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Tips and information on green funds, stocks and ETFs

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TIPS AND INFORMATION ON GREEN FUNDS, STOCKS AND ETFS

What are sustainable investments?

Tips and information on green funds, stocks and ETFs. Conventional investments primarily consider aspects such as return, risk and liquidity – sustainability, on the other hand, plays a subordinate role or not at all. Sustainable investments close this gap by paying attention to compliance with sustainability criteria by the companies and countries concerned when selecting stocks and indices. In this way, investors can invest with a clear conscience and contribute to a better future with their investments. There are now sustainable investments in a number of areas of traditional investments. There are lots of different financial products to choose from, from funds to government bonds, ETFs (Exchange Traded Funds) and individual stocks. We show you what is important and how you can recognize and assess sustainable investments.

What are the criteria for sustainable funds and ETFs?

In the area of ​​financial investments, sustainability is a multifaceted term that is unfortunately not subject to any legal requirements. However, the ESG ( Environmental, Social, Governance) criteria, which are used to assess the sustainability of a company (or state), are widespread.

ESG stands for sustainability in three areas:

  • Environment
  • Social
  • Supervisory structures (governance)

The ESG criteria do not represent specific conditions, but serve as a guide for a sustainability assessment and are an international standard in the field of sustainable investments.

How are sustainable funds composed?

There is no single process of how closely the ESG criteria are applied when building a fund. They range from selection criteria to active influence on corporate management. So, to really understand how a sustainable fund invests and influences, you should understand the key strategies.

  • Connection criteria
  • Best-in-class approach
  • Theme fund
  • Engagement and exercise of voting rights
  • Impact Investments

FNG SUSTAINABILITY PROFILES FOR SUSTAINABLE FUNDS

Good to know : According to a study commissioned by the Federal Environment Ministry, a climate-friendly investment strategy can reduce indirectly caused (because financed) greenhouse gas emissions by up to 42%.

What can a sustainable investment achieve?

With an investment in particularly sustainable companies and countries, you support them on their way to more sustainability. Simply because your money is no longer available for all those companies and countries that do not take sustainability seriously. But above all, you are specifically reducing your impact on our planet. Because your money will be managed more sustainably from now on. It may even directly develop new clean technologies that will create a better future for all of us. You and your wealth will become an engine of the energy transition. In this way, you also indirectly reduce your personal carbon footprint and your water consumption!

How safe are sustainable investments?

Sustainable investments hold the same opportunities and risks as conventional investments. It basically depends on the type of investment, how high the earnings opportunities and the risk of loss are. When investing sustainably, you should therefore first check which form of investment corresponds to your personal needs in terms of security, profitability and liquidity. Always remember: higher return expectations usually come with higher risk.

Are the returns on sustainable investments lower?

The returns on sustainable investments are usually in line with the market average. There are even studies claiming that sustainable funds outperform traditional funds.  In principle, with a sustainable investment strategy you do not have to do without higher returns. However, the personal return on any investment always depends on the individual case.

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