Feeling the pulse of the German market
onValues recently conducted a systematic search and selection process for German banks and asset managers that offer investment strategies based on sustainability criteria. The outcomes show that the German market still lags behind other European markets in terms of the quality of the strategies and services offered, although we were able to identify 2-3 institutions that meet our quality standards. Assessment criteria included: institutions’ strategic commitment to responsible business practices, the role of sustainability within their asset management as well as the risk-return characteristics of their main investment offerings. The analysis lead to the following main observations: Most financial institutions market sustainable services but only few demonstrate strategic, top management commitment to sustainability investments. Environmental, social and governance (ESG) criteria are rarely integrated into the overall investment process and in most cases added as an extra filter during the security selection process. There seems to be a certain standardisation of processes for using ESG criteria during security selection driven by the consolidation trend in the sector for independent ESG-research. Performance differences within asset classes are small, but vary significantly for balanced strategies, leading to the conclusion that asset allocation is a key driver of performance.