In the meantime, the topic of sustainability concerns pretty much everyone in the financial sector, banks want to protect the climate, investors invest environmentally friendly money, fund companies fight against the climate crisis, species extinction and the exploitation of people in the supply chain. The formula for this is ESG – that stands for environmental aspects (Environment), social criteria (Social) and rules of good corporate management (Governance). As the heart of the capital markets, banks have at least as much influence on climate change as industrial groups, even if their own operations tend to use little CO2.
“There is a lot of will for sustainability in the banks,” says Katharina Beck, top candidate of the Hamburg Greens and former consultant for sustainable banking, at SZ Sustainability Congress. But it takes a long time to change things, for example to introduce sustainability as a criterion for lending. “Something like this can take three to five years, if only because you have to convert the IT systems,” says Beck. It is no less important, but just as complicated, to integrate sustainability into the banks’ risk measurement systems. But that is simply 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 it cannot be alone,” says the Green politician.
“The financial overseers are not known to feel responsible for saving the world”
Thomas Jorberg, CEO of the sustainability bank GLS, is also convinced: “If something doesn’t change drastically, the climate catastrophe will quickly turn into a banking catastrophe”. After all, every bad climate event usually causes severe damage. Loans may no longer be repayable. The German financial supervisory authority Bafin is also slowly developing an awareness of this, but has an urgent need to catch up. “The financial supervisors are not known to feel responsible for saving the world,” says Jorberg. But if the collapse of the world goes hand in hand with the collapse of the banks, then supervision is suddenly “on the agenda”.
According to the ECB banking supervisory authority, banks in the euro zone will soon have to give greater consideration to their climate change risks for their businesses. Many institutes in Germany are of course faced with the dilemma that, given the continued high costs, they urgently need income in order to achieve their profit targets. It is more difficult to do business responsibly.
After all: Hypovereinsbank, for example, deliberately finances social projects with no intention of making a profit. It is about investing in social projects on favorable terms, said Stephanie Kraus-Nijboer, Head of Social Banking at the Unicredit subsidiary Hypovereinsbank, for example to make a contribution to affordable housing and similar things. “At the same time, we also support these projects through our network”. The topic of sustainability does not just cover this one area, but the entire bank.
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 for it. Jorberg sees the private sector and private capital as having a duty, not the state. “A tremendous amount has to be invested, but it will not fail because of money, there is an abundance of that,” says Jorberg. The problem is rather that our system has produced a grandiose maldistribution of capital. The state urgently needs to set the right framework conditions so that capital can flow into the right projects.
“In the debate we are right now on the verge of a planned economy,” says Jorberg with a view to requirementsthat the state should help finance the transformation. That is wrong. “Companies must and can bear the risks themselves”. Using or destroying nature would have to be really expensive. Politicians have failed to create a clear incentive system for years and are now resorting to individual regulations. “Nobody cares that the price of petrol goes up when oil cartels drive the price up, you accept that like a law of nature, but if you do it to protect life, the same increase is a social catastrophe” says Jorberg. That was clearly put forward.