Despite huge global challenges German pension sector lags behind
Despite huge global challenges, the German pension sector is lagging way behind with their voluntary sustainable investment guidelines according to Fair Finance Germany's latest update of their Pension Guide.
The sustainability standards of German life insurers were assessed on compliance with international sustainability standards - analyzed using around 150 individual criteria from the areas of climate, corruption, gender equality, human rights, labor rights, nature & the environment, taxes, armaments and transparency. The published voluntary commitments of six life insurance companies operating in Germany were checked.
The conclusion? Although all insurers examined have generally spoken out in favor of sustainability, the life insurance sector with investments worth billions, still offers disappointing voluntary commitments and socio-ecological investment criteria.
Allianz Leben does best overall with 39% percent, but does not do justice to its pioneering role as the leading insurance company in Germany. Axa Leben (33%), Debeka Leben (26%), R + V (26%), Zurich Germany (22%) and Alte Leipziger Leben (15%) follow in the ranking. Compared to the first assessment of last year, there have been hardly any significant changes and all insurers remain in the “red” zone.
At least in the area of human rights, most life insurances have improved positively thanks to their commitment to the UN Global Compact. In this area, Allianz received the highest percentage of the life insurances examined at 63%.
Most neglected was the area of nature and environmental protection, for which only Allianz and Axa - albeit far too weak - have drawn up regulations.
It is gratifying that Debeka has made its ESG approach more concrete with the exclusion of coal companies and controversial weapons as well as a reference to the protection of human rights and thus achieved a better rating.
"The state must also demand that financial service providers comply with international legal obligations with regard to human rights, environmental and climate protection," says Thomas Küchenmeister, managing director of the NGO Facing Finance, which coordinates the Fair Finance Guide. "Even if the sector traditionally invests heavily in fixed-income securities, clear investment guidelines are also required for corporate bonds, because in times of extremely low interest rates, insurance companies also have to look for lucrative investment options," he adds.
The shortcomings in the explanations from the life insurance companies are striking, explains Julia Dubslaff, who coordinates these evaluations of the life insurance companies. “Regulations on climate protection are mostly limited to the exclusion of coal companies. Other sectors such as oil and gas or the cement, aviation or automotive industries are not taken into account.”
There are similar restrictions on the subject of armaments: here, for example, the insurance companies have not established any regulations with regard to arms exports. Human rights violations are often only included in general or concern the core labor standards of the ILO. Effective complaint mechanisms in accordance with the UN Guiding Principles on Business and Human Rights for people who are impaired by corporate activities are currently in vain among the life insurers examined. The contributions to the 17 sustainability goals of the UN are also interpreted less globally than in relation to their own product range.
Since the term sustainable investment is not generally defined, many financial service providers use the term in a way that best suits the respective business model and not as social and ecological norms and standards or climate change or social crises and wars make it necessary.
“We welcome the fact that the EU taxonomy has set binding standards for ecological and climate-friendly investments for the first time. However, the green taxonomy does not yet provide a comprehensive definition of sustainable investments, because it only focuses on six ecological goals and especially the climate-relevant area of sustainability and the factors social sustainability and corporate management remain underexposed, "says Ulrike Lohr from the Südwind Institute, also a member of Fair Finance.
"Since ethical and ecological action is also important for more and more consumers in the context of their private or company pension schemes, we would like to see a significant improvement in all life insurance companies in the coming year," comments Dr. Annabel Oelmann, Member of the Board of the Bremen Consumer Center.
"As long as there are no statutory minimum standards," she says "life insurers must meet their responsibilities through voluntary guidelines!"
Read the German press release here.