Sustainable investments
March 16, 2012
Banks offering sustainable investments have seen an upsurge since the financial crisis hit in 2008. More and more people want to invest in an ethical and environmentally friendly way.
"They are definitely not part of the banking sector's big players," said Manfred Jäger-Ambrozewicz, professor at the Cologne Institute for Economic Research (IW).
Only very few banks in Germany are offering sustainable investments. It's mostly medium-sized banks such as GLS Bank, Triodos, Umweltbank and EthikBank and some banks run by churches and municipal social banks like the Steyler Missionsbank and Pax Bank.
EthikBank 10 years on
EthikBank, the subsidiary of Volksbank Eisenberg in Thuringia, was founded a decade ago. It was the first bank in 2005 that allowed bankrupt clients to open an account.
"It wasn't just the financial crisis which brought new clients to the bank," EthikBank's spokesperson Claudia Bioly said. The nuclear disaster in Fukushima, Japan last year, "had been the reason for many people to say, 'things can't go on like this.'"
Nuclear power is just one of the sectors the bank won't invest in. The bank, with some 15,000 business customers and private accounts with about 500 new accounts every month, said "companies that invest in armament, genetic engineering for agriculture, chemicals destroying the ozone layer, animal testing for cosmetics or accept child labor are all taboo," Bioly said. EthikBank also deems business with countries inappropriate where human rights are violated or where corruption is wide-spread.
According to EthikBank, there are no complex, opaque financial investments as the bank only offers investment deals that costumers can actually understand.
"Savings accounts, fixed term deposits, long-term growth certificates and, of course, loans as well," Bioly said.
EthikBank is a "transparent bank," Bioly added. "Every bond, every commercial paper, even every loan will be published online."
A secure investment?
Over the years, ethically minded banks have gained in trust and credibility. But some customers still wonder if those banks are as safe as traditional ones - a fear Bioly said potential customers need not have.
"We are part of the deposit protection scheme of the cooperative banking group Volks- und Raiffeisenbanken. It's the oldest bank protection scheme worldwide that's not financed by the state," Bioly said.
EthikBank's total assets last year amounted to 129 billion euros ($169 billion). In that same year, Deutsche Bank, Germany's biggest bank, had assets of some 1.8 trillion euros.
According to IW's Manfred Jäger-Ambrozewicz, the banking industry needs both systems - the big banks as well as the social-ecological institutes. "They are part of the financial system," he said. But he also warned that the traditional banking system needs to become more reliable.
In 2011, EthikBank was rated by independent accountants for the first time. They looked at its commercial paper transactions and customer loans to see if the bank would meet its investment objective. Both reports said the bank's operations were in line with its principles.
Author: Monika Lohmüller /sst
Editor: Sean Sinico