Banks and fund companies market sustainable financial products with great vigor.

In a study presented on Thursday, the Leibniz Institute for Financial Market Research SAFE, the ESMT Berlin University of Economics and Business and the Dresden branch of the Ifo Institute for Economic Research doubt whether this will save the climate and the environment.

In the joint analysis, the researchers warn of excessive expectations.

Green systems only contribute to reducing CO2 emissions under certain conditions.

Markus Frühauf

Editor in business.

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According to the paper, green stocks, government bonds and portfolios, with the help of which the transformation of the economy towards more sustainability are to be supported, do not necessarily have the positive characteristics that investors hope for in them. The researchers base their doubts on the fact that there is practically no causal link between green financial instruments and the use of funds for green purposes in companies and in the national budget. "Green financial investments therefore have far less influence than desired on investments by companies and the state," they write.

The discussion about nuclear power in the EU shows that the classification of technologies as sustainable can trigger disputes.

France and other countries want to introduce this into the catalog of sustainable finances because it is a low-carbon form of energy, while Germany is against it due to the unclear disposal.

In an interview with the Reuters news agency, Chancellor Angela Merkel said that Germany would probably not be able to assert itself on this issue.

This shows how strongly the assessment of what is sustainable is guided by subjective interests.

Green portfolio does not reduce pollutant emissions

The researchers also take a critical view of the chances of being able to reduce pollutant emissions with a green equity portfolio. Companies that issued green shares were not doing so in a more sustainable manner. "Those who invest in green financial assets make their own portfolio greener, but nothing changes in the emissions of the economy as a whole," says Jan Pieter Krahnen, SAFE Director and one of the authors of the study.

The situation is similar with green government bonds, which the federal government issues in the exact amount at which green spending could previously be identified in the federal budget.

So only conventional bonds would be replaced by green bonds.

In the opinion of the authors, private investors can achieve more if they actively participate in decision-making processes in the company in order to initiate an actual change towards more sustainability.

In doing so, however, they would have to be prepared to lose profits, warns Marcel Thum, head of the Ifo branch in Dresden.

The authors call for the emphasis to be placed on a political regulatory framework instead of private engagement.

In this way, pollutant emissions could be significantly reduced through an emissions trading system.