Some of the ETFs (Exchange Traded Funds) advertised by banks as “sustainable” contain companies in their portfolio that are active in, among other things, the defense and oil and gas industries. This is shown by research by the investigative SWR format “Vollbild. (Video at the end of the article)
ETFs are stock index funds, i.e. funds that track an index and bundle shares of various companies included in the index. The author of the “Full Screen” film, Alex Baur, sought advice from several banks on sustainable investments in an undercover research and then comprehensively evaluated the ETFs recommended by the bank advisors in a self-experiment.
Major players in the defense industry in sustainable ETFs
In order to put the banks' advertising promises of sustainability to the test, the "Vollbild" author conducted several consultations and information sessions on sustainable investments at HypoVereinsbank, Berliner Sparkasse and Commerzbank as part of his research, which lasted several months. These banks are currently very present with advertising for sustainable investments. The ETFs recommended as sustainable by the bank advisors or on the homepage were subjected to a careful analysis.
The complex evaluation showed that companies included in the stock index funds do not meet investors' common ideas about sustainability and some even violate the banks' and fund providers' own guidelines. However, all of the “sustainable” ETFs that were particularly recommended by the banks as part of the “full-screen” research are burdened by defense companies. One is one of the 100 largest defense companies in the world. A company is involved in the Yemen war with exports. The research also revealed that the supposedly sustainable ETFs also contain companies that extract oil and gas - sometimes using controversial methods, such as fracking.
Advertising promises are not kept
“Green” ETFs are in vogue: several banks are currently promoting sustainable investments with elaborate marketing campaigns. They promise interested customers that they will do good for our planet by investing in funds and ETFs. The money will be invested sensibly with an eye on the environment, social issues and corporate governance. “The sustainable investment business is booming,” says Thomas Küchenmeister, board member of the NGO Facing Finance, in an interview with “Vollbild”. FNG Market Report 2022 commissioned by the financial companies themselves shows: While the volume of sustainable funds in Germany was just over 21 billion euros in 2011, it rose to almost 410 billion euros in 2021.
How the greenwashing system works
In the almost 30-minute investigative report, “Vollbild” reveals how the greenwashing system works in investments and thus secures a place for companies such as TotalEnergies, Hensoldt and Coca-Cola in sustainable ETFs. Companies are examined by rating agencies for their sustainability and are also based on data provided by the companies. The ratings, in turn, are used as a basis for grouping into the funds: “Of course, the companies also know this and then make sure that the data is prepared in the most rating-friendly way possible. Of course, I can then pass as a sustainable company,” explains independent sustainability consultant Viola Raddatz in the “Vollbild” interview.
EU taxonomy rules too lax?
The EU Taxonomy Regulation is an attempt at EU level to link sustainability in financial investments to concrete requirements. In response to a “full screen” request, a spokeswoman for the EU Commission explains: “The aim of the EU taxonomy is to prevent greenwashing and to support investors in identifying economic activity that is in line with our environmental and climate goals.” But yes Now, while the taxonomy is still being developed, the regulation is already being criticized for its rules being too lax. “In our view, the taxonomy could lose a lot of credibility and therefore acceptance due to the inclusion of nuclear power,” criticizes the Federal Ministry of Finance in response to a “full screen” request.
Banks' reactions to the research
When confronted with research into sustainable ETFs, Berliner Sparkasse referred to the in-house fund provider Deka. He, in turn, rejected the allegations and sees the rating agency as responsible. Commerzbank announced that it was following EU regulations. HypoVereinsbank did not specifically address any of the questions asked. Instead, she announced that the ETF that the bank advisor had recommended to the “Fulbild” author had no longer been offered as a sustainable fund since the beginning of August. HypoVereinsbank has now defined stricter sustainability criteria for itself.
Criticism of the lack of transparency in sustainable ETFs
Thomas Küchenmeister from “Facing Finance” criticizes the lack of transparency in sustainable ETFs: “Banks don’t do enough to relieve people of this excessive demand, to say transparently and openly: ‘There’s unfortunately still a bit of oil here, in this sustainability fund in there and a little bit of weapon and a little bit more exploitation. Would that be ok for you?' But that’s not how they do it, they just cover it all up.”
“Vollbild” is SWR’s new investigative research format from the workshop of “Report Mainz” and LABO M. Every two weeks on Tuesdays, a new video appears on YouTube and in the ARD media library.
Source: SWR
Also read: What is TikTok doing against propaganda. The Ukraine war is also happening on TikTok. Propaganda and disinformation flood the news feed.
Related to the topic: Green funds: skiing in the desert
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