Nadine Bold, the Umweltbank’s business is based on the principle of sustainability. Now everyone is talking about sustainable investments. What impact is the trend having on you?
When the UmweltBank was founded 25 years ago, sustainable investments were still a side issue and people made fun of our business model. Now all of that has changed. Today our core business – renewable energies, the environment, and social housing – is more relevant than it has ever been. This is a positive development for us, because more and more people are discovering the UmweltBank. The news about the climate crisis is having an impact on people and protests like Fridays for Future are raising public awareness of the issue of sustainability. This is leading to growing interest among younger target groups, who are deliberately coming to us, because, at the UmweltBank, sustainability is not just a trend, but has been a corporate objective over the last 25 years.
How do you explain this rapid change in the attitude of the public?
I think it is mainly due to the fact that climate change is taking place outside our own front doors and we are experiencing it directly. Investment is not necessarily the first thing that comes to mind in the context of sustainability, but awareness is growing. The EU is also having an impact by imposing an increasing number of obligations on companies to become more sustainable. These include the EU taxonomy and the Sustainable Finance Disclosure Regulation. The reporting requirements on companies are becoming more comprehensive and financial organizations have to publish their strategies and information about their approach to sustainability risks. The subject is growing in importance for banks too, because the climate crisis has long since become a financial risk.
Most banks use the term ESG in their advertising to highlight their focus on the environment, social responsibility, and good governance. What does an ESG investment actually involve?
This can vary significantly, so customers who are interested in sustainable investments need to read the small print very carefully. Funds often use the best-in-class approach. This means that an allegedly sustainable fund invests in the companies in an index or an industry that are the leaders in terms of environmental, social, or ethical criteria. Depending on the bandwidth of the selection, this can include businesses that have not completely given up using fossil fuels, that do not fully comply with labor law standards, or that have corporate governance systems which leave much to be desired. Many funds also apply tolerance limits, which means that they allow investments if a company’s involvement in the arms industry amounts to a maximum of ten percent of its business, for example.
What is the difference between sustainable and ESG investments?
You have highlighted a fundamental problem. It is important to look very carefully at what the individual providers mean by these terms, because they are not protected. At the UmweltBank, we talk about sustainable investments in the context of the Sustainable Development Goals (SDGs). These are the 17 goals for sustainable development that all the member states of the United Nations were asked to commit to in 2015. This globally recognized concept of sustainability includes specific goals for socially, economically, and environmentally sustainable development ranging from the use of clean energy through to education and gender equality. Anyone who invests money with us is having an impact that is based on the SDGs.
Greenwashing is the attempt to give a product or a company a green image by means of marketing. How do you avoid this?
We often see greenwashing happening at companies that have not been sustainable in the past and then try to make themselves look green with a specific product or a campaign. At the UmweltBank, we have the advantage that sustainability has been a core part of our corporate strategy since we were founded 25 years ago. On the one hand, this means that we do not have a legacy of doing business unsustainably. On the other hand, we aim to provide complete transparency, because the more data we make available, the less possibility there is of greenwashing. In our own UmweltSpektrum funds for example, we put the emphasis on a comprehensive, traceable, and transparent selection process. In addition, we provide information about the securities in the funds and their focus on sustainability on a monthly basis. Our five-member environmental board, which is the environmental equivalent of a supervisory board, monitors our compliance with sustainability criteria. In addition, our 300 employees and 133,000 customers are highly vigilant, and this means that we receive a lot of valuable feedback.
You only offer actively managed funds?
Our portfolio is free of charge and we offer investors a carefully selected range of sustainable equity, pension, and mixed funds from a variety of providers. These include our own UmweltSpektrum funds, which are actively managed.
What sort of returns do sustainable investments offer?
You don’t have to accept lower returns if you choose a sustainable investment. On the contrary. Against the background of the global crises, sustainability is increasingly becoming a decisive criterion for market survival.