By Henrike Hein, March 31, 2023
How is sustainability ensured at Goldmarie Finanzen?
In times when greenwashing is a great topic and new scandals are constantly being uncovered, it is of course important to take a particularly close look at where we invest our money.
Together with Germany's most renowned rating agency, imug Rating, we have defined sustainability criteria that we take into account when selecting stocks for our portfolios. The rating agency also provides us with the data we need to carry out the sustainability assessment of the companies. As an independent agency, it prepares ESG evaluations and sustainability ratings based on independent analyses. In doing so, it uses global databases and draws on decades of experience. Our sustainability rating consists of three components:
- Application of exclusion criteria defined with the rating agency
- Inclusion of standard-based screenings
- Positive criteria
The exclusion criteria
We exclude companies that generate revenue in the following business sectors:
- Animal welfare-endangering practices such as factory farming, the production of cosmetics involving animal testing, the manufacture or sale of fur products, or irresponsible animal testing for medical purposes.
- Production or sale of controversial weapons, financing of cluster munitions or anti-personnel mines
- Coal mining & coal-fired power generation
- Fossil fuel industry (upstream)
- Uranium mining
- Unconventional oil and gas extraction
- Manufacturing of banned chemicals or pesticides
- Tobacco industry
The following exclusion criteria are based on the companies' revenue. This means we examine what proportion of a company's total revenue comes from certain business practices. If the share exceeds a defined threshold, the stock is excluded:
- More than 5 % of revenue from the production or sale of civilian firearms
- More than 5 % of revenue from military sales (but not controversial weapons, see above)
- More than 10 % of revenue from midstream activities for fossil fuels
- More than 5 % of revenue in the gambling sector
- More than 5 % of revenue from nuclear energy
- More than 3 % of revenue from pornography or adult entertainment
You can find the exact specifications for the criteria and the upper limits also here. These are supplemented by data from various independent NGOs. These evaluate not only which activities generate sales, but also how production and transport are carried out and what climate-relevant expansion efforts exist.
Norm-based screening
The second component is standards-based screening. This is conducted to identify violations of the United Nations Global Compact. Screened is:
- Respect for human rights
- Compliance with labor law
- Compliance with environmental and supply chain standards
- Anti-corruption
If companies stand out negatively in the above-mentioned areas, this leads to their exclusion from our stock universe.
The selection criteria
As a third component, positive criteria play a role in the evaluation of the companies. These are based on the Sustainable Development Goals (SDG) of the United Nations. The business activities of companies are assessed in terms of their ecological and ethical-social impact. For example, a company's products are rated as harmful, harmless (do-no-significant-harm, DNSH) or positive. Positive criteria relate to the following areas:
- Access to information
- Promotion of education
- Energy and climate protection
- Food and nutrition
- Health
- Infrastructure
- Responsible finance
- Water and sanitation
- Ecosystem protection
Of course, we also include the ESG score of the companies in our assessment. However, this is not uniformly defined and differs depending on which data is included in the score. Therefore, we also use the sustainability criteria mentioned above to ensure that our investments have a positive environmental and social impact. Furthermore, investors are informed about the extent to which their own investment meets the requirements of the EU taxonomy. The problem here is that much of the data needed to assess compliance with the regulation is not yet fully provided by the companies. As a result, financial investments have to be reported as supposedly not taxonomy-compliant because the relevant data is not available.
It is important to us that our sustainability criteria meet high standards and not just the minimum. That's why we constantly question them, conduct ongoing quality management, and draw on the benchmarks of independent NGOs. Our algorithm for optimizing portfolios is therefore fed exclusively with sustainable stocks on the one hand and includes additional sustainability criteria in the optimization on the other. This is unique and sets us apart from the best-in-class approach of most ETFs.