Mr Thomä, you are currently at the climate conference in Glasgow. What role does the financial market play in the discussions about climate protection?
Antonia Mannweiler
Editor in business.
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There was greater optimism in Paris.
The climate conference in Glasgow is not a failed summit.
But the best that we are currently getting is just not good enough.
That being said, the financial sector is an absolute hot topic here.
You can tell, for example, that the Prime Minister of Barbados calls financial institutions and central banks by name.
The private sector plays a major role in combating climate change.
What exactly is the financial sector doing?
Almost every day there are new trillion commitments for the environment or new climate alliances are announced.
Is that just lip service?
It is a matter of a certain actionism or event fetishism.
There are clear voices who consider this to be greenwashing.
But it is impressive how institutions are mobilizing to make their portfolios climate-neutral.
Clear positions were taken in Glasgow.
It's no more like a few years ago, when there were just a few lost ESG analysts attending such conferences.
And what role do private investors play in the debate? Can they do anything at all in combating climate change? The bulk of the capital flows are ultimately directed by the large institutional investors.
If I don't buy meat in the supermarket in Berlin, I won't prevent less minced meat from being produced.
The same applies to consumption and investment.
What will several hundred euros bring me in a 200 trillion market?
But it's also about taking an active role.
For example, small investors can change their shareholder behavior if they vote for climate resolutions in companies.
What should investors look out for when trying to make their portfolio sustainable?
There is no such thing as sustainability.
It's just an umbrella term.
It's like saying I want to be a good person.
First you have to ask yourself what is important to you.
Is it climate protection, is it employee rights, gender issues, animals or pandas?
Climate-friendly companies often belong to sectors with a high level of dependency on heavy metals, where there are employee problems.
Here, too, you have to weigh up.
There are also many investors with religious motives, such as excluding alcohol from their portfolios.
Others say they would rather be actively involved in climate protection.
So you have to answer for yourself what the topics are that you want to push forward.
And when you have answered these questions for yourself?
Then you have to take your preferences into account and implement them.
Often, however, they only sell off-the-shelf ESG products.
So it helps to find out more beforehand.
Comparison platforms such as Meinfairmögen help with this.
Are there sustainability strategies that investors can adhere to?
Three paths have been established.
In the first one, you take the standard portfolio, shake it once and then get an ESG twist.
Instead of 1,400 companies, you suddenly only have 900. That shifts the weighting of different sectors and companies.
You then have less coal and gas in your portfolio, but maybe more McDonald's and Facebook.
Everyone can have their own opinion about whether this is sustainable.
Most would say: not really.
On the other hand, there is only marginally higher risk of spread and a low risk of clusters.
The sustainable MSCI ESG Leaders Index has been around for 14 years, and the MSCI World has been developing in step with it for just as long.
What do the other paths look like?
The second way is to choose a more focused topic.
Investing in a fund for renewable energies, for example.
Then you take the topic of sustainability really seriously.
A title like McDonald's is unlikely to find its way into it, and you won't find any coal or gas values either.
It's no longer a Wild West like it was a few years ago.
There are significantly higher growth opportunities, but also a higher cluster risk.
So you have to think carefully about how risk-conscious you are.
And what does the third path look like?
This is the world of impact investing.
These are impact-oriented investments. This means that the investment should make a positive contribution to the climate or society. In return, investors receive a financial return.
Yes, there are many smaller companies or peer-to-peer platforms in this area.
Exciting projects can also be supported with crowd investing.
But of course you are in risk profiles that cause most investors to sweat.
But that's the reality: the more you want to change the world, the more risk you have to accept.
You may find the topic important, but it doesn't sound particularly attractive or sensible for old-age provision.
Taking sustainability seriously does not mean reallocating 100 percent of your assets into ESG funds.
That is not the last word in wisdom.
A sustainable portfolio doesn't have to have more risk than a normal portfolio.