Union Investment along with profession Henry Schäfer from University of Stuttgart did sustainability study, for which 203 major investors in Germany were surveyed with asset under management amounting to €6trn.
According to the study, 65% of institutional investors in Germany stated that sustainability criteria should be taken into account. In 2013, their share was only 48%. For 35% of all respondents ESG criteria play no role at the moment. The study shows a dichotomy of the institutional market: There are still sceptical investors who fear disadvantages in achieving their investment objectives. In contrast, there are investors who have gained predominantly positive experiences with sustainability in practice.
91% of the surveyed capital management companies make significant use of sustainable investment strategies. The sustainability rate is particularly high at 80% for church investors and foundations. This is followed by pension funds with a share of 57%, insurance companies with 49%, banks with 41% and large companies with 40%. At 56%, more than half of these investors are very satisfied or extremely satisfied with the consideration of ESG criteria in the investment process. That’s an increase of 10% points over the previous year. 85% can no longer imagine withdrawing from sustainable capital investment (previous year: 77%).
For three quarters of respondents, economic criteria are in the foreground, an increase of 11% compared to previous year. By contrast, social and ethical criteria (64% each) and governance criteria (63%) are considered far less important. Ecological criteria are the worst of the list (58%).
“Investors are increasingly looking at sustainability from an economic perspective. Proponents and opponents seem to agree that sustainable investments have to be financially rewarding,” said Alexander Schindler, who is responsible for institutional clients at Union Investment.
Based on the investor survey conducted by Professor Schäfer, the sentiment index for sustainable capital investment rose by 3.5 points to 22.9 points over the previous year, thus continuing its moderate upward trend in recent years. The index measures the attitude of German investors towards sustainability on a scale of -100 to +100.
“The sentiment index shows a slowly growing acceptance of sustainable investments by investors. There is still a lot of room for improvement. Compared to other European countries, the German market is still not exhausting its potential. The number of sceptics is shrinking in Germany only slowly,” noted Schäfer.
Institutional investors who do not consider sustainability criteria fear disadvantages in terms of return and risk management. By contrast, investors who spend money both conventionally and sustainably report the opposite: 70% of them claim that the sustainable portfolio has developed similar or even significantly better than the conventional portfolio in terms of yield and risk aspects. The proportion of respondents who lacked relevant information was 24%.
The survey determined that sustainable investment plays an important role for investors. For example, 78% of respondents said they would invest in sustainable investment if their environmental, social or ethical impacts were measured.