Stefan Tesch
Gambling, nuclear energy, armor, tobacco and genetic engineering are just excerpts from the list of exclusion criteria that the Wiener Privatbank Schelhammer and Schattera has invested in sustainable investing. Companies operating in these areas do not get a place in the ethics funds of this bank. Likewise, states are falling through the grid, where human rights violations, child labor and the death penalty are the order of the day or hap- pen off the freedom of the press.
The church-related bank is one of the pioneers in the field of sustainable investments. "When we started imposing ethical criteria for funds 15 years ago, we were laughed at," recalls Georg Lemmerer, Head of Sustainability. However, the crisis year 2008 led investors to rethink and many recognized that ethics and sustainability are not a marketing gimmick. “Investing sustainably in companies avoids risks,” explains Lemmerer. For example, the bankruptcy of Greece was spared, because Hellenic government bonds are a no-go due to the excessively high arms budget. Papers from the oil company BP are also taboo. "If companies constantly violate environmental regulations, it is only a matter of time before it has a negative impact on economic success," explains Lemmerer. Although the prices of Schelhammer's ethics funds collapsed during the crisis, they recovered faster than the average.
TIPS for sustainable investment:
Sustainability vs. yield
Whether sustainable funds generally yield higher or lower returns than "normal" can not be answered on a flat-rate basis. But it is clear that "investing sustainably does not have to be at the expense of the return," says Lemmerer. A look at the "3" ethics fund, which consists of 80 percent in bonds and 20 percent in equities, shows that since its launch in the year 1991, its price has risen on average by an annual average of 4,3 percent. Overall, Schelhammer and Schattera managed six ethics funds with different concepts behind it.
The range of sustainable financial products is now huge in Austria as well as internationally. However, the interpretation of the concept of sustainability between institutions varies widely. So many funds with only one eco-title in the portfolio are already considered sustainable. Guidance is provided by the Ministry of the Environment with the Austrian Ecolabel for Sustainable Financial Products. Funds that carry it are an obstacle to nuclear power, armaments, genetic engineering and human rights violations. The list can be found at www.umweltzeichen.at.
Microcredit as development aid
In order to invest sustainably, traditional banks are not necessarily required. One of many variants is the topic of microfinance, the granting of micro-credits to socially disadvantaged people in developing and emerging countries. They are given by locally operating microfinance institutions (MFIs) to non-bankable people, people who would not get any loans from conventional banks. The reasons for this can either be the volume that is too low for banks or the illiteracy of customers
"Small loans help people financially to stand on their own two feet and do not push them into the clutches of loan sharks or crime," said Helmut Berg, head of the Austria branch of Oikocredit, Founded in the Netherlands, this 1975 Investment Cooperative operates in 71 countries today. It does not lend itself to microcredit, but provides capital to a pool of locally operating MFIs (600 in 70 countries worldwide). In doing so, Oikocredit only works with those MFIs who provide their borrowers with sufficient coaching for their business ventures. "They meet their customers on an equal footing and treat them as business partners," says Berg. The usual loan amount in Asia and South America is between 100 and 500 Euro for terms of between six months and one year. Such a loan is often enough to allow a seamstress to buy a new sewing machine and thus secure a long-term source of income.
Sustainable Investing: Participate in Microfinance
As a private person you can at Oikocredit from 200 Euro invest sustainably in the form of Cooperative Share Certificates without a binding period. Depending on the success of the business, up to two percent of the dividend is distributed annually, which has been realized in recent years. There are no purchase and sales charges and no custody fee. However, the company asks for a voluntary membership fee from 20 Euro to cover the tampering costs. In this country, around 5.200 people are currently investing sustainably on an average of 18.000 Euro each. In sum, this makes one investment capital of 93 millions, one counts all branches of Oikocredit Together, you come to just under a billion. About half of Oikocredit's investment volume goes to Latin America, a quarter to Asia, and a part to Africa, Central and Eastern Europe. Countries with the highest sums of funding: India (around 95 million), Cambodia (65 million), and Bolivia (60 million).
And what about the risk? "The default rate of the loans is around one percent. Our advantage is the enormous diversification of investment capital, "says Berg. However, as with other financial products, the capital of investors is not subject to any deposit insurance and, theoretically, a total default is possible. However, no investor has yet lost money at Oikocredit.
Investing sustainably: shares in the power plant
Civil power plants, mostly solar power plants, have become very popular in recent years. Investors buy individual solar panels of the power plant and rent them to the operator. This produces electricity and pays annual panel dividends to the panel owner. Sale-And-Lease-Back is the name of the game and was rapidly advanced by Wien Energie with 24 power plants, including 22 solar and two wind turbines, in the Greater Vienna area. So far, some 6.000 investors with a total of 27 million euros. "The market potential for PV investments is still very high, but the interest rate is heavily dependent on government subsidies for green electricity," says Günter Grabner, Managing Director of Kärntner Our power plant Naturstrom GmbH, Operator of 20 solar power plants in Austria. Currently, the subsidy (vulgo feed-in tariff) is 8,24 cents per kilowatt-hour, 2012 19 Cent was more than twice as high. The returns on such investments could therefore decline in the long term. As a rule, power plant operators grant fixed interest rates with indefinite terms.
“Our power plant” guarantees three percent fixed and the doors for investors are currently open, because Günter Grabner is building a 12.000-panel citizen power plant on the roof of a business park in Wernersdorf, Styria. Only private individuals who can buy between one and 48 panels at a price of 500 euros each - a maximum of 24.000 euros are permitted as investors. “On average, one holds 20 panels,” reports Grabner. There is no binding period, however, if the panels are sold within the first five years, expenses of 50 euros are incurred.
The participation in Windkraft Simonsfeld AG, the operator of ten wind farms in Austria and one in Bulgaria, works differently. Investors can participate there through unlisted shares, which are only tradable directly between shareholders.
Attention: Participations in citizen power plants are not subject to capital gains tax and returns must be taxed separately from 730 Euro exemptions per year.
Investing sustainably: alternative crowd investing
2013 Wolfgang Deutschmann already knew that Crowdinvesting is currently revolutionizing the classic capital market and founded the crowdinvesting platform with its partner Peter Gaber Green Rocket, It focuses exclusively on sustainable business ideas. The most recent example is a bio fruit juice lemonade, which recently brought 150.000 Euro out of the crowd. "Unlike other platforms, we select according to strict rules," says Deutschmann. Business plans do not have to be sustainable, they have to be forgotten. "Only to come to us with an idea is too early," says the founder. Result of this tough policy: From 30 projects, only two were not successfully funded by the crowd.
Returns to investors are made up of two components: First, a share of the annual corporate profit. Second, from the enterprise value increase. However, this is due only at the end of the term, usually after eight to ten years. Those who drop out of it can do so, but they will lose out on this, usually the largest share of the total return. In the case of a sale of the company (Exit), one participates aliquot in the sales value. Some companies still offer investors an annual fixed interest rate of between one and three percent as a candy.
Investing solely in a company is too risky, because the total loss of his investment is well possible. "Therefore, a spread to around ten is ideal. Then returns of ten to 15 percent are possible, "says Deutschmann. On average, investors are involved in two to three projects with 1.000 Euro each
Sustainable Investing - Market Development
In Austria, Germany and Switzerland, the volume of sustainable investments has increased fivefold from 52 to 257 billion over the past five years. This is shown by the Market Report of the Forum Nachhaltige Geldanlagen (FNG). In Austria, 2015's sustainable investments grew by 14 percent over the previous year to ten billion euros. About one quarter is attributable to private individuals, the remainder to institutional investors, such as pension funds.
"It is a positive signal that sustainable investments in Germany have outperformed within the overall market," says Wolfgang Pinner, Head of FNG Austria. "This clearly shows that this is more than a trend."
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