How sustainable is the DAX?

How sustainable is the DAX?

We analysed Germany’s 40 major companies in the DAX40 — this is what we found

Olga Rabo

Nov 2, 2021



min read

“40 is the new 30”, announced the DAX back in September 2021 when it added 10 more equities to its list. What was arguably the most popular stock market index in Germany already, became an even more popular one.

Indeed, the DAX seems great at first glance. It has companies like HelloFresh (Germany’s biggest “Kochbox”), Zalando (whose stock absolutely surged during the pandemic), Adidas (“tracksuits are always in style”), Deutsche Bank, and more. Founded in 1988, had you invested in the DAX an equivalent of €1000 back then, you’d have something around €16,310 in your pocket by now.

Not bad, right?

But by now, the world has changed. Now investors don’t want to invest for profit (only) — they want to invest with impact. Companies, as well as the indices comprising those companies, need to be prepared for climate change and ready to tackle the challenges of the climate crisis.

At Cooler Future, we’re dealing with tonnes of data to find the best-in-class impact funds, so we figured we'd be the best people to find an answer to this question.

Keep on reading as we analysed the German DAX based on some of the most crucial climate and environmental metrics there are to track!


We used CDP and company-reported data from the most recent reported annual data and based this article on our own calculations.

The DAX and emissions

First things first, let’s agree that when we say “the DAX”, what we mean is “companies in the DAX”.

Now, how is the DAX doing in terms of emissions? Apparently, not great.

For instance, instead of decreasing, the 40 companies that form the DAX actually increased their Scope 1 & 2 emissions: they were 1,639,123 tonnes higher in 2020 than in 2019, according to our calculation. If we compare this to, say, Smart Energy or Clean Water funds (both available on the Cooler Future platform), companies in these funds reduced their Scope 1 & 2 by 37,314 and 205,326 tonnes respectively for the same comparative period. (This is what we like to see! You can learn more about how we pick funds here. But back to the DAX now.)

Sustainable funds available on Cooler Future

More on emissions: reporting, reducing, committing

100% of companies in the DAX (so, all 40) report and measure emissions across all Scopes: 1, 2, and 3.

Now, this is a great first step, since companies’ own emission reporting is crucial in estimating companies’ transparency level and commitment to climate change. As the old saying goes, if you can’t measure it, you can’t improve it. First check: pass!

But as we also know, just reporting isn’t enough.

Companies need to commit to reducing their emissions — preferably, also across all Scopes.

In the DAX, only 45% of companies have set emissions reduction targets for Scope 1 & 2. Worse yet, only 37% of companies have publicly set emission reduction targets for Scope 3 — admittedly the more challenging scope, yet the most crucial one nevertheless.

Are these impressive numbers?

Collectively, the DAX40 companies have a revenue of around €1.6 trillions. So there’s probably just enough money to try to address the emissions challenge properly. The fact that the majority of Germany’s Top 40 didn’t set emission reduction targets speaks for the DAX not being too climate-friendly.

Next on: the expected reduction rate for emissions.

Collectively, the 45% DAX companies which have set the reduction targets are expected to reduce their Scope 1 & 2 by 4.5% annually on average.

Those companies that have committed to reducing their Scope 3 emissions, are expected to reduce this type of emissions by 2.2% annually (also on average).

“To meet the 1.5℃ goal, we need to see a reduction of emissions from companies at a rate of at least 6-7% annually, ideally more. The positive thing about the DAX40 companies is that they have fairly good reporting in terms of emissions. But the ambition in their reduction targets, and most of all the concrete emission reductions achieved so far, are way behind what’s needed.”


How do players in the DAX field compare?

To illustrate, Adidas’ expected reduction rate for Scope 1 & 2 emissions based on the company's reduction targets is above 10% annually. But when we looked at Puma, Adidas’ rival, the reduction rate for the same scopes is just less than 3%. (At the same time, both companies significantly exceeded their annual reduction rates in 2020.) This is just to give a quick example of how two companies from the same industry can vary.

The DAX and water

Of course, emissions aren’t the only topic that should be on companies’ sustainability agenda. Water-related metrics are also crucial to track when we talk ‘sustainability’.

So when it comes to water, here’s what we found:

Of all DAX40 companies, the majority — 69% — did publicly disclose their water consumption metrics in 2020.

Of these companies, 64% were able to show a decrease in water consumption for 2020, while 36% of the companies reported an increase instead, compared to 2019.

Roughly 11% of the DAX companies report that they recycle water.

These numbers, again (and unfortunately), aren’t that great.

How do players in the DAX field compare?

Let’s compare Adidas and Puma again, as these companies belong to the same industry. In 2020, Adidas reported that they used 301 megaliters of water. Meanwhile, Puma reported they used about 96 megaliters instead. (When it came to recycling water, neither of the companies reported on that.) Interestingly enough, Deutsche Bank reported consuming 1474 megaliters of water in 2020 and recycling 0.

The reason it’s so important to use water more efficiently and decrease water consumption, as well as recycle water, lies in the fact that water is quickly becoming a scarce resource. Currently, 25% of people worldwide do NOT have access to clean water, and this number will only continue to increase due to rapid urbanisation, global population growth, and, of course, climate change.

To paint the picture further:

To take a holistic approach towards sustainability, recycling water and reducing how much of it is actually consumed is important if companies want to position themselves as sustainability leaders in their sector.

Conclusion: The DAX and sustainability

Without stating the obvious, we need more action from companies across all sectors to reduce emissions in line with the 1.5℃ goal, as well as reduce and recycle water too.

Of course, the purpose of the DAX is not to be sustainability-tilted, because its main purpose is to be an indicator of the country’s equity market. And of course, we generally need to allow companies a period of transition, too. But let’s not forget that the DAX40 companies are Germany’s biggest publicly traded players. They could afford to do more — if they wanted to — and perform much better in terms of sustainability.

Investing in indices is great if you want to diversify across equities, industries, or geographies. But if you care about sustainability, perhaps investing in the DAX isn’t your best option.

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