More and more investors want to invest their money in climate protection. Many providers of financial products promise to invest money in a sustainable way, but all too often the promises are broken: investments in the “good” don’t have to end well. Sometimes there is a risk of total loss. The Finanzwende think tank, which is committed to reforming financial markets, has for the first time compiled the figures of the biggest flops of investments marketed as “eco” in a study. According to this, investors have lost around two billion euros over the past ten years. In the assessment available to SZ, Finanzwende names, among others, the wind investor Prokon. Here, 75,000 investors have lost a total of around 600 million euros. At UDI, a financier of wind farms, biogas plants and solar parks, the damage amounted to 150 million euros and at Windreich, a company specializing in wind turbines, around 100 million euros, according to the survey.
Finanzwende has also included in the list of providers for whom losses are likely in the coming years, for example because the first defaults have already occurred. “At least two billion euros in losses in the gray capital market with eco-investments alone – this figure is astonishing. Too many providers are treacherously exploiting the ecological conscience of investors”, explains Magdalena Senn, market consultant sustainable financial resources at Finanzwende. These providers would sell high-risk and often questionable investments with green promises.
Consultants have a conflict of interest
Less stringent rules apply to the gray market for capital than to traditional mutual funds. Investment products are structured as risky direct investments, corporate investments, subordinated loans or profit sharing rights. In some cases very high commissions are paid for the sale of these systems. Consultants are therefore in a conflict of interest. They only make money if they sell the product, but not if they properly dissuade an insecure customer from signing up. The federal government recently tightened the gray market rules for capital in the Asset Investment Act, also for the first time for so-called blind pools. In such participation models, which finance for example real estate, wind farms or media projects, investors invest money without knowing which property their money is going to. Many investors had suffered heavy losses with these opaque models. This is now prohibited, investment objects must be specifically named in sales prospectuses and have a verifiable degree of realization.
“Private investments are essential for the sustainable restructuring of the economy and society,” says Senn, the expert in financial transition. “Failures to invest with a green coat destroy confidence. We need strong rules that protect consumers and put sustainable investments on a stable footing.”