![Sample our Economics, Finance,Business & Industry journals, sign in here to start your access, latest two full volumes FREE to you for 14 days]({"type":"image" , "src" : "/sda/5931/TOC-Subject-Sample-2021-Economics-Finance-Business-Industry.jpg"})
ABSTRACT
The topic of sustainable finance is of growing interest for political scientists as we witness a series of new policy initiatives, regulations, and campaigns at global, supranational, and national levels. This paper aims to contribute to a better understanding of discourses and initiatives related to the promotion of sustainable finance in Germany. It sheds light on the role and actions of different stakeholders in this field, including government-led policy initiatives, the banking and insurance sector, as well as nonprofit organisations and their networks. Interviews were carried out with three mainstream banks and one asset management group on how they are responding to this new trend in finance. For a long time, Germany has not been a frontrunner in sustainable finance but latest figures show a strong upward trend. This paper argues that many initiatives from different types of stakeholders, including civil society organisations, have contributed to broadening debates and deepening discourses and, thus, have promoted the mainstreaming of sustainable finance in Germany. Initiatives at the global level and at the level of the European Union, especially the EU Action Plan on Sustainable Finance, resonate well in Germany.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 See presentation of the research domain of sustainable finance by the University of Hamburg, Department of Economic: https://www.wiso.uni-hamburg.de/forschung/forschungsschwerpunkte/sustainable-finance/02-research.html, accessed 23.03.2020.
2 The EU Action Plan on Sustainable Finance (European Commission Citation2020) frequently uses sustainable and green finance synonymously. The Final Report of the EU High-Level Expert Group on Sustainable Finance (Citation2018, 2) starts its Foreword with a reference to the Paris agreement. Other expert analysis also highlight that ‘green is the new gold’ and establish the link between green issues and sustainable finance: ‘As policymakers push ahead with plans for greening the financial system – and investors seek to boost their green credentials – interest in sustainability – oriented financial products has never been stronger’ (IIF Citation2019: 1).
3 Compare with definitions of Zhou (Citation2019).
4 The IPCC is now in its sixth assessment cycle, in which the IPCC is producing the Sixth Assessment Report (AR6).
5 The controversies over the business practices of Nestle and Siemens received special attention by the media paid, e.g. DW Citation2020a and The Guardian Citation2020.
6 The predominance of the financial sector in the operation of present-day capitalism is at the centre of the research agenda within the ‘Post-Keynesian’ field. ‘Two schools have provided advances for the understanding of the implications and risks of “financialisation”: the Kaleckian and the Minskian’ schools. For further discussion, see: Menkhoff and Tolsdorf (Citation2001) and Piacentini (Citation2017).
7 In early February 2020, Tesla’s market capitalisation was larger as BMW and VW combined while Volkswagen sold almost eleven million and Tesla only 367,500 vehicles in 2019. (Der Standard Citation2020). Between summer 2019 and early 2020, the electric car manufacturer's share initially rose by more than 300%, before falling by 60% in the wake of the corona pandemic. In the weeks that followed, Tesla stocks made a spectacular comeback, culminating in a preliminary high on June 10, 2020 when it broke the record high of $ 1000 for the first time. (Jauernig Citation2020).
8 Global Sustainable Investment Review 2018. http://www.gsi-alliance.org/wp-content/uploads/2019/03/GSIR_Review2018.3.28.pdf.
9 Action 1 of the EU Action plan calls for the establishment of an EU classification system for sustainable activities, an EU taxonomy on sustainable finance. In May 2018, the Commission adopted a package of measures implementing several key actions announced in its action plan. The package includes three regulations. (European Commission Citation2020). Two proposals completed the consultation procedure and the respective regulations have been published. The proposal on the taxonomy is considered to be the most important document. The European Commission's Technical Expert Group (TEG) handed over its final recommendations for the classification of climate-compatible economic activities in March 2020.
10 The Global Climate Risk Index (GCRI) developed by the nonprofit Germanwatch analyses quantified impacts of extreme weather events – both in terms of fatalities as well as economic losses that occurred – based on data from the Munich Re NatCatSERVICE, which is considered worldwide as one of the most reliable and complete databases on this matter. The index focuses on extreme weather events but does not take into account important slow-onset processes such as rising sea-levels, glacier melting or more acidic and warmer seas. It is based on past data and should not be used as a basis for a linear projection of future climate impacts (Eckstein et al. Citation2020, 5).
11 Interview with Parisa Shahyari, Senior Advisor Sustainable Finance, WWF, Germany on 8 June 2020.
12 Exchanges with Christoph Nedopil-Wang, Green Belt and Road Initiative Centre, Beijing and Parisa Shahyari, WWF Berlin in June 2020. For the Chinese initiatives, see GFC (Citation2015) and UNDP China (Citation2020).
13 According to FNG (FNG Citation2019), sustainable investment refers to a strict application of a series of criteria, including a comprehensive coverage of all ESG criteria. Responsible investment refers to specific criteria of investors that correspond to some of the ESG criteria without aiming at full coverage of ESG criteria. The distinction applied by FNG, Germany has lead to intensive discussions at the level of EUROSIF and other stakeholders in Europe. The FNG criteria on sustainable investment in Germany are considered to be stricter than those in some other countries (Interview with Claudia Tober, Co-CEO of FNG on 2 April 2020).
14 The Green Party entered into the lower house of the German parliament for the first time in the 1983 federal election by surpassing the 5% threshold. It won 5.7% of the votes and 27 seats.
15 The Evangelical Church in Germany (German: Evangelische Kirche in Deutschland, EKD) is a federation of twenty Lutheran, Reformed (Calvinist) and United Protestant regional churches and denominations in Germany. Together they represent the vast majority of Protestants. There are also a few independent evangelical churches, many of them with stronger charismatic orientation than those united within the EKD. In 2018, the EKD had a membership of 21,141,000 members, or 25.5% of the German population. It constitutes one of the largest national Protestant bodies in the world.
16 There is an extensive body of literature on the features of the German foundations sector. For an introduction in English, see: Council of Foundations Citation2019.
17 Talk with Rupert Graf Strachwitz, political scientist, historian, founder and Executive Director of the Maecenata Foundation, on June 4, 2020. He is one of the leading foundation experts in Germany.
18 The most recent one took place on 18.09.2020 in Frankfurt (Frankfurt School of Finance Citation2018).
19 For example, at an event of GreenBuzz in Berlin on 29.01. 2020 Finance the Change. How green is your pocket? https://greenbuzzberlin.de/event/finance-the-change-how-green-is-your-pocket/,accessed 30.01.2020.
20 The final report is due end of August 2020. One of the key messages of the conclusions of the interim report – in German language – reads as follows. ‘Dafür (für eine positive Wirtschaftsentwicklung) ist mitentscheidend, dass die Finanzwirtschaft durch die politischen Rahmenbedingungen in die Lage versetzt wird, ihre Rolle der effizienten Allokation von Kapital bestmöglich zu auszufllen und damit einen wesentlichen Beitrag zur großen Transformation zu leisten’.
21 The oekom research AG reviews the compliance with the defined sustainability criteria of the companies in the index and necessary index adjustments at regular intervals. (Berlin Citation2020c).
22 The critical statement is found on the top of the English Wikipedia article on Danone, otherwise no other reference tops google search results. There is an interview with Andreas Ostermayr published in the German weekly Die Zeit, ‘Die Kritik macht uns ratlos’ 16. September 2011, https://www.zeit.de/wirtschaft/unternehmen/2011-09/interview-ostermayr-danone in which he says in his concluding statement: ‘If a company claims that it does something particularly well, it is critically examined. This is completely legitimate’.
23 Danone 2020. https://www.danone.com/about-danone/at-a-glance/danone-data.html, accessed 23.03.2020.
24 Phone call with Oliver Ginsberg of Tetrateam https://www.tetrateam.de on 31 January 2020 and discussion at an event of GreenBuzz in Berlin on 29.01. 2020 Finance the Change. How green is your pocket? https://greenbuzzberlin.de/event/finance-the-change-how-green-is-your-pocket/,accessed 30.01.2020.
25 The interview took place via video call at the premises of DZ-PB Berlin on 05.12.2019. Participants included the Sustainability Advisor to the Board of Directors and the Sustainability Task Manager, DZ Privatbank Luxemburg, and the Head of Division, Private Banking, DZ Privatbank, Berlin.
27 DZ Research Publication 19.02.2020, Berlin. This is not a public available document but sent to DZ clients via email once a week. DZ Privatbank shared this example portfolio with me.
28 The interview took place on 07.01.2020 at headquarters of Weber Bank in Berlin with one vice-president and one chief-financial adviser of Weber Bank, Berlin.
29 The interview took place on 17.01.2020 at LBB headquarters in Berlin. Two senior portfolio managers were present, including one manager with a specific mandate on sustainability issues.
30 The interview took place with one senior portfolio manager from R&H on 20.02.2020 in Berlin.
31 The portfolio manager of R&H requested me not to publish the figures.
32 ‘An analysis by Fidelity showed that with each level in the in-house ESG rating, the stock performance was around 2.8 percentage points better during the recent turmoil in the Corona crisis. Bonds from companies with an A rating achieved an average return of −9.23% compared to -17.14% from companies with a C rating’ (Investrends.ch Citation2020) https://investrends.ch/aktuell/news/je-hoher-das-esg-rating-desto-besser-die-aktienperformance/.
33 A series of political initiatives in Germany successfully called for a linking of recovery programmes to green and sustainability issues. WWF (WWF Citation2020a) had started a petition in Germany to apply sustainability criteria to recovery programmes. The German car industry, known for its strong lobby power in German politics, had proposed subsidies for purchases of new cars, including those with combustion engines. However, the government agreed on 4 June 2020 that it would limit subsidies to electric cars.