Despite a difficult market situation: sustainable investments in Germany continue to grow
The annual publication of the Sustainable Investments Market Report shows that the growth trend in sustainable investments continued in 2022. The total volume reached a record value of 578 billion euros.
The study published by the Forum Nachhaltige Geldanlagen (FNG) presents the development of sustainable investments in Germany and Austria and has been an important source of information for political decision-makers, industry insiders, academics and journalists since 2005. A key finding of the study is the continued growth of sustainable investments in Germany and Austria in 2022: despite the difficult past year, both countries were able to set new records, even if the growth rates are lower than in the previous year. In addition to the expected growth rates, the study was able to identify development-related challenges for sustainable investments, primarily in the area of greenwashing and the implementation of trustworthy products with a uniform standard.
Market volume grows by 15 percent in 2022
Despite a smaller increase compared to 2021 (16.3%), the market volume of sustainable investments has grown by 15% and thus continues to outperform the German market as a whole. The total volume of EUR 578 billion comprises sustainable mutual funds, mandates and special funds as well as sustainably managed customer custody accounts and proprietary investments. With a total volume of EUR 371.2 billion, mutual funds account for the largest share of investments.
ESG integration is losing relevance
Different providers use different methodologies for their sustainable investments. Although 64% of all providers still use ESG integration as a sustainability strategy, the lack of data on governance and social aspects has recently led to a decline in this methodology. The majority of providers of sustainable investments use exclusion criteria: For example, around 95% of the assets considered use the criteria of weapons and human rights.
Greenwashing accusations harm development
Expert interviews were also conducted as part of the study in order to obtain a more comprehensive picture of sentiment. This revealed that the majority of respondents still see a need to catch up on existing standards and regulations for sustainable investments. In particular, the collection of high-quality data poses major challenges for many market participants, as this is not always available under current regulations. The industry is also discussing the issue of greenwashing, which is increasingly affecting many companies. The growing importance of the topic is due to various factors, including an unclear definition of sustainable investments, ill-defined EU regulations, a lack of standards, media coverage and a different understanding of sustainability. For example, 90 percent of respondents believe that greenwashing accusations have the potential to impair the growth of sustainable investments.
An optimistic view of the future
The respondents remain optimistic about the future. For example, 80 percent assume that sustainable investments will continue to grow in the current year, while just under twelve percent expect a decline and around eight percent expect the volume to remain the same. In addition, 43 percent of respondents forecast growth in sustainable investments of over ten percent.
Conclusion: Sustainable investments are already highly relevant today and will continue to grow in the coming years. Nevertheless, the industry is facing challenges: Standards and regulations need to be revised in order to facilitate their application and prevent greenwashing.
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