Investment for Future.
Sustainable investments. Those who integrate aspects of sustainability into their investment processes will not only generate more returns in the future. It also helps to change the economy and society in a positive way. Because capital can move a lot.
"You're not using plastic bags? Do you ride your bike in the city instead of your SUV? But have you ever thought about what your capital is doing in the meantime," asks Michael Huber from the Vermögenszentrum Frankfurt: "Because that would give you much more influence.
"We can all be real catalysts on the capital markets. We provide equity and debt capital. Reward companies with it. Or punish them by withdrawal. And they trigger eco-innovations. This has now become a megatrend, a real movement," adds Oliver Borgis of Weberbank. Investment for Future.
"This is a big issue for high-net-worth clients and especially for the younger generation. They want to know: Dad, Mom, how do we actually earn our money? How sustainable are we," informs Fabian Strube, Robeco.
So sustainable investment has long been out of the "green" corner. "It makes sense and, if implemented correctly, should also generate higher returns in the future. In view of stronger regulation and more critical consumers, sustainable companies are simply better positioned to compete. They are more sustainable and have a much lower reputation risk," explains Axel Angermann, Chief Economist of the Feri Group.
The most frequently used strategies for implementation are exclusion, best-in-class and impact. In exclusion, the investor's convictions define the investment universe. In the best-in-class approach, it is the ESG criteria - environment, social affairs and governance - that count. In each sector, either the best companies are identified or those that improve the most according to these criteria. "Those who invest in these improvers have the greatest impact," says Alexander Prochnow-Ast, Head of Portfolio Management at Volksbank Kraichgau's Family Office.
Impact is the key word that drives entrepreneurial families in particular. It plumbs capital into young start-ups whose products and services could change the world. "This is of course early-stage financing with all its opportunities and risks," says Stefan Ebner, Partner at Focus Asset Management in Munich. "But it also has the most direct effect when, for example, investments are made in companies that develop better technologies for the purification or storage of water," explains Marc Flügel, Robeco. "We are actually looking for suitable candidates via our network," says Ebner, "for example, a technology company that can filter CO2 out of the atmosphere would be ideal.
For private investors, the diversity of the strategies means: "They must become clear about how they personally want to realize sustainability in their depots," says Thomas Buckard, CEO of Michael Pintarelli Finanzdienstleistungen AG in Wuppertal. "Many investors have a vague idea of what they want, but a lot has to be said before it becomes an investment strategy.
In fact, the devil is in the detail. With oil, nuclear power and tobacco, it may still be easy to make a statement. But this is not so easy for industrial companies with many sales areas and global production sites. Even seemingly unambiguous rankings such as CO2 emissions are full of pitfalls. In the first positions, for example, there are almost only banks and insurance companies. Because they produce nothing physically. "After all, CO2 can still be measured. But with ESG criteria there will always be qualitatively different opinions. That's why the EU wants to continue to clarify what sustainability means," says Michael Huber.
"The world of sustainability is not black and white," says Ebner. There is always a "What speaks for it, what against", and at the end of the day the return must be right.
For its own assessment, the industry essentially draws on data from three analysts: MSCI, Sustainalytics and ISS Ökom. Their ratings define the investment world of sustainability as investors know it from fund ratings. Alexander Prochnow-Ast, for example, looks at the sustainability scores and leaves out the lower third. "Then we look for the top business performers."
Stefan Ebner himself has developed a database with which he calculates the impact of a company. "We can quantify which share of sales is generated with positive aspects and which with negative ones - this is how we can weight them.
Oliver Borgis votes for a combination of exclusion and best-in-class: "Use comprehensive criteria to systematically exclude certain investments and apply classical fundamental analysis and best-in-class to the remaining universe. We ourselves consider criteria at company level from six main groups with zero percent tolerance and from eight main groups with ten percent tolerance.
The Robeco team is more uncompromising: in addition to defined minimum standards on exclusion criteria, ESG criteria are firmly anchored in every investment process. "In addition, we are convinced that wealth goes hand in hand with responsibility. The Dutch investment manager therefore actively exercises its voting rights and enters into a dialogue with the companies in order to improve behaviour and the long-term return on investment. Alexander Prochnow-Ast advises investors to use MSCI ratings as a guideline: "They give a company the stamp that proves that it meets the required ESG criteria of the EU. The shares of these companies would in future be bought by institutional investors - so it makes sense to include them in the portfolio beforehand."
A new challenge for the bankers. They have to be sparring partners for investors, create transparency, have an opinion on the impact of the companies - and then keep an eye on the return aspect. "Of course - anyone who interprets ESG too strictly will make the investment universe too small. Creating a balanced portfolio with risk-minimizing asset allocation is difficult," says Thomas Buckard. The future is that capital investment will take place on two levels. "The purely economic, according to old fundamental indicators. And the sustainable one. Used together, deposits become sustainable and yield strong," says Axel Angermann.
Sustainability is not a single investment strategy, but one of several analytical tools that investors should use.
"Possibly", Michael Huber reflects, "in 15 years a portfolio will look exactly the same as it does today - with the difference that the companies have done their homework and are now operating consistently according to ESG criteria. Then our capital would really have changed the world."
The EU wants to create clarity and defines what sustainability means in the coming years. "A sensible measure," says Oliver Borgis of Weberbank in Berlin. "But it does not conclusively solve what ESG is exactly. The lowest common denominator will be found," says Alexander Prochnow-Ast.
The bankers are less enthusiastic about the "EU Action Plan Financing Sustainable Growth". "It partly dictates to the financial industry how it must take ESG criteria into account in its investment decisions, that's a mistake," says Mark Flügel of Robeco. Politicians have to set the framework, create order, but not deal with how to implement it. "That's a planned economy," criticises Axel Angermann.