The trend towards sustainable investments is unbroken. Institutional investors in particular are taking the lead here.
NSustainability in investments is becoming an increasingly important issue in Germany too. The asset class continued to grow strongly in 2018. In the meantime, 219 billion euros have been invested in this way, 28 percent more than in the previous year. This emerges from the current market report of the Forum for Sustainable Investments (FNG) for 2018. If one also takes into account the assets at company level, the total is 1.53 trillion euros.
The assets managed sustainably within the framework of investment funds and mandates grew by more than 41 billion euros to 133.5 billion euros. Almost 45 billion euros are invested in investment funds. There was also growth in customer deposits from specialist banks with a focus on sustainability, which rose by around 8 percent to 38.6 billion euros.
Exclusion criteria continued to dominate among the investment strategies, also in combination with other investment strategies. Almost 128 billion euros were managed using appropriate criteria. The companies pay particular attention to compliance with labor law, the fight against corruption and bribery, and respect for human rights.
The consideration of climate aspects is becoming increasingly important. The exclusion of companies that extract coal or generate electricity has recently become one of the ten most frequently used criteria.
The growth is largely based on institutional investors. At the end of 2018, around 93 percent of these capital investments were in the hands of church institutions, insurance companies and pension institutions, among others. They also expect further growth of up to 30 percent and more.
However, those surveyed also hoped for changes in the legal framework, and private investors are only being relied on in third place. “The German sustainable investment market has always been driven by institutional investors. As a result of the mandatory query of sustainability preferences in customer discussions, the demand from private investors for sustainable investment products will experience a significant boost, ”predicts FNG board member Helge Wulsdorf.
An important impetus is the package of measures of the EU Commission in the context of the implementation of the action plan for the financing of sustainable growth. With a total of ten measures, the EU Commission wants, among other things, to direct capital flows into sustainable investments in order to achieve international climate and sustainability goals. To this end, it relies in particular on creating greater transparency about the range of sustainable investment solutions and their sustainability-related quality.
The foundation, however, is the attempt, within the framework of the so-called taxonomy, to establish bindingly what sustainability means in an economic context. In its currently developed form, however, this is not a comprehensive definition, criticizes the FNG. For the time being, this is largely based on ecological goals and especially climate change. This means that important areas, such as social and responsible corporate governance, would hardly be taken into account.