German institutional sentiment positive on sustainable investing

windfarm 410The majority of large institutional investors in Germany regard sustainable investing positively, with two thirds already factoring environmental, social and governance (ESG) criteria into their investment decisions.

In addition, they all believe that sustainability criteria will become more important, and that the market for sustainable investment will grow substantially over the next five years, Union Investment, a German asset manager, found.

Union sought to gauge sentiment for sustainable investment in Europe among 218 institutions with €1trn under management. Using a scale between -100 and +100 Union found sentiment stood at +22 points in June.

Although large companies and charitable foundations put a particular weight on sustainable investment, banks, insurers and pension funds were found to have invested a smaller proportion of their portfolios into this area than such organisations in other northern European countries.

Only 40% of respondents gave higher expected returns as a reason for sustainable investment, while 71% cited image enhancement. Of the one-third of respondents who currently do not manage their assets sustainably, 74% gave the assumption that returns will be lower as a reason, an assumption that was contested in a report by asset manager RCM earlier this week.

Professor Henry Schäfer, who holds the chair of corporate finance at the University of Stuttgart and who created the indicator, said: “A tool like this… provides welcome constructive support for advances in this field and creates transparency for all market players.”

©2011 funds europe