The scandal surrounding Deutsche Bank's fund company, DWS, is probably not an isolated case.
But it illustrates the shortcomings in the classification of investment products that are sold as sustainable and climate-friendly.
Opinions continue to differ as to what is sustainable.
Even in Brussels, where the Commission wants to set international standards with its list of criteria, the so-called taxonomy, the concept of sustainability is reaching its limits: In political horse-trading, nuclear power and gas were classified as transitional technologies and thus as sustainable.
Editor in Business.
Follow I follow
The provider ESG Book, which specializes in sustainable data analysis, points out that German fund companies with their sustainable investment products sometimes perform worse than the competition from other countries.
For example, 45 percent of the funds that describe themselves as sustainable, including listed index funds (ETF), with their stock and bond portfolios, do worse than the average of all German funds in terms of CO2 emissions.
So it would be better for investors who want to invest sustainably to buy a Dax ETF than one of these funds.
ESG Book does not name the affected fund companies in the analysis.
There are also problems internationally
The German climate funds also perform poorly in other respects: For some, almost 40 percent of their investments would not meet the Paris climate targets.
On average, 73 percent of the portfolios, mostly equity investments, are compliant with the Paris climate targets.
According to ESG Book, this corresponds to the international value.
The authors regard this as worrying because the problem with the classification of sustainable funds affects a much wider spectrum than that of German providers.
In their study, they found that not a single one of the analyzed German climate funds has a portfolio that is made up entirely of companies whose business models contribute to the goal of just 1.5 degrees Celsius by 2050.
According to ESG Book, this proportion is 35 percent in the investments of sustainable funds, compared to 28 percent in the entire German fund universe.
Another point of criticism from ESG Book is the investments of German climate funds in companies from the oil and mining sector that promote fossil fuels.
These include companies such as BP or the Australian mining groups BHP and Rio Tinto.
The data provider calls for stricter regulatory measures to harmonize the classification of sustainable investments more.
This is also necessary
$5 billion in fees by 2025
In principle, the author of the study considers the sustainable investment approach to be correct.
He also pursues business goals with his criticism.
ESG Book wants to sell sustainability data to financial companies.
The sustainable data business is growing rapidly.
Index providers like MSCI or rating agencies like S&P or Moody's have been investing here for a long time.
According to estimates by experts, the volume of fees should increase fivefold to 5 billion dollars by 2025.
The abbreviation ESG comes from the English terms for environment (environment), social development (social) and good corporate governance (governance) and stands for the entire spectrum of sustainable goals in the financial world.
ESG Book emerged from the Arabesque S-Ray data unit of the asset manager of the same name.
Although this is still an important shareholder, it no longer holds the majority after the latest round of financing.
The Frankfurt-based company, which also counts Allianz X, the holding company of the insurance group, among its investors, wants to encapsulate itself from Arabesque and strives for an independent market presence.