Annual Report 2025

The year 2025 was marked by escalating geopolitical tensions in digital policy, continued advances in artificial intelligence, and its growing integration into everyday work. As a result, digital policy has firmly moved beyond its status as a niche policy area. The risks arising from Europe’s technological dependencies have become widely recognised, creating an opportunity: companies, public institutions, and citizens across Europe are exploring alternatives to Big Tech more actively than ever before. At the same time, enforcement of the Digital Markets Act (DMA) and the Digital Services Act (DSA) gathered pace, with their impact becoming increasingly visible through landmark decisions. 

These developments lie at the heart of our work. We are committed to ensuring that digital technologies in Germany and across Europe are developed and used in ways that uphold democratic rights and values. Over the past year, however, this vision came under increasing pressure from techno-deterministic narratives and growing anti-regulatory rhetoric. At the same time, financial constraints and political efforts to delegitimise civil society and academic institutions further complicated the operating environment. 

Against this backdrop, we strategically advanced our funding activities and began building a new portfolio. Its focus is on strengthening competition policy as a key instrument for limiting market concentration and reducing Europe’s dependence on large foreign technology companies. We also supported initiatives that examine digital public discourse, governance structures and platform design, together with their societal impacts, while helping to build the knowledge base needed for this work. At a time when digital regulation is increasingly contested and public debate is becoming more polarised, robust evidence and independent research on digital public spheres are more important than ever. 

At the national level, the establishment of the Federal Ministry for Digital Transformation and Government Modernisation marked an important institutional milestone. Our partners developed recommendations on the ministry’s mandate, organisational structure, and ways of working. Their objective is to ensure that digital transformation in the public sector is understood not simply as a technical challenge, but as a comprehensive transformation of institutions, administrative processes, and organisational culture. Such change has the potential to make government more effective, responsive and citizen-centred. To support this ambition, our partners brought together innovators from across all levels of government, identified structural barriers and highlighted practical examples of a modern, adaptable and learning-oriented public administration.

The year began with a series of pivotal events. Among them were US Vice President JD Vance’s remarks at the Munich Security Conference, where he accused European countries of democratic shortcomings, and the arrest of Istanbul Mayor Ekrem İmamoğlu by the Turkish judiciary. These developments prompted many to question which countries Germany and Europe can still count on as partners that share common interests and values. 

At a time when the global order is undergoing profound change, trusted relationships and protected spaces for dialogue are more important than ever. Many of our projects put this principle into practice over the past year. These included the journey of 54 Raisina Young Fellows to Delhi, the meet! Mercator Europa Tour in Lisbon, the 16th cohort of the Mercator Fellowship on International Affairs in Gdańsk and Warsaw, the Türkiye Europe Future Forum in Istanbul, and the Philanthropic Leadership Platform – China-Europe in Brussels. Through targeted support, we enabled participants to reflect on Europe’s role in the world through the lens of global challenges and to develop responses together. 

A further priority was strengthening Europe’s future partnerships. This included a roundtable on African-European cooperation in critical raw materials organised by the Africa Policy Research Institute and the European Policy Centre. Together with our partners, we are working to strengthen expertise across Europe and foster strategic responses to global change, including through initiatives such as the European Rule of Law Conference. 

Our affiliated organisations also made significant progress. Last year, the Advisory Board approved a second funding phase for the Bildungsnetzwerk China, which simultaneously expanded its focus to include Chinese-speaking communities around the world. In recognition of its pioneering work, the German Federal Foreign Office increased its institutional funding for the Mercator Institute for China Studies (MERICS) from 2026 onwards. Meanwhile, the Deutsch-Türkische Jugendbrücke took an important step towards greater organisational independence by establishing as its new sponsoring organisation the Deutsch-Türkische Jugendbrücke e.V.. All of this underlines the importance of long-term commitment and reliable partnerships in responding to a rapidly changing world—not only today, but in the years to come.

Climate protection is losing political momentum amid competing security priorities, economic pressures and growing distributional conflicts. At the same time, increasingly severe extreme weather events – including in Germany – are becoming impossible to ignore. Building society’s resilience to climate change requires rapid emissions reduction and effective climate adaptation to go hand in hand. Climate action must also be understood as a cross-cutting issue, closely linked to innovation, competitiveness and geopolitical resilience. Equally important is ensuring that climate policy is socially just, enabling as many people as possible to live in ways that are both climate-friendly and resilient to the impacts of climate change. Only then will the necessary transformations command broad public support. 

Against this background, we strengthened our work on social participation and equitable climate policy over the past year. This included collaborations with the Bundesnetzwerk Bürgerschaftliches Engagement, the KLUG – Deutsche Allianz Klimawandel und Gesundheit, and the think tank Zukunft KlimaSozial. We also placed greater emphasis on financing the transition. Our newly established think tank, Finance4Transition – F4T, aims to mobilise private capital for decarbonisation. 

We also began integrating climate mitigation and adaptation more closely across our work. At the University of Bonn, we support a project examining the long-term consequences of the catastrophic Ahr Valley floods. Meanwhile, the Wuppertal Institute is analysing how the increasing impacts of climate change are reshaping transformation pathways and climate policy scenarios. 

In 2026, we will place greater emphasis on an integrated approach to climate policy. We are launching a new strategy guided by the vision of a climate-resilient society that brings together emissions reduction, adaptation and carbon dioxide removal. Its objective is to respond effectively to changing political, economic and environmental conditions. While the strategy builds on our existing work, it also creates space for new topics and partnerships, embedding them within a more integrated framework. 

Global conflicts, the rise of authoritarian tendencies, economic stagnation and growing social inequality in Germany shaped the past year. Feelings of uncertainty and fears of downward social mobility are increasing, with many people feeling that they lack equal opportunities to participate in society and that their political voices are not being heard. As a result, many perceive social cohesion to be weakening while polarisation continues to grow. Yet participation and social cohesion are fundamental to a resilient democracy. 

These developments prompted us to refine our strategy in 2025 and develop new approaches to addressing these challenges. Going forward, we will place an even stronger emphasis on promoting the participation of socio-economically disadvantaged people facing difficult life circumstances. In particular, we will focus on local communities and the labour market. 

At the same time, we remain committed to strengthening social cohesion by creating opportunities for people with different perspectives and backgrounds to engage with one another, while encouraging the political participation of groups that continue to be underrepresented. We also work to reinforce the democratic institutions that underpin public trust in the state and its ability to act effectively. Our particular focus is on strengthening the resilience of local democratic institutions, which form the foundation of a functioning democracy within communities. To this end, we support the Netzwerk Junge Bürgermeister*innen and are working, together with the Gesellschaft für Freiheitsrechte,  to strengthen legal protections for local elected representatives. 

Another priority over the past year was improving labour market participation for young people without formal vocational qualifications. In partnership with JOBLINGE, we will support these young people over the coming years in gaining direct access to vocational training. Through this work, we are exploring innovative approaches to labour market integration that strengthen individual economic participation while helping to address structural skills shortages. 

Finally, over the past year we worked with the think tank More in Common to strengthen collaboration between civil society organisations and business actors, equipping them with the knowledge and skills needed to foster social cohesion. Our overarching goal remains to support companies in embracing their wider social responsibility while strengthening a civil society that has come under increasing pressure in Germany.