Finance – Sustainable financial advice: support for “green” investments? – Business

Frankfurt am Main (dpa) – The European Commission wants to spend more money on “green” investments. From August 2, things will become serious for banks and asset managers: from then on, when providing investment advice, they will have to ask about the sustainability advantages of their clients.

Why it is?

Regardless of whether it is an investment fund, an equity fund or an annuity fund – from August 2, bank advisers and insurance brokers are obliged to ask clients if they want to invest “green” and what their preferences are. This should be taken into account when choosing a product. The regulation is part of a whole series of new EU regulations that gradually come into force under the acronym “Mifid II”. In the future, investment advice will no longer be just about return and risk, but also about the environment, social issues and good corporate governance: the acronym ESG (Environmental Social Governance) is used to some extent in advice.

Are there uniform rules for “green” investments?

Along with the taxonomy, the European Commission in Brussels has launched a kind of catalog of climate-friendly investments. The criticism is that from January 2023 it is also considered climate friendly to invest money in certain gas and nuclear power plants. Among other things, environmentalists consider this to be wrong. Investors must therefore continue to be very well informed about what lies behind financial products advertised as “sustainable”.

“Implementing the Mifid II requirements is crazy for consultants,” says Christian Klein, who studies sustainable finance as a professor at the University of Kassel. “One problem is: How can I explain to my client in a short time what, for example, taxonomy and disclosure regulations are? The main problem then is the so-called buys? “

When asked, the BVI fund association explained: “The fact that there is still no common understanding of what is sustainable, despite the myriad technical details and regulations, is actually a problem.” According to the BVI, only European or international minimum standards can provide more clarity: “This applies equally to ESG data, corporate reporting and sustainable product requirements. Therefore, we are committed to complying with such international minimum standards. “

What does the new rule mean in practice?

Suppose a customer wants to invest 60 percent of € 10,000 in ecologically sustainable investments as defined in the EU Taxonomy Regulation. In this case, an investment advisor can recommend a sustainable financial product for € 6,000 and a product that has nothing to do with ESG for the remaining € 4,000.

Are “green” financial products really “green”?

According to bank president Christian Sewing, the financial sector takes the challenges of climate change very seriously. “The financial industry is now using a lot of resources to ensure that what we call green is really green,” the head of Deutsche Bank recently said as president of the German Banking Association (BdB) in an interview with dpa news. agency. “All market participants are aware of how dangerous the greenwashing allegations are.”

What is the purpose of the new requirements?

Politicians want to direct more money where it benefits the climate and the environment instead of harming it: climate protection, adaptation to climate change, sustainable use of water resources, transition to a circular economy, avoiding pollution, and protecting ecosystems and biodiversity, etc. etc. The European Union has set itself the goal of climate neutrality by 2050, and Germany wants to achieve this by 2045. This means that from then on, gases that are harmful to the climate, such as carbon dioxide (CO2), should be avoided or stored. According to experts, the transformation of the economy from “brown” to “green” will only be successful if, in addition to public billions, also private individuals will support it with their investments.

How popular have sustainable investments been so far?

The trend is growing. The Nachhaltige Geldanlagen Forum (FNG) has set the total amount of sustainable investments in Germany as of December 31, 2021 at EUR 501.4 billion. It’s almost 50 percent. more than a year earlier. The share of balanced funds in the entire German market increased significantly during the year from 6.4 percent. up to 16.7 percent

Will the new rules provide another boost?

“In polls, most Germans have been saying for years that the topic of sustainable development in investing is really exciting for them. But they are not implementing it, ‘says Professor Klein from Kassel. “I am convinced that if this is actively offered to customers, we will get a huge demand. It can be bumpy at first as the case is complex. But I think in the end a lot of investors won’t buy an 0815 fund, but something green. “

However, the BVI fund association is skeptical that from now on demand can be met in all respects: “In the beginning there will probably not be enough products to meet all possible customer preferences.”

© dpa-infocom, dpa: 220801-99-231519 / 2

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