Eco-bonds: Berlin wants to promote sustainable investments

Enlarge image

Textile production in Bangladesh: quick and easy pointers

Photo: Nick Kaiser / dpa

With a new financial strategy, the federal government wants to align cash flows and capital investments more closely to climate and environmental aspects as well as the protection of human rights. The aim is to mobilize urgently needed investments for climate protection and sustainability, according to the so-called Sustainable Finance Strategy, which lists 26 individual measures. The cabinet should decide on Wednesday. In future, a »sustainability traffic light« is to be used to identify financial assets and to make green investments easier to identify, for which there is increasing interest anyway. Guarantees and loan support for exports are to be given increasingly for green projects.

The federal government itself wants to reallocate share investments of nine billion euros in the pension and benefit fund accordingly. He also wants to get more money from investors through green bonds. "The federal government wants to develop Germany into a leading sustainable finance location," says the concept. It is based on the sustainability goals of the United Nations and wants to coordinate closely with the EU. According to experts, Germany is currently at most in the middle of the field in Europe.

The background to this is that ESG criteria (environment, social, governance, i.e. environment, social affairs and good corporate governance) are becoming increasingly important for professional investors and these also require companies to observe them.

The government's strategy is for facilities such as funds to be provided with a traffic light.

One wants to achieve this together with the EU.

But if this is not possible quickly, the system will be set up together with the Federal Environment Agency.

"The system is intended to give investors quick and easy advice on how to assess and take sustainability into account when investing their assets."

Green bonds with different maturities

After the first two green bonds, the federal government wants to have more to follow in 2020 - with very different maturities. A 30-year green bond is planned for May and a ten-year bond is to follow in the second half of the year. “The issue volume in 2021 will be of a similar magnitude as in the previous year.” In 2020, the federal government launched the first two green bonds with great success. Together they had a volume of 11.5 billion euros.

When issuing guarantees for companies, sustainability aspects should be included to a greater extent in addition to the previous criteria such as economic viability.

Something similar is planned for “Hermes” loans for business abroad: “In the future, particularly climate-friendly projects will benefit from additional, favorable cover conditions for export credit guarantees in addition to the existing incentive models.”

The Federal Ministry of Finance is to present a concept in 2021 as to how the financial supervisory authority Bafin can get all the human and technological resources on the subject.

Cooperation with other authorities is also to be improved.

Financial advisors should be trained on the subject of sustainability through training.

It is true that the government also wants to join forces with the EU, which is also working on guidelines for investments with the so-called »taxonomy«.

However, the concept of the federal government makes it clear that nuclear power should not fall under the criteria.

In the EU, however, there are strong advocates for the technology, so that there is still a lot of wrestling in Brussels.

The federal government's concept ultimately aims to raise the necessary investments to make the continent climate-neutral by 2050.

The EU Commission estimates the annual need for this at 350 billion euros.

mik / Reuters