DAX companies invest less: dividends first, then climate protection

Thursday, November 4, 2021

DAX companies invest little
First dividends, then climate protection

Germany’s large corporations are investing far less than is necessary to become climate neutral in the coming decades. They have enough money to do this. However, NGOs complain that companies prefer to share their profits rather than invest in the future.

According to one report, instead of making substantial investments in climate protection, 30 DAX companies are distributing a substantial portion of their profits to shareholders or building up financial reserves. According to a report by Oxfam Germany and citizens’ movement Finanzwende, many DAX companies have financial exemptions for investments that the EU requires to become climate-neutral by 2050.

Both organizations called for a corporate legal framework that ensures that corporations no longer put shareholder interests above the common good. The report analyzes how 30 DAX companies have used their profits over the years: Between 2009 and 2020, dividends grew by 85 percent, nearly twice as much as profits, which grew by 48 percent.

According to the report, individual companies (RWE, Eon and ThyssenKrupp) also transferred money to their shareholders after years of losses. In addition, financial reserves have increased from EUR 122 billion in 2014 to nearly 200 billion at the end of 2020. According to the information, this mainly benefits the shareholders, as the large reserves increase the value of the company.

double the investment gap

At the same time, according to the report, there was a lack of climate protection. Oxfam and Finnzwende calculated for each region what corporations would have to invest annually to make their business models climate-neutral by 2050. According to the information, all companies invest very little, and many will be able to do so – without government subsidies or tax breaks.

In the transportation sector, for example, according to the report, the investment gap between BMW, Daimler, Volkswagen and Lufthansa is 13.8 billion euros per year, and their profits have more than doubled on average recently. If corporations were to make the necessary climate investment from this, they could still deliver on average at 2009 and 2010 levels, the authors explained.