurgence of climate skepticism has become official doctrine.
Growing indifference to climate policy in Germany
Even in Germany, voters are losing interest. While environmental issues dominated the 2021 German election – often dubbed the 'climate election' – they played hardly a supporting role in this year's vote. Just one in four voters considered climate change among their top three concerns when casting their ballots. Supporters of the far-right AfD, the left-right-wing populist party BSW, and the pro-business FDP in particular dismissed climate policy as irrelevant.
One statistic that surprised me comes from an international survey conducted by Ipsos in April: today, only 41% of Germans think their country should do more to address climate change. With that Germany finds itself at the very bottom of the 32 countries surveyed (global average: 62%). Two years ago, this figure was still a small majority of 55%.
This shift in attitude seems to coincide with a decline in factual knowledge. For instance, 59% of Germans believe that transitioning to renewable energy will inevitably result in higher energy costs – more than in any other country. Additionally, every second German believes that electric vehicles are just as harmful to the environment as conventional cars. Here, Germany shares a top spot for climate skepticism alongside France and Poland.
Fig. 1: Support for climate policies declines
“Does xxx hurt the economy and prosperity?“
(% who say „agree somewhat/entirely“)
Politicians are looking the other way, too
To add insult to injury, this lack of interest extends to policymakers as well. Not only has the new German government displayed a puzzling lack of ideas and ambition on climate issues, but Brussels was also unable to provide the UN with clear emissions reduction targets for the November climate summit. In a letter to the UNFCCC, the Commission stated that by 2035, the EU aims to cut greenhouse gas emissions by between 66.25% and 72.5% compared to 1990 levels. Funnily precise, yet noncommittal!
Climate and environmental protection are no luxuries
The report on the state of Europe’s environment published earlier this week by the European Environment Agency (EEA) comes at just the right time to remind us of a few hard facts. While the EEA dutifully acknowledges achievements like reductions in CO2 emissions and improvements in air quality, the title of its accompanying press release doesn’t mince words: "The state of Europe’s environment is not good." The agency highlights worsening soil quality, the overuse of land due to intensive agriculture, and declining biodiversity as key concerns.
The economic costs are equally alarming. Between 2020 and 2023, extreme weather events caused annual damages in the EU of €44 billion – a figure that almost matches the annual damage of the previous three decades combined. (see Fig. 2). Less than half of these losses were insured, and many are becoming uninsurable. Alarmingly, 15% of all industrial production sites in Europe are located in flood-prone areas. Data from the reinsurer MunichRe shows a rapid worldwide increase in damages from natural disasters (see Fig. 3).
Fig. 2: Annual damages in EU caused by natural catastrophes
€ Billions of 2023
A joint report released this summer by the OECD and the UN Development Programme (UNDP) estimated that without action against climate change, global GDP could be 2.9% lower by 2050 and a staggering 13% lower by 2100. A healthy ecosystem and climate are therefore crucial production factors. Weakening efforts on climate and environmental protection will cost our children and grandchildren their future prosperity.
Fig. 3: Average annual damage due to natural disasters
US$ billions, inflation corrected
Turning challenges into opportunities
No continent is warming faster than Europe. All the more reasonto turn these challenges into opportunities. In the coming decades, climate and environmental technologies will become a global growth sector – one that even anti-science climate deniers cannot stop. Those who develop solutions in climate technology will emerge as winners. This is why the EU must not backtrack on its climate ambitions. Europe has always been at the forefront of large-scale innovation – now we need to prove we can still lead!
Dr. Moritz Kraemer, Chief Economist / Head of Research at LBBW
Download To the point!
-
176.1 KB | October 02, 2025
This publication is addressed exclusively at recipients in the EU, Switzerland, Liechtenstein and the United Kingdom.
This report is not being distributed by LBBW to any person in the United States and LBBW does not intend to solicit any person in the United States.
LBBW is under the supervision of the European Central Bank (ECB), Sonnemannstraße 22, 60314 Frankfurt/Main (Germany) and the German Federal Financial Supervisory Authority (BaFin), Graurhein-dorfer Str. 108, 53117 Bonn (Germany) / Marie-Curie-Str. 24-28, 60439 Frankfurt/Main (Germany).
This publication is based on generally available sources which we are not able to verify but which we believe to be reliable. Nevertheless, we assume no liability for the accuracy and completeness of this publication. It conveys our non-binding opinion of the market and the products at the time of the editorial deadline, irrespective of any own holdings in these products. This publication does not replace individual advice. It serves only for informational purposes and should not be seen as an offer or request for a purchase or sale. For additional, more timely in-formation on concrete investment options and for indi-vidual investment advice, please contact your investment advisor.
We retain the right to change the opinions expressed herein at any time and without prior notice. More-over, we retain the right not to update this information or to stop such updates entirely without prior notice.
Past performance, simulations and forecasts shown or described in this publication do not constitute a reliable indicator of future performance.
The acceptance of provided research services by a securities services company can qualify as a benefit in supervisory law terms. In these cases LBBW assumes that the benefit is intended to improve the quality of the relevant service for the customer of the benefit recipient.
Additional Disclaimer for recipients in the United Kingdom:
Authorised and regulated by the European Central Bank (ECB), Sonnemannstraße 22, 60314 Frank-furt/Main (Germany) and the German Federal Financial Supervisory Authority (BaFin), Graurheindorfer Str. 108, 53117 Bonn (Germany) / Marie-Curie-Str. 24-28, 60439 Frankfurt/Main (Germany). Authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request.
This publication is distributed by LBBW to professional clients and eligible counterparties only and not retail clients. For these purposes, a retail client means a person who is one (or more) of (i) a client as defined in point (7) of Article 2(1) of the UK version of Regulation (EU) 600/2014 which is part of UK law (UK MiFIR) by virtue of the European Union (Withdrawal) Act 2018 (EUWA) who is not a professional client (as defined in point (8) of Article 2(1) of UK MiFIR); or (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (as amended, the FSMA) and any rules or regulations made under the FSMA (which were relied on immediately before the 31 December 2020 (IP completion day)) to implement Directive (EU) 2016/97 on insurance distribution, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of UK MiFIR; or (iii) not a qualified investor as defined in the UK version of Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, which is part of UK law by virtue of the EUWA (the UK Prospectus Regulation).
This publication has been prepared by LBBW for information purposes only. It reflects LBBW’s views and it does not offer an objective or independent outlook on the matters discussed. The publication and the views expressed herein do not constitute a personal recommendation or investment advice and should not be relied on to make an investment decision. The appropriateness of a particular investment or strategy will depend on an investor’s individual. You should make your own independent evaluation of the relevance and adequacy of the information contained in this publication and make such other investigations as you deem necessary, including obtaining independent financial advice, before partici-pating in any transaction in respect of the financial instruments referred to this publication herein.
Under no circumstance is the information contained within such publication to be used or considered as an offer to sell or a solicitation of an offer to buy any particular investment or security. Neither LBBW nor any of its subsidiary undertakings or affiliates, directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, fullness, accuracy or completeness of the information in this publication (or whether any information has been omitted from the publication) or any other information relating to the, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this publication or its contents or otherwise arising in connection therewith.
The information, statements and opinions contained in this publication do not constitute or form part of a public offer. LBBW assumes no responsibility for any fact, recommendation, opinion or advice con-tained in any such publication and expressly disclaims any responsibility for any decisions or for the suitability of any security or transaction based on it. Any decisions that a professional client or eligible counterparty may make to buy, sell or hold a security based on such publication will be entirely their own and not in any way deemed to be endorsed or influenced by or attributed to LBBW.
LBBW does not provide investment, tax or legal advice. Prior to entering into any proposed transaction on the basis of the information contained in this publication, recipients should determine, in consultation with their own investment, legal, tax, regulatory and accounting advisors, the economic risks and merits, as well as the legal, tax, regulatory and accounting characteristics and consequences, of the transac-tion.
