In the meantime, the topic of sustainability concerns just about everyone in the financial industry, banks want to protect the climate, investors are investing environmentally friendly money, fund companies are fighting the climate crisis, the extinction of species and the exploitation of people in the supply chain. The formula for this is ESG – which stands for environmental aspects (Environment), social criteria (Social) and rules of good business management (Governance). As the heart of capital markets, banks have at least as much influence on climate change as industrial groups, even though their own operations tend to use little CO2.
“There is a lot of will for sustainability in banks,” Katharina Beck, first candidate for the Hamburg Greens and former consultant for sustainable banking, told the SZ Sustainability Congress. But it takes a long time to change things, for example to introduce sustainability as a criterion for granting credit. “This sort of thing can take three to five years, if only because you have to convert the computer systems,” says Beck. It is no less important, but just as complicated, to build sustainability into banks’ risk measurement systems. But that’s just part of the core business. Even when it comes to investments, not everything is sustainable. “Many securities funds that operate as ESG funds just rule out gambling and cluster bombs. But he can’t be alone,” the Green Politician said.
“Financial supervisors are not known to take responsibility for saving the world”
Thomas Jorberg, CEO of the sustainable development bank GLS, is also convinced: “If something does not change radically, the climate catastrophe will quickly turn into a banking catastrophe”. After all, every bad weather event usually causes serious damage. Loans may no longer be repayable. German financial supervisor Bafin is also slowly realizing this, but urgently needs to catch up. “Financial supervisors aren’t known to take responsibility for saving the world,” Jorberg explains. But if the collapse of the world goes hand in hand with the collapse of the banks, then supervision is suddenly “the order of the day”.
According to the ECB’s banking regulator, euro-zone banks will soon have to take more account of their risks linked to climate change for their companies. Many institutes in Germany are of course faced with the dilemma: given the still high costs, they urgently need income to achieve their profit targets. Responsible business is harder to do.
After all: Hypovereinsbank, for example, deliberately funds social projects with no intention of making a profit. It’s about investing in social projects on favorable terms, said Stephanie Kraus-Nijboer, head of social banking at Unicredit’s subsidiary Hypovereinsbank, for example to help with affordable housing and the like. “At the same time, we also support these projects through our network”. The topic of sustainability does not just cover this area, but the entire bank.
But at the same time, there is an opportunity for the banks in the fact that they are called upon to finance this transformation, or that they can provide the capital. Jorberg sees the private sector and private capital as having an obligation, not the state. “A huge amount has to be invested, but it won’t fail because of the money, there is plenty of it,” says Jorberg. Rather, the problem is that our system has produced a grandiose misallocation of capital. The state urgently needs to put in place the right framework conditions so that capital can flow into the right projects.
“In the debate, we are currently on the brink of a planned economy,” Jorberg said, referring to demands that the state should help finance transformation. It’s wrong. “Companies must and can assume the risks themselves.” To use or destroy nature must be very expensive. Politicians failed to create a clear incentive system for years and now resort to individual regulations. “Nobody cares that the price of oil goes up when the oil cartels raise the price, you accept that as a law of nature, but if you do it to protect life, the same increase is a social disaster. “, says Jorberg. It is clearly put forward.