As announced, we want to take a look at the topic of finance together with you in February. Because more and more political regulations are currently coming into force that are supposed to lead to the transformation of our economy towards climate neutrality within a few decades.

One of the pillars for this transformation is investment and capital flows. And so it is not surprising that at the center of this task of the century are now the banks, with great regulatory pressure in their luggage: For they have it in their hands in which technologies, products, regions to invest and for what. However, it is not so easy to determine when an investment is sustainable.

We would like to illustrate these processes and the link to each with an example: The Supply Chain Sourcing Obligations Act (LkSG). What does this have to do with business, banks and ourselves?

Companies have to produce management and annual reports time and again to demonstrate to more than just their banks how successful and future-proof their business model is. However, in recent years, politicians at EU and national level have issued increasingly stringent regulations that stipulate exactly how and to what extent information on sustainability aspects must now be provided. It is clearly stipulated that above a certain company size, certain sustainability indicators must be disclosed on a regular basis. And: It can even affect you if you are below this limit, because if you are a supplier for a company subject to reporting requirements, the company can demand that you report to it on how your own sustainability is doing.

What does this mean for banks? And for individuals? Well: in the coming years, banks themselves will have to record and report in great detail the extent to which the companies and economic activities they finance implement or consider sustainability. The data is still patchy, but companies and banks everywhere are working feverishly to fill those gaps.

And the individual? Years ago, green investments were relatively niche products. Now, when dealing with my own finances, I can pay more and more attention to which bank I am a customer of and look closely at what the bank is co-investing my money in. This is stipulated, for example, in the Sustainable Finance Disclosure Regulation (SFDR), according to which I, as an investor, must be made aware of which aspects of sustainability a fund takes into account.

It is still the case, of course, that there are major challenges here in the area of definitions, etc. In subsequent articles, we will therefore also take a critical look at the challenges that these verification requirements entail. Sustainability, it turns out, is holistic - and also often leads to the need to weigh up conflicting individual aspects. But the fact that, in general, an increasingly strong position must be taken on sustainability and that, at least in the medium term, sustainability will hopefully become more and more clearly verifiable everywhere, from large capital flows to small investment products, is a welcome and absolutely important circumstance, in our opinion!

In the further course we will lead interviews with experts for you at this place to the topic. We are already looking forward to it!