Towards Climate Neutrality

Ten years after the Paris Climate Agreement entered into force, the House of Finance, together with the Sustainability Office of Goethe University Frankfurt and the Leibniz Institute for Financial Research SAFE, hosted a joint event to reflect on the path towards climate neutrality. The panel discussion, held on 19 June 2026, brought together Ralf Eckert, Managing Partner Financial Services at EY Germany; Dirk Schumacher, Chief Economist at KfW; Florian Heeb, Assistant Professor at SAFE and UniCredit Foundation Fellow; and Detlef Fechtner, Chief Political Correspondent of Börsen-Zeitung, who moderated the discussion.

The event also marked the opening of an immersive video installation hosted at the House of Finance. Students, faculty, staff, and members of the public were invited to engage with the implications of today’s climate policy decisions through an immersive experience. Made available by EY and based on scientific evidence, the installation presents four climate scenarios set in the year 2055. Through emotionally compelling personal appeals from within these future scenarios, it illustrates the consequences of present-day climate action—or inaction. The installation made a strong impression on its many visitors, as reflected in the thoughtful and lively discussions that continued well beyond the exhibition itself.

The panel discussion likewise underscored that achieving climate neutrality—and identifying the role capital markets can play in enabling the transition—remains the subject of intensive academic research and ongoing policy debate. At the same time, the panellists stressed that the pursuit of an optimal regulatory framework must not become an obstacle to timely action. As Ralf Eckert put it: “We are moving too slowly.”

Sustainability regulations such as the EU Corporate Sustainability Reporting Directive and the EU Taxonomy are important and create transparency, but they do not lead to transformation, the experts emphasized. At the same time, according to Schumacher, the reporting requirements place a particular burden on small and medium-sized enterprises. “I’m torn between two worlds,” he said.

Another important aspect is the quality and comparability of data in sustainability reporting. Heeb highlighted that standardization is difficult due to industry-specific differences. Measuring sustainability aspects other than CO₂ emissions is also particularly challenging: measuring a company’s impact on biodiversity, for example, is about 80 times more complex.     

For the financial market to play a stronger role in driving the transition, it must be clear where capital is lacking and where it can have the greatest impact. However, such a targeted analysis is “not that easy” in practice, Heeb said, but it would be enormously helpful: Many investors are willing to deploy capital specifically to support the green transition, even if this might mean lower financial returns.

It remains to be seen how capital flows might change as a result of the transition. Heeb mentioned academic research indicating that CO₂-intensive (“brown”) assets are increasingly being shifted from strictly regulated banks to less regulated financial intermediaries, such as non-banks. A crucial question, therefore, is how much longer CO₂-intensive business models remain profitable. A well-designed emissions trading system could send strong price signals by pricing CO₂ emissions, thereby making emissions-intensive business models less economically attractive.