Investing sustainably: When money does good



Private Banking with focus on sustainability

Money for Future. This is how you could describe the increasing demand for sustainable investments based on the youth demonstrations “Fridays for Future”. This trend is also clearly noticeable in private banking.

Money can make a big difference: It can create jobs, fulfill private desires - and also make the world a little better. The latter is becoming more and more important. "The demand for sustainable investments is increasing," says Heinz Bednar, Managing Director of Erste Asset Management, "especially with larger assets, there is often the desire to achieve something positive." A look at the financial markets confirms that: the topic is sustainability the strongest growing segment. In Austria, Germany and Switzerland alone, over 500 sustainable funds are offered. 280 billion euros have been invested there - a new record.

Investing sustainably with effect

But what is it exactly? Impact investing, the English expression, gets to the point: Investments that have a positive effect in the environmental, social or corporate governance area. Erste Bank and Sparkassen are pioneers in Austria for sustainable investments and already in 2001 they have launched an equity fund that invests in environmental companies. Several funds are now offered with a clear focus on sustainability.

In any case, sustainable investors promote environmental protection and responsible economic behavior - which is why the demand for sustainable investments in private banking at Erste Bank and Sparkassen is increasing sharply. And will continue to rise. Because impact investing plays an even bigger role for millennials.

Ten employees at Erste Asset Management deal intensively with this topic. An integrative approach is being pursued, which accordingly takes an in depth look into the companies.

Criteria for sustainable investments

There are several clear exclusion criteria. They include industries such as nuclear power, arms production and trade, and tobacco. Companies that are involved in child labor, animal testing or corruption cases are also eliminated.

Only companies that are eligible for selection

  • handle the environment carefully (e.g. reduction of CO2 emissions, consideration of natural habitats for plants and animals, low water consumption)
  • take social aspects into account (e.g. respect for human rights, no discrimination, adequate remuneration)
  • are managed responsibly (measures against bribery, fair competition, high transparency, independent supervisory board with a high proportion of women)

A best-in-class approach is then used for selection. Means: Investments are made in companies that have the highest standards in the industry.

Sustainability in asset management

These two examples show what the sustainability concept of Erste Bank and Sparkassen actually means:

ERSTE BANK RESPONSIBLE STOCK DIVIDEND is a global sustainability equity fund with a focus on high dividends. The fund includes, among others shares in the MTR Corporation, one of the largest Chinese providers of goods transport by rail, and the Swiss reinsurer Swiss RE, which aligns its entire investment portfolio according to the ESG criteria of the UN (stands for Environment, Social and Governance).

The ESPA D-A-CH FONDS is a mixed fund that invests in bonds and stocks in Germany, Austria and Switzerland. The portfolio currently consists of 70 percent bonds (with a focus on German corporate bonds) and 28 percent shares, including the Swiss building materials manufacturer Sika, which specifically focuses its research on resource-saving construction methods and energy-saving building materials, combined with precise reporting.
 

Please note that an investment in securities entails risks in addition to the opportunities described. The performance of the past does not allow reliable conclusions to be drawn about future developments.