Verena Menne on how investors can stay ahead of sustainable finance developments

What trends are you seeing in sustainable finance within Germany and Europe, and how can investors stay ahead of these developments? 

At EU level but also nationally, we see a shift in focus from sustainability (e.g. EU Green Deal) to economic concerns (e.g. Competitiveness Compass, Clean industrial deal). However, these two aspects are not a trade-off: being a front-runner in sustainable finance including aspects such as sustainability reporting, we also strengthen the EU’s competitiveness.  

Investors should stay their course in terms of their sustainability strategies and be clear about what they need for that: a streamlining of the sustainable finance framework without compromises on its ambition.   

How can financial institutions build a more inclusive and sustainable financial system in the context of the EU’s sustainable finance agenda? 

Amongst our members we see a lot of discussions about transition as well as biodiversity – two areas where there is currently limited regulation. Financial institutions should set their objectives and strategies both within and beyond regulation, focusing on the areas where they see the biggest risks to avoid or opportunities to benefit from.  

What tools or methodologies would you recommend for investors looking to better assess and manage the impact of their sustainable investments? 

That will vary according to asset class and sustainability strategy. However, one thing is helpful across all different situations: the exchange with peers. Sharing worries and problems as well as solutions and successes can be beneficial for everyone involved.  

With increasing scrutiny on greenwashing, how can investors ensure the integrity of their sustainability claims and avoid falling victim to misleading green investment products? 

Investors should consider what they want in terms of sustainable investment (Focus on climate? Focus on social? Already green? Transitioning? ) and then carefully assess what is out there in terms of products. Tools such as the FNG Sustainability Profiles can serve as an initial guide during an analysis, providing detailed insights into the sustainability strategies of over 500 investment funds. 

Labels such as the FNG-Siegel can help to identify credible products that are professionally managed and thus prevent greenwashing.