Sustainable investing: How your money rules the world


November 2, 2021
Do you prefer to put off the topic of sustainable investing? Rarely a wise idea. Because your savings help shape the world 24/7 – without you even noticing.

More and more people are no longer leaving it to chance which loans are supported with their savings. Sustainable investment is the trend. Find out here more about sustainable investing and determine for yourself what your money is used for.

We invest a lot of time and effort to make our daily consumer behaviour more sustainable. From jute bags instead of plastic bags to vegan meat substitutes and smartphone covers made from 100% recycled material: every little step of everyday life is closely scrutinised for sustainability.

In doing so, we neglect one thing that has an even greater impact on the world: The money in our bank accounts. Do you know how your money rules the world?

Your money in the bank shapes the world every day

What you do with your money has an impact. So does what you do NOT do with your money. It simply ALWAYS has an effect.

For some, there may even be a considerable chunk in the account. Waiting to be spent or invested. Or not. 

Not only financial experts know that the latter is usually not a good idea. Because apart from the fact that money “slumbering” in a conventional account constantly loses value over time (keyword inflation), it permanently shapes the environment and society. 

The money is not simply “lying” in the bank, as the saying goes. Instead, it is constantly in circulation in the form of loans, without the thrifty person noticing anything at all.

Do you know which loans are financed with your savings?

As a rule, this is not the case. This makes it unclear whether the savings are used for projects that correspond to one’s own values – or not. 

It is quite possible that a vegetarian’s savings go to the meat industry.

Or that the black number on the electric car driver’s account is used to promote fossil fuels.

Sounds absurd? We think so too! 

But fortunately, everyone can proactively determine for themselves what is promoted with their money. In order to exclude harmful loans, switching to a sustainable bank and a sustainable current account is an uncomplicated option that guarantees at least a degree of certainty.

Those who prefer to pull the strings themselves can go a little further and invest sustainably.

Investing sustainably in e-car sharing & Co. saves resources such as CO2

Which investment option is suitable always depends on the individual goals of the investor. If the most positive possible effect on social-ecological factors is important to him, the magic word is “sustainable investment”. Savings can be used for good without much effort. And increase it at the same time.

Even for small sums, choosing a sustainable fund over a conventional fund already has an impact on the environment. Sustainable investments (e.g. in renewable energies, e-car sharing companies, etc.) can save many tonnes of CO2, water and other resources, depending on the size of the investment.

What are sustainable investments?

What does “sustainable” actually mean for investment products?

Sustainable investments are investment vehicles such as ETFs (exchange traded funds) or funds that invest in companies that meet ecological, social or ethical criteria and thus aim to create added value.

Sustainable investments thus differ from conventional investments in that they not only have a financial return, but also a social-ecological return. In addition to the monetary aspects, there is always an emotional, value-based additional benefit.

In practice, however, it is not so easy to clearly distinguish between conventional and sustainable investment products. The industry is in a process of discovery here. 

Since sustainability is complex, the EU taxonomy (a kind of minimum criteria catalogue) was published by the European Commission in order to set a minimum standard for investment vehicles in the area of climate. The EU taxonomy is continuously developed by an expert task force. 

ESG criteria crucial for sustainable investments

For an investment to be considered sustainable, the so-called “ESG criteria” are important.

  • E” stands for Environmental
  • “S” stands for Social and
  • “G” for Governance (responsible corporate management).

The preparation of an ESG rating is carried out by rating agencies specialising in sustainability, which are commissioned by both investors and issuers. The ESG criteria are defined individually by the rating agencies and can include the following analyses, among others:

  1. Environmental: The environmental criterion examines the company’s environmental performance, including greenhouse gas emissions, resource consumption and energy efficiency.
  2. Social: The social aspect focuses on a company’s social commitment. Relevant criteria here include product responsibility, compliance with human rights within the value chain, interaction with employees and customers, and occupational safety.
  3. Governmental: The governmental score defines how sustainable corporate governance is. The aspect includes, for example, questions regarding corporate values, takes a look at the company’s partnerships and also examines them with regard to corruption.

Negative and positive criteria determine the sustainability of investments

Both negative screening and positive screening help to classify investments as ESG-compliant or not.

In negative screening, companies are checked for negative criteria. A more widespread negative criterion is “free of coal”. This criterion focuses on investments in coal mining and coal-fired power generation. If certain values (called thresholds) are not met, the security is excluded from the portfolio.

Involvement in the arms trade, the tobacco or alcohol industry or human rights violations are, of course, no-goes in ESG investments. Almost all ESG ratings are based on this exclusion principle, whereby no clear criteria are applied, especially in social areas (such as human rights).

A positive criterion for ESG investments, on the other hand, is, for example, whether a company belongs to a particularly sustainable player within its respective industry and measures environmental and social impacts.

Invest sustainably and earn a return at the same time?

One thing first: even though many studies show that sustainable investments often perform better than conventional investments, there is still no clear, scientifically sound statement regarding the comparison of returns.

However, one prejudice against sustainable investment products is clearly outdated: the allegedly lower return. The assumption is based primarily on the fact that sustainable economic models incur additional costs compared to conventional ones. 

In the meantime, however, it is not only industry experts who know that these are offset – namely by the long-term additional benefits of sustainable investments based on ESG factors.

In terms of their return, sustainable investment opportunities can be on a par with financial investments without additional social-ecological benefits, but they can also perform better or worse. All three variants are possible.

Every investment opportunity must always be assessed individually in terms of its risk-return profile, regardless of whether it is conventional or sustainable. However, some studies evaluate sustainable investments as more positive in a direct comparison.

Study measures higher returns with sustainable investments

An analysis by the fund rating company Morningstar from 2019, for example, attributes a higher return and survival rate to sustainable investment. It looked at 4,900 funds, including 745 sustainable ones (defined according to ESG criteria). 

Higher returns: According to the results, 60 percent of sustainable funds outperformed their conventional peers in terms of returns over a decade. 

Higher survival rate: The survival rate for conventional investments was 46 percent – compared to 72 percent for green investments.

Even in the Corona crisis, sustainable funds have proven to be more stable and crisis-proof. And in some cases developed more positively than conventional investments.

Sustainable investment is the trend

A large-scale global survey of institutional investors conducted by the Economist Intelligence Unit (EIU), “Resetting the agenda – How ESG is shaping our future”, shows that sustainable investment is in vogue. 

According to the analysis, the consideration of ESG factors is becoming increasingly important when deciding for or against a financial investment. According to the results, the consideration of ESG factors in investments increases the investment opportunities, but not the risk.

Climate funds particularly popular among sustainable investments

A study published in 2020 by the Institute for Financial Services Zug IFZ showed that demand for climate funds in particular has increased more than 6-fold in the last three years.

The study situation is also reflected in our perception: sustainability is in. The questioning of one’s own consumer behaviour and the search for green alternatives in everyday life is on the rise, especially among younger generations. Sustainable products and services have been experiencing a sustained upswing for years.

Those who invest in sustainable start-ups and products that have a green impact on the world with innovative concepts are jumping on a bandwagon that is in demand and heading in the right direction. 

Sustainable investment opportunities

The options for investing money sustainably are becoming increasingly diverse and simple. Green investment opportunities abound. Sustainable ETFs and equity funds, for example, can be found in areas such as renewable energies, electromobility, water and health.

This results in numerous thematic investment niches. For example, vegan brands have been conquering the stock market for years. Ethical and health-motivated people in particular are investing more and more in sustainable food, lifestyle and healthcare brands.

When it comes to sustainable investments, many investors prefer to focus on green-tech companies that mainly promise a positive impact on ecological goals. They invest in renewable energies or climate-friendly mobility concepts, for example.

The spectrum of topics for investments in the e-mobility sector is also huge and ranges from battery manufacturers and drive technologies to e-charging stations and car-sharing companies.

EOT: Investing sustainably in ELOOP’s E-Car Sharing

Since August 2020, anyone can invest in our mobility concept. For this purpose, we have launched the blockchain-based security token ELOOP ONE TOKEN, or “EOT” for short.

It is important to note that this is not a cryptocurrency but a blockchain-based investment vehicle. Both large investors and private individuals participate in our turnover by purchasing EOT.

The appeal of the EOT for many is that, unlike other blockchain-based tokens, it has a physical countervalue. Namely, our tokenised carsharing fleet, which now consists of 21 Tesla. The EOT thus represents an existing product, namely the cars and the carsharing service.

ELOOP cars continuously generate revenue and thus also bring money into the pockets of token holders in real time.

The EOT combines several major trends in sustainable investing:

  • E-Mobility: ELOOP’s car sharing fleet consists only of Tesla and is thus purely electric.
  • Renewable energies: The fleet is powered by green electricity in Vienna.
  • Sharing idea: The community idea is very important to us. By sharing cars and their sales, we also pursue social goals. We want to achieve a positive impact and grow as a community.

By the way: The blockchain-based security token EOT is one of the few tokens that do not require mining. The blockchain uses the “proof of stake approach”, whereby the blockchain is created with just one click.

The so-called mining (German “Schürfen”) requires an enormous amount of computing power, which results in insane amounts of CO2 emissions.

EOT turns cars into assets

What is unique is that the EOT makes cars an asset for token holders. In contrast to the usually not very sensible purchases in terms of private car purchases. This is because cars immediately lose considerable value when they are purchased.

Moreover, they are a liability that continuously takes money out of the owner’s pocket. An investment in a service based on the constant use of cars, such as ELOOP’s e-car sharing, is different.

The largest token sale to date is currently underway. We have tokenised 10 more Tesla, so there is a total of 850,000 EOT for sale. 

Find out more about the EOT here.

You want to invest and earn money? Then you can register here.

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