Sustainable investing: All Greenwashing or What?

Unclear definitions of sustainability and green investments

The problem here lies primarily in the lack of a definition of the term: ESG stands for Environmental, ESG stands for Environmental, Social and Governance. So-called "ESG" funds evaluate such factors when they want to invest in particularly sustainable companies.

"But exactly how they do it and how strict they are about it is up to them," says Magdalena Senn, financial markets expert at Finanzwende Recherche. So-called sustainable ETFs are often based on the so-called best-in-class principle, meaning they invest in companies that strive to do better in what is actually their controversial industry. However, this approach is very difficult due to its relatively lax standards with regard to sustainability. For example, according to this line of reasoning, an oil company can be included in a green fund if it is considered the most progressive of the oil companies. Another problem is that the ESG ratings from different Providers sometimes vary widely. In this example, a different oil company may be the "best", as Magdalena Senn points out. That's why investors who really care about sustainability need to pay attention to what exactly is in the funds or ETFs they invest in. If it says ESG, don't be lulled by green promises, but look one level further." Magdalena Senn, financial markets expert at Finanzwende Recherche.

A possible solution to the definition problem is emerging on the political side: In response to the UN's Paris Climate Agreement and the Sustainable Development Goals (SDGs) agreed there, the EU at the end of 2019, the EU formulated new guidelines for classifying investments according to environmentally and socially sustainable criteria (taxonomy).

Contradictions of the EU taxonomy

However, as was announced at the beginning of 2022, the EU Commission is likely to classify nuclear power and gas as sustainable under certain conditions. as sustainable. Rumor has it that there was a secret deal between Germany and France. And as if that were not absurd enough, after the Russian attack on Ukraine, there are also voices that want to recognize the arms industry as sustainable, because it contributes to "securing peace, freedom and democracy in Europe" (statement by defense expert of the Federation of German Industries Matthias Wachter). Should the EU Commission be tempted to take such a step, it would be an absurdity not to be surpassed, it would virtually greenwash its own standards. However, these discussions also show how important it is that investors do not blindly rely on full-bodied advertising promises, but must pay attention to the choice of their investment. They need to be careful when selecting their investments whether they really correspond to their idea of sustainability.

Transparency in sustainability is key

Goldmarie Finanzen therefore focuses on transparency: the combination of individual shares, based on strict and comprehensible sustainability criteria. Another advantage here is that the voting rights of the shareholder remain with the investor and are not remains with the investor and is not transferred to the fund provider (as is usual with ETFs). This retains the possibility of directly influencing the companies is retained and is not transferred to providers with partly non-transparent political agendas.