World Alliance of International Financial Centers (WAIFC) on “The role of financial centers in driving economic growth.”

In 2018, financial services leaders from around the globe assembled to announce a new strategic initiative: The World Alliance of International Financial Centers. WAIFC is an international non-profit association, which represents leading global financial centers and facilitates cooperation and the exchange of best practices.

In the context of the present uncertainties, with the consequences of the coronavirus and the slowing down of economic growth all around the world, financial centers must play an even more essential role to accompany a necessary recovery and the orientation of the economies towards sustainable development and the satisfaction of the economic needs.

Together with WAIFC member Casablanca Finance City, WAIFC has published a report in collaboration with Oxford Business Group on “the role of financial centers in driving economic growth,” which highlights the breadth and diversity of financial centers’ activities in financing their real economies.

Eleven financial centers have contributed to the report with their showcases:

    • Abu Dhabi Global Market
    • Astana International Financial Center
    • Belgian Finance Center
    • Busan International Financial Center
    • Casablanca Finance City
    • Frankfurt Main Finance
    • Hong Kong Financial Services Development Council
    • Luxembourg for Finance
    • Paris Europlace
    • TheCityUK
    • Toronto Finance International

The financial industry undergoes a process of structural change. Nowadays, the priority actions of our members concern environmental finance, technological innovation and infrastructure, as well as social and territorial financing. International financial centers are more reliant on technology, and our members have been driving innovations in the financial industry by supporting the adoption of innovative technologies from cloud computing and blockchain to artificial intelligence and big data. Also, our members are increasingly promoting all segments of sustainable finance and strive to ensure that environmental and social considerations are adequately taken into account and integrated into the financial sector moving forward.

The new report provides an overview of those activities. It is available for free download at https://frankfurt-main-finance.com/wp-content/uploads/2020/04/WAIFC-role-of-financial-centres.pdf.

Arnaud de Bresson, Chairman of the WAIFC Board of Directors and CEO of Paris Europlace, says:

“The WAIFC was created to foster collaboration among international financial centers and to build up a global network. It aims to accelerate the dialogue and exchange of best practices among them and develop communication with the general public. Our core objective is that finance should not be self-centered but rather serve the real economy all around the world. We are committed to supporting global economic transformations, fostering the combination of public and private funding, and contributing to meet the sustainable development goals all around the world.”

Said Ibrahimi, Member of the WAIFC Board of Directors and CEO of Casablanca Finance City, says:

“As a founding member of the WAIFC as well as the first financial center in Africa to join the alliance, CFC is proud to contribute an African perspective that showcases the level of international cooperation in its undertakings on the continent. We strongly believe in Africa’s potential, and the pivotal role global financial centers play in driving growth and contributing to socio-economic development. We aspire through this report to make these benefits known beyond the world of finance.”

Dr. Jochen Biedermann, Managing Director of the WAIFC, says:

“Financial centers are vital to sustaining economic growth. They provide the infrastructure for investment that drives entrepreneurial endeavors and economic growth across industries and communities and increasingly contribute to sustainable development and financial literacy. Our members embrace innovation and actively drive developments in that space. They provide fertile ground for start-ups with new ideas and innovative business models. The diversity of WAIFC members is an important strength.”

Hubertus Väth, Member of the WAIFC Board of Directors and managing Director of Frankfurt Main Finance, says: “Frankfurt Main Finance is proud to be a co-founder of the WAIFC network. Especially in times when the financial industry is facing enormous challenges, it becomes clear that solutions in an interconnected world can often only be found through international cooperation. This applies in particular to the financial sector. The financial center Frankfurt, in the heart of Europe, is a natural partner in such a cooperation.”

 

The World Alliance of International Financial Centers (WAIFC) is a non-profit association registered in Belgium, representing 16 leading international financial centers of four continents. WAIFC members are city governments, associations, and similar institutions developing and promoting their financial centers.

In an era of breakthrough technologies and rapid social change, financial centers are crucial to sustaining economic growth. Thus, the objective of the WAIFC is to create a transparent network that facilitates cooperation and sharing of best practices to further the understanding of the importance of international financial centers for national and global economies as well as social development.

Dr. Lutz Raettig: Protective Shield for Germany leverages financial centre’s efficient infrastructure

Politicians rely on an efficient financial sector for their economic protection programmes. Under KfW’s leadership, the entire breadth of the development banking system and the financial centre’s infrastructure has been deployed.

“Waste not, want not.” This proverb characterised the budgetary policy of the federal and state governments. Internationally, the “black zero,” the surplus in the budgets of the federal and state governments, has long been a hot topic. Now, however, it is precisely this room for manoeuvring that allowed politicians to get the “Protective Shield against Coronavirus in Germany,” likely in excess of 500 billion euros, up-and-running in quick order without triggering negative capital market reactions.

The largest aid package since the Second World War includes short-time work benefits, the deferral of social security contributions, tax-privileged one-time payments to employees, and a large number of aid and credit programmes for the self-employed, as well as small, medium- and large companies. The interest rates vary slightly, depending mainly on the exemption from liability for the lender.

Germany as a pioneer

Governments at the federal and state level have acted quickly, correctly and courageously. In doing so, they have relied on the financial centre’s efficient infrastructure, which has been successfully proven for decades. The state, development banks and local banks are well coordinated to quickly and efficiently process and disburse loans.

Borrowers apply for a loan from their local bank, which checks eligibility and creditworthiness, while a development bank provides the funds. Depending on the programme, the local bank can be exempt from liability up to 100%, while the development bank can refinance itself on the market with favourable terms because it has a state guarantee either explicitly or implicitly through the legally established institutional liability and guarantor liability. Moreover, due to the urgency of the situation, new programmes are usually not developed, but rather expanded and easier access to existing ones has been facilitated.

With KfW Bankengruppe and Landwirtschaftliche Rentenbank, Germany has two federally owned development banks. In addition, the federal states also have their own investment and promotional banks. For many years, KfW carried its corporate objective in its name, as it was founded in 1948 as the Kreditanstalt für Wiederaufbau as part of the Marshall Plan. After the Second World War, comparable institutions existed only in France, Italy, the Netherlands and Poland. It was not until 1989, first in the countries of Central and Eastern Europe, then increasingly in other EU countries from 2008 onwards, that comparable concepts were implemented and corresponding banks were established. Today, KfW is one of the world’s leading development banks in the world, with a AAA rating from the three most important rating agencies.

Financial stability concerns

With the loan programmes, the government mandates the German banking system to provide corporate customers with financial “medicine” for “acute care” and later “rehabilitation” based on its in-depth knowledge and experience

The corona pandemic shows how valuable a healthy finance sector can be for the real economy during a crisis. However, even the financial industry is not immune to the risks of drastic measures. Therefore, prudent principles must continue to apply to banks as well.

Against this backdrop, it is understandable when politicians and supervisors urge banks to waive bonuses and dividend payments due from 2019, at least if the banks do not receive the distributions as a capital gain. Although the banks have significantly increased their equity capital, the further course of the crisis is by no means clear enough to allow a sufficiently robust risk assessment to be made today.

BaFin and the Bundesbank have already taken far-reaching preventative measures together at the European level with the European Central Bank and the financial supervisory authorities. As BaFin President Felix Hufeld summarized, “The existing regulatory framework grants us a high degree of supervisory flexibility, of which we will fully utilise. We will relieve the burden on banks where this is possible without compromising financial stability.”

When visiting BaFin’s website on Corona, one gains an impression of the range of measures being taken. These relate to banking, insurance and securities markets, and range from waiving the planned countercyclical capital buffer, the treatment of problem loans, the postponement of Basel III standards by one year to the shortfall in pension funds and reporting obligations under the Market Abuse Regulation.

Drawing lessons from the pandemic

Just like the financial crisis in 2008, the corona pandemic in 2020 should be a point for reorientation. It should be clear that Germany, as the world’s fourth-largest economy, must have an efficient financial sector to overcome crises.

In addition to the development banks and local banks, capital markets also play an important role, as this is where the programmes are financed. In this respect, the Financial Centre Frankfurt is outstandingly positioned in Europe. Gradually, institutional investors should also be included in financing the new start, because they can leverage and thus strengthen existing programmes. The role of international financial institutions should not be underestimated either. Here, Frankfurt has scored points in recent years by bringing more than 30 international financial institutions to the Main with their new EU headquarters. These institutions can now see that their choice of location was the right one because here, challenges were solved pragmatically.

Regulation is now being put to the test as well. There is no doubt that many components will demonstrably contribute to stability. Other rules will require review in the light of the crisis, especially where complexity is unfavourable in relation to the desired outcome.

It is certainly clear that digitalisation will receive an enormous boost. It will be irreversible. Simplification and de-bureaucratization of existing regulations will ease digitalisation efforts. The criteria should be adjusted by all parties involved. Our perfectionism, which is so valued worldwide, should be pragmatically adjusted in the light of the crisis. After all, we now are experiencing how, with a little flexibility, the challenges of the lock-down can be mastered in a way that was not imaginable just a few weeks ago.

What efforts the corona pandemic will still demand of politicians, the populace and the economy cannot yet be seriously predicted. At this point, whether it is a “black swan” event or, as the author of the book of the same name, Nassim Taleb, claims – simply an expected shock, is more of an academic question. We can only hope that the medical and pharmaceutical sector will quickly find a vaccine and/or an effective therapeutic treatment for the coronavirus and that those responsible can agree on economic and public health measures to better guard against future pandemics. Hopefully, we will not waste the lessons of our current emergency and be forced to relearn them in the next.

Asahi Shimbun interviewed Hubertus Väth

Kazuo Teranishi, correspondent for Asahi Shimbun, one of the oldest and largest national daily newspaper in Japan, interviewed Hubertus Väth during his visit in Tokyo in March 2020, which took part in the FinCity Global Forum (hosted by FinCity.Tokyo).

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Germany after Brexit: Now there is a need for doers – Guest contribution by Hubertus Väth in “die bank”

The countdown was projected on to the side of Prime Minister Boris Johnson’s office and residence at 10 Downing Street until Brexit’s completion on 31 January 2020, midnight Brussels time. Negotiations on future relations are underway. However, regulatory questions for the financial sector remain largely unresolved. London will – also in the well-understood interests of the EU – remain the leading financial centre in Europe for a long time to come. This does not mean, however, that the UK’s withdrawal will be without consequences. The cake will be newly cut, and Germany should use this opportunity to establish Frankfurt as the leading financial centre in the EU, all the while striving for constructive cooperation with London and Paris.

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ESG ratings are better standardised than one might think (DVFA Guest contribution in Börsen-Zeitung)

Authors: Henrik Pontzen and Gunnar Friede, both Heads of the DVFA Commission Sustainable Investing

 

Imagine one analyst rates a security as a buy, while another deems it a sell. Scandalous? Not at all. Isn’t it quite normal that two equally well-trained and recognized experts could reach opposite conclusions after a thorough fundamental analysis of the same company? Then, why do we hear repeated complaints about ESG (environment, social and governance) ratings, deriding them because they too can have differing conclusions?

The demand that rating agencies come to a unanimous judgement when assessing ESG standards arises from false expectations. In terms of complexity, a company’s ESG rating can hardly be seriously compared with a credit rating. The latter evaluates only one facet: what is the probability of default on the coupon and repayment of a bond?

In assessing ESG, both the observation horizon and the number of criteria taken into account are disproportionately greater, and not only quantitative but also qualitative weighting is required. In this respect, a higher spread of results is to be expected per se.

However, the variance is not only due to the complexity of the subject. It also lies in the nature of the subject. For example, the answer to the question of whether electromobility is sustainable may vary depending on the rating agency’s assessment. On the one hand, e-mobility is compatible with the goal of climate neutrality; on the other hand, rare earths are used in the production of batteries, the extraction of which is sometimes questionable from a social and environmental point of view.

The answer to whether a car manufacturer, for example, is a company that operates sustainably can, therefore, be quite different, with good reasons. Which business activities are sustainable and which are not will only be decided in the future. The divergent ratings reflect this openness of decision and give room for different assessments.

Therefore, differing results are not an argument against ESG ratings or against the goal of investing sustainably. Even the fundamental analysis of a company’s stock does not always provide clear results about its actual performance. The fact that different analysts, in good faith and with the best of intentions, arrive at different results – one advises to buy, another to sell – is generally not seen as a sufficient reason to altogether do away with these analyses. ESG ratings should be handled in a similarly relaxed manner, but with a constant desire to conduct better analysis.

Furthermore, the assertion that ESG ratings do not agree to any extent on how to measure a company’s sustainability risk must be questioned. While the argument for a low correlation between individual stocks may be justified, it is not true for the average of companies and ESG rating agencies. This is demonstrated, among others, by a recently conducted study by MIT Sloan. The study’s authors Florian Berg, Julian Koelbel and Roberto Rigobon examine the ESG ratings by leading ratings agencies Asset4, RobecoSam, Sustainalytics and Vigeo Eiris for a universe of more than 800 of the world’s largest companies and found an average paired correlation of 0.7.

E- and S-ratings consistent

The consistency of the ratings is particularly high in the E-areas and for the most part in the S-areas. However, there are larger deviations in the G-areas and when the ratings from KLD/MSCI are added. By way of comparison, the leading bond ratings show a paired correlation of about 0.9 for the MSCI AC World between Moody’s, S&P and Fitch. In other words, the dispersion of the correlation between the providers of ESG ratings is quite acceptable on average, which is all the more surprising as the providers use different rating philosophies and take into account between 38 and 238 indicators in their measurements, i.e. they differ greatly in their methodology in quantitative terms alone. The major providers of bond ratings indeed achieve higher levels of agreement in their ratings. But the correlation in ESG ratings is surprisingly high when considering their complexity.

Assessments of companies according to ESG criteria are already better standardised than their reputation. However, the informed, critical use of multiple ESG ratings and the qualitative, conclusive overall assessment by the analyst remains indispensable for sustainable investing and highlight the strength of the asset manager. Ambiguities and sometimes poor data quality do not fundamentally call into question the concept of sustainable investing. The DVFA Commission on Sustainable Investing sees these findings rather as a mandate to investors to support diversity in rating agencies and at the same time to demand better measurement methods and, in dialogue with the companies, data that is sufficiently reliable and up-to-date.


Links:

DVFA Commission Sustainable Investing: https://www.dvfa.de/der-berufsverband/kommissionen/sustainable-investing.html

Three new members join the financial centre initiative Frankfurt Main Finance

Frankfurt am Main – The financial centre initiative Frankfurt Main Finance e.V. welcomes three new members. CRIF Bürgel, Deloitte Deutschland, and European DataWarehouse join the initiative as sustaining members.

“We bid our new members a very warm welcome! With their added support and the support of our long-standing members, we work towards the sustainability and efficiency of the Financial Centre Frankfurt. Our joint efforts significantly benefit the financial centre and have a lasting, positive impact on its worldwide prominence and reach,” says Dr. Lutz Raettig, President of Frankfurt Main Finance.

“Just like CRIF Bürgel, Frankfurt Main Finance stands for openness to innovation. We are, therefore, extremely pleased about our membership and future cooperation with an excellent network within the financial industry. Frankfurt has not only established itself as the leading financial centre in Germany through the strong concentration of financial firms, but is also one of the most important financial centres in the world. We will endeavour to make the best possible use of the resulting synergies with Frankfurt Main Finance and the other members, so that Frankfurt can continue to consolidate its pole position in the financial market. In line with our strategy, we also look forward to the collaboration and contact with one of the most progressive international FinTech hubs,” comments Christian Bock, Managing Director of CRIF Bürgel.

“As Germany’s leading financial centre, Frankfurt is one of Deloitte’s largest and most important locations. The membership in Frankfurt Main Finance fills us with eager anticipation of a noticeable deepening in our relationships with all actors in the financial metropolis. We are certain that our work can provide the Frankfurt community not only with many important stimuli, as it has in the past, but also with many benefits,” says Prof. Dr. Carl-Friedrich Leuschner, Deloitte auditor and partner. Head of Banking Practice at Deloitte Hans-Jürgen Walter adds, “Deloitte has supported the development of the Financial Centre Frankfurt in the competition between European and global financial centres for many years. In addition to the European Competence Centre for the Banking Union, Deloitte is also active in a number of initiatives with banks, associations, universities and politics with the goal of strengthening Germany’s most important financial centre. Membership in Frankfurt Main Finance is an additional resolute and active step in this direction, which includes, in particular, the further development of Frankfurt as an attractive location for the start-up and FinTech community.”

Dr. Christian Thun, Managing Director of European DataWarehouse, emphasises his excitement at the prospect of working with Frankfurt’s financial centre initiative. “We see our membership in Frankfurt Main Finance as a commitment to the Financial Centre Frankfurt, to which we owe a great deal and whose development we aim to pursue and actively shape with the keenest interest. Frankfurt Main Finance provides us with the requisite platform to do this, and we look forward to the exchange with the fellow members and market participants.”

CFS Index on the rise

Financial industry reports: Strong growth in revenue and earnings / Fewer jobs cut at financial institutions

The CFS Index, which measures the business climate of the German financial sector on a quarterly basis, rises by 4.3 points to 114.2 points. This positive development can primarily be attributed to high revenue and earnings growth in the financial industry in the fourth quarter of 2019. The investment volume among the financial institutions has also risen, while job cuts are lower than in the previous quarter. This positive news is offset by slightly slower growth in the investment volume and employee numbers among the service providers.

“Despite all gloomy prophecies the quarterly financial results of sector firms, both banks and financial service firms, are pointing northwards. This is even more true for numbers expected in the subsequent quarter” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, interprets the results.

The future international importance of the Financial Centre Germany continues to consolidate, as in previous quarters. With a change of -1.7 points, this indicator is now at a moderate level of 117.0 points. The financial institutions and service providers are unanimous in this assessment.

Dr. Lutz Raettig, President of Frankfurt Main Finance e.V., explains: “The Financial Centre Frankfurt will gain in importance due to the Brexit. This development is not self-fulfilling, but rather requires the continuous effort of all parties involved. The further consolidation of the index should be a clear signal and incentive for all responsible persons to continue and intensify their commitment to the financial centre.”

Financial industry revenues and earnings rise

The surveyed financial institutions and service providers surpassed their expected growth in revenues/business volume in the final quarter of 2019. The corresponding sub-index for the financial institutions rises by 5.9 points to 120.6 points, which is 7.9 points higher than one year ago. For the service providers, the sub-index climbs as much as 9.7 points. It is now 1.5 points higher than one year ago, at 122.4 points. The financial institutions are anticipating a decline in the current quarter, whereas the service providers expect to see a slight further increase.

The earnings of both groups also developed very positively in the fourth quarter of 2019. The corresponding sub-index for the financial institutions gains 7.9 points to reach a level of 111.4 points. The huge growth recorded by the service providers substantially exceeds even their positive outlook from the prior quarter. The sub-index for this group rises by 14.4 points to 122.8 points. The financial institutions and service providers are expecting the growth to weaken again in the current quarter.

Growth in investment volume is positive among financial institutions / Slight decline among service providers

The growth in investment volume in product and process innovations among the financial institutions climbs 2.9 points to 108.6 points in the fourth quarter of 2019, yet still remains 3.4 points below the level of one year ago. By contrast, the sub-index for the service providers sees a slight decline of -1.5 points to 112.6 points, which is the same level as one year ago. The financial industry has an optimistic outlook for investment in the first quarter of 2020.

Fewer job cuts at financial institutions

Job cuts at the financial institutions, which have been ongoing for some time, were less severe than expected in the prior quarter. The employee numbers sub-index rises accordingly by 4.1 points to 94.5 points, which is 6 points higher than one year ago. The financial institutions expect to further curtail their job cuts in the current quarter. The service providers are hiring fewer new employees than in the previous quarters, though the numbers remain positive. The corresponding sub-index falls by -2.6 points to 106.1 points. Compared to last year, this is 5.4 points lower, meaning fewer people are being hired. The service providers are anticipating a clearly more positive development in the current quarter.

 

 

The results are based on a quarterly management survey in the German financial sector.

The Center for Financial Studies (CFS) conducts independent and internationally-oriented research in important areas of Financial and Monetary Economics, ranging from Monetary Policy and Financial Stability, Household Finance and Retail Banking to Corporate Finance and Financial Markets. CFS is also a contributor to policy debates and policy analyses, building upon relevant findings in its research areas. In providing a platform for research and policy advice, CFS relies on its international network among academics, the financial industry and central banks in Europe and beyond.

CFS survey: “Outlook for the year 2020”

German financial industry expects more widespread adoption of negative interest rates for savers – Calls for stronger incentives for share ownership

Low interest rates and share ownership 

A CFS survey of financial industry executives shows that over 90% of respondents do not expect the ECB to change its monetary policy this year. Therefore, most financial experts (again over 90%) assume that the trend of banks introducing negative interest rates or deposit fees for savers will continue. Given the profound consequences for private pensions, a clear majority of those surveyed (approx. 87%) advocate stronger incentives for share ownership for the purpose of retirement planning.

“The proportion of people who own stocks or stock funds has increased in recent years. Nevertheless, only around one in six people currently invest in stocks,” says Professor Volker Brühl, Managing Director of the Center for Financial Studies. “The financial transaction tax proposed by Finance Minister Olaf Scholz would therefore be counterproductive.”

The respondents are split on the question of whether the government should adopt measures to protect retail savers against negative interest rates. This course of action is supported by 51% of the financial industry executives.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., emphasizes that “the lack of an investment culture in Germany has been criticized for decades. If there is anything positive to be gained from negative interest rates from the investors’ point of view, it is that equity investment must now become the pillar of private pension provisions in order to avoid capital losses.”

Growth prospects and balancing the budget

Furthermore, the CFS survey makes it clear that the majority of the financial industry is not expecting a slump in economic growth this year, despite continuing uncertainties over trade disputes and geopolitical risks. Approximately 51% of those surveyed regard the federal government’s forecast of approximately 0.6% GDP growth in Germany as realistic.

The issue of balancing the federal budget is also provoking considerable debate in the financial industry. A majority of 54% are in favour of temporarily running a deficit to boost public investment or provide tax relief. 44% of respondents are opposed to this.

“The survey results show that there is no clear consensus in the financial sector regarding either the economic outlook or the need to shore up the economy with fiscal policy measures,” explains Professor Brühl.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., adds that “the opinion reflects the delicate situation of the very open German economy. On one hand, a record foreign trade surplus, on the other a pandemic, whose course endangers value chains, which are already stressed by Brexit and the yet to be completely resolved trade conflict between the United States of America and China.”

 

 

The results are based on a quarterly management survey in the German financial sector.

The Center for Financial Studies (CFS) conducts independent and internationally-oriented research in important areas of Financial and Monetary Economics, ranging from Monetary Policy and Financial Stability, Household Finance and Retail Banking to Corporate Finance and Financial Markets. CFS is also a contributor to policy debates and policy analyses, building upon relevant findings in its research areas. In providing a platform for research and policy advice, CFS relies on its international network among academics, the financial industry and central banks in Europe and beyond.

New, innovative conference for digital finance

The first Frankfurt Digital Finance Conference brings together decision-makers and innovators from the financial industry – companies, start-ups, politicians, investors, regulatory authorities and academics – on a neutral platform in Frankfurt am Main. We spoke with the conference organizers, Corinna Egerer and Max Hunzinger, about FinTech trends, the Frankfurt location and the added value of the event.

Which services in the field of FinTech are currently of particular interest?

“Alongside with the usual suspects – such as Artificial Intelligence applications, Blockchain solutions and Payment –  Digital Identities are in focus. Open Banking is also still a hot topic to cover the chances that derive from the PSD2 Directive. IT security is and remains a vital challenge. And last but not least services that enable better customer experience – B:B and B:C – are crucial for success. All these and more topics will be discussed at Frankfurt Digital Finance.”

What can events like the Frankfurt Digital Finance Conference do for the various members of the FinTech community?

“Events like Frankfurt Digital finance connect people who have similar interests but come from different companies, institutions and backgrounds: to learn from others’ experiences, to get to know each other, to network and eventually start joint projects, all this can be reached with such a conference. “Better Together” is the motto of Frankfurt Digital Finance. Participants from incumbents and entrants, from academia, from investors and politics all meet on a level playing field. Not least a “Corporate Challenge” will take place at Frankfurt Digital Finance where teams from different companies develop ideas and concepts to better connect corporates and startups, to create value together.”

Why did you choose the Frankfurt Financial Centre as the location for this conference?

“Frankfurt as an ecosystem with incumbents and entrants can develop into a leading digital finance hub in Europe. Here we do not only have the industry expertise but also trusted personal networks and the ability of a financing chain providing the necessary resources for all stages from startups to institutions. This fact we have to communicate better  – Frankfurt Digital Finance shall support here.”

Further information about the event and registration options are available on the website frankfurt-digital-finance.de.

DVFA study on Sustainable Development Goals: A Brief Overview of Providers, Methodologies, Data and Output

Alignment with the United Nations Sustainable Development Goals (SDGs) is not as easy as it seems and is still very inconsistent. A current study by the DVFA Commission Sustainable Investing on the SDG impact measurement offers a market overview of the currently available measurements, analysis tools and providers as well as some evaluations and recommendations.

The authors of the study, Christoph Klein and Dr. Rupini Rajagopalan, consider the 17 sustainability goals of 2015, although introduced to assess states, as an important milestone on the way to effective sustainable investments in companies. In their view, the SDGs have the potential to shift the focus of market participants and science to the purpose and positive effects of investments. So far, however, implementing ESG considerations has been viewed as prudent risk management.

Klein and Rajagopalan examine the following questions: How can the SDG-related effects of financial instruments and funds be measured? What is actually measured? What is the defined methodology? What types of data are needed? What is the analytical output?

The study provides an overview of the market, but is not a recommendation for a particular provider. The DVFA paper focuses on the twelve providers who, from the authors’ perspective, offer their tools to a broader customer base.


Links:

DVFA study on Sustainable Development Goals: https://www.dvfa.de/fileadmin/downloads/Verband/Kommissionen/Sustainable_Investing/DVFA_SDG_Impact_Measurement.pdf

DVFA Commission Sustainable Investing: https://www.dvfa.de/der-berufsverband/kommissionen/sustainable-investing.html