To many investors, the yield level is not the only criterion anymore when it comes to their investment decision-making process. More and more investors also want to make sure that their capital is invested in an environmentally conducive and ethically correct fashion. But how can they find such sustainable investment opportunities?
Yield plus ethics plus environmental conscience
Back in the days, the most important investment criteria for investors were: safety, liquidity and yield. Nowadays, if you ask investors, another criterion has been added: sustainability. An increasing number of retail investors want to be sure that their money does not go to banned weapons, child labour, or unethical companies.
The market has recognised this trend. At EUR 280,6 bn, the total volume of sustainable investments has set a new high in Germany, Austria and Switzerland combined. Relative to the previous year, assets invested on the basis of stringent social, environmental, and governance criteria have grown by manyfold. One of the pioneers in this segment of the financial market is Austrian Erste Asset Management (Erste AM). As far back as 17 years ago, the company floated the first environmental equity fund, and since 2006 Erste AM has collaborated with the environmental organisation WWF – a collaboration that has been internationally recognised.
No weapons and no child labour in investments
“Sustainable return depends on stable, well-functioning, and solidly governed companies,” as Gerold Permoser, Chief Investment Officer of Erste AM, points out. And for issues like stability and solidity, aspects such as corporate social and environmental responsibility have become increasingly important. An environmental or financial scandal can easily get a company into dire existential straits in times of social media. Corporate management knows this. “Never before has sustainability been more important than today,” says Permoser.
Almost every company today has departments that deal with environmental protection and fairness, not the least with a view to shareholder value. Consistent investments and compliant companies are crucial to ensure that things like child labour, food speculation, the production of banned weapons, or corruption reliably end up on the index. There are some 400 sustainable funds at the moment in the German-speaking region. By investing sustainably, an investor will reap benefits in the future, can earn a lucrative yield, and also supports a compliant corporate policy.
Good growth opportunities from mega trends
We are faced today with the fact that a number of mega trends, i.e. far-reaching global developments, also drive the issue of climate change, and in turn, population growth or urbanisation in growth regions. The aforementioned trends lead to an increase in energy consumption, rising demand for scarce resources, more emissions of greenhouse gases, and an increase in waste. Key technologies in the environmental field today are e.g. renewable energy (wind energy, solar), energy storage, lighting (LED), optimization of energy transport but also electric cars.
“At the end of the day, companies that offer solutions to these developments will be benefiting from above-average growth opportunities for years. Everything starts with socially responsible investments,” as Permoser concludes.
With sustainable assets under management of EUR 5.3bn, Erste AM is a pioneer in the areas of ethics and sustainability: the first public sustainable fund was issued as early as 2001.
Prognoses are no reliable indicator for future performance.