Sustainable investment
Sustainable investments, also commonly referred to as socially responsible investments (SRIs), are investments that take account of environmental and social criteria as well as economic factors. Sustainable investment products are distinguished from conventional products according to the following approaches:
- Negative criteria filter: the only investment products considered are those from companies that do not engage in certain business areas or practices (e.g. child labour, gambling, pornography, violations of environmental, labour or commercial law).
- Positive criteria filter: only companies that belong to a certain sector (e.g. environmental technology) are potential investments.
- Best-in-class method: this is a relative criterion. The only companies considered are those that demonstrate the greatest commitment to sustainability, as compared with competitors in the same sector.
Because these approaches are often very complicated, making it
difficult to distinguish sustainable from conventional products,
independent, specialised research agencies often assume this task.
When designing our principle-based investment products, we work
with a leading, independent sustainability ratings provider, oekom
research AG. Institutional and private investors alike are placing
increasing emphasis on companies that are able to reconcile
economic with environmental and social objectives.
The drawback to the purely sustainability-based approach is that
good companies are not always good investments. Glamorous,
sustainability-oriented companies can, as BayernLB sees it, in fact
sometimes lead to significant capital losses.
