The German Experience with Sustainability Reporting

Kastrop and Velleuer examine the German experience with sustainability reporting. They consider its background and rationale in the context of the aging of the German population. They give an overview of the first comprehensive report on the effects of demographic change published by the Federal Ministry of Finance in 2005, point to the lessons learned from this first exercise and highlight the changes introduced in the preparation of the second sustainability report, which is based on updated projections. Kastrop and Velleuer evaluate how sustainability reporting can be relevant for the policy debate and illustrate the findings of a recent study using insights gained by behavioral economics. They also address the issue of uncertainty in the projections and conclude by examining how to deal with long-term risks in the formulation of medium-term budgetary targets.