Investing in a Sustainable Future
Today we encounter the topic of sustainability everywhere, including in investing. Earth Overshoot Day shows why it matters: from this day on, we use more natural resources for the rest of the year than the Earth can regenerate in that year, and thus live at the expense of future generations. For Austria, this day has fallen in spring for years.
With sustainable investments you can invest your assets in a way that matches your personal values and support more sustainable development. Whether a sustainable investment generates higher or lower returns or weathers crises better than other investments cannot be said in general. It depends on the individual product, its costs, market developments and the time period.
Some topics that sustainable investments often focus on: alternative energy sources, energy efficiency, water supply, mobility and transport, green buildings, smart grids, the blue economy (sustainable use of marine resources) and recycling.
Like any investment, this area has risks as well as opportunities. Many companies in these fields are young or operate in new markets; how they will develop in the long run is hard to assess. In addition, prices fluctuate and in individual cases the capital invested can be lost.
What Is Sustainable Finance?
When is an economic activity environmentally sustainable? The EU Taxonomy Regulation (Regulation (EU) 2020/852) is a classification system of the European Union. Under it, an economic activity is environmentally sustainable if it
- contributes substantially to at least one environmental objective, such as climate change mitigation,
- does no significant harm to any of the other environmental objectives,
- meets the technical screening criteria and
- complies with minimum safeguards, for example on human and labour rights.
"Environment" is one of the three pillars of ESG (Environmental, Social, Governance). These three areas describe how responsibly a company operates.
Article 8 and Article 9: disclosure categories, not quality labels. Under the EU Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088), providers must disclose how a financial product deals with sustainability:
- Article 9 products have sustainable investment as their objective.
- Article 8 products promote environmental or social characteristics.
- Other products are not subject to these specific disclosure requirements.
This classification tells you what information a provider has to disclose. It is not a quality or safety label and says nothing about the return or risk of a product.
There are also labels for financial products, such as the Austrian Ecolabel for sustainable financial products. Such a label confirms that a product meets the criteria of that particular label. It says nothing about return, costs or risk, and the criteria of the various labels differ.
A common reference point for sustainability goals are the United Nations' 17 Sustainable Development Goals (SDGs). The various categories and labels are not yet standardised; further developments and innovations can be expected in this area.
What Does Sustainability Mean for You in Our Advice?
When we advise on unit-linked life insurance (insurance-based investment products) and when we arrange securities, we go through these steps with you:
- Your starting point: We clarify your investment objectives and the planned investment period, your knowledge of and experience with investments, your financial situation including the losses you can bear, and your risk tolerance.
- Your sustainability preferences: We ask whether and to what extent sustainability is important to you in your investment, for example a minimum proportion of environmentally sustainable or sustainable investments, or the consideration of adverse impacts on the environment and society.
- Clear explanation: We explain the sustainability features of the products in question to you on the basis of the providers' information.
- Does the recommendation suit you? We check whether a product suits your objectives, your circumstances and your sustainability preferences. If no product matches your preferences, we tell you. You then decide whether you want to adjust your preferences.
- Documentation: You receive a written statement on the suitability of the recommendation with the reasons for it.
You can find our legal information on how we deal with sustainability risks, adverse sustainability impacts and our remuneration under Sustainability-related disclosures in the imprint.
