Environmental, social and governance (ESG) criteria have become integral in shaping the landscape of real estate financings in Germany. Financial institutions and investors are increasingly recognizing the significance of sustainability considerations in their decision-making processes. Real estate developments incorporating energy efficiency, environmental sustainability and social responsibility are more likely to secure financing. Projects with robust ESG performance may benefit from lower interest rates and favorable terms, reflecting a commitment to responsible and sustainable practices.

The Federal Financial Supervisory Authority published guidelines in December 2019 on dealing with sustainability risks, targeting credit institutions, investment firms, insurance companies, fund management companies and pension funds. These guidelines, while being nonbinding, outline good-practice principles for the appropriate management of ESG risks, emphasizing the integration of ESG factors into existing types of risks, such as credit, market, liquidity and operational risks.

The EU has been actively developing and implementing regulations focused on ESG aspects in various sectors, including real estate finance. The EU Taxonomy Regulation, which entered into force on 1 July 2020, plays a pivotal role in this context. It provides a classification system to identify which economic activities can be considered environmentally sustainable, thereby guiding investment toward more sustainable projects, including those related to real estate. In addition to the Taxonomy Regulation, the EU's Sustainable Finance Disclosure Regulation mandates more transparency in how financial products' sustainability is reported, which is crucial for real estate investments. These regulations are part of a comprehensive EU framework to facilitate sustainable investment and ensure that investors have clear information on the sustainability of their investments. The Corporate Sustainability Reporting Directive mandates companies, including non-EU companies listed on EU markets, to report on their sustainability practices.

There are various public and private programs to promote the sustainability of buildings. Germany's KfW Förderbank covers a broad spectrum of development programs in Germany and abroad. Its low-interest loans can flow to developers involved in energy-efficient construction and rehabilitation, as well as to companies and private individuals involved in renewable energies, such as sun, wind, and biomass. Several private financial institutions have programs to promote green buildings and green financings. In addition, Germany's 16 federal states (Bundesländer) offer financial support to companies, private individuals, and institutions in the fields of energy efficiency and renewable energies. The principal amounts of the loans available differ from federal state to federal state and from project to project, taking into consideration the needs of the region and the type of project. In the private sector, "crowdfunding platforms" are becoming popular. For instance, the German Environmental Foundation (Deutsche Umweltstiftung) is supporting the establishment of a crowdfunding platform focused on sustainability projects. As of fall 2014, private individuals and companies gained the opportunity to invest in these environmental projects and, hence, have helped small companies with their financing.