Sustainable investing? A short travelogue

Lukasz Glowacki
Table of contents
Lukasz Glowacki

Sustainable investing? A short travelogue

Meet Lukasz, an experienced young investment autodidact who has been increasingly concerned with the potential sustainable consequences of his investments over the past few years. We asked him to share with you in this blog his knowledge, tips and tricks that have helped him on his way and let you share his journey.

Financial deep sleep

I started my first "real" job in 2010, and although I had studied business, my financial literacy was at an incredibly poor level. Retirement planning? No plan! Investing money? I have my daily allowance (at that time there was even a few percent).

So what do you do in such a situation? You look for supposed experts who tell you what to do. No sooner said than done.

In 2010, I took out a company pension plan through a direct insurance company (the external advisor was recommended by my employer at the time) and took no further interest in the fine print. A year later, I dropped my pants in front of a financial advisor and disclosed my income situation. With the end result: Riester contract. Despite many more "therapy sessions" (from 2012-2016), I somehow avoided acquiring any more financial products, even though I was always strongly advised to do so. Honestly, I had no idea at all what the counseling people were talking about. They also didn't try very hard, but rather threw around technical terms.

The financial awakening

I would probably still be seeing consultants today if the following opportunity hadn't presented itself to me in 2016: a financially secure break from professional life. I invested the time well. On the one hand, because I spent a lot of it with my firstborn child and, on the other, to understand and reorganize the topics of finance and insurance.

Karl Lagerfeld said one thing: "Anyone who wears sweatpants has lost control of his life"

And so it is with the subject of money: "He who relies on others is abandoned."

So in mid-2016, I embarked on a journey to answer the question: What do I do with my savings? Because my strategy: "all-in daily money" no longer worked!

Who am I?

In principle, I am someone who does not make spontaneous purchasing decisions. If I want to buy a kettle, then it must be the price-performance winner. Cheap to buy and lasts at least a lifetime. Conversely, this means that I spend a lot of time looking for information. And I did the same - maybe even a little more meticulously - when it came to investing. I read books, scanned Instagram, listened to podcasts, discussed in forums, talked to my friends (so many of them are not interested in it), studied comparison tables in magazines, etc.

But instead of getting an answer right away, other questions arose. Questions like: What type of investor am I? What is important to me in the magic triangle of investment?

  • Yield
  • Security
  • Liquidity

I can say that at the time, I only perceived the topic of sustainability as a marginal issue.

One thing quickly became clear to me at that time. I am prepared to deal with the topic of investment, but not on a daily basis. And since then, I've been like the financial vizier Albert Warnecke: I invest passively and use the time I've gained to stand at the barbecue with friends and drink a cold beer.

Asset classes? Here we go!

You can invest your money in the following classes:

  • Individual stocks (e.g. Netflix)
  • Actively managed funds
  • Passive funds so-called ETFs - Exchange Trade Funds
  • Government bonds
  • Corporate Bonds
  • Raw materials
  • Real Estate
  • Gold
  • Cryptocurrencies/NFTs
  • Money market (e.g. overnight money)
  • Collectibles (art, vintage cars, wine, etc.)

The choice quickly fell on passively managed equity funds, so-called exchange traded funds ETFs. Why?

They are broadly diversified, i.e. you do not invest in one company (single share) that could possibly go bankrupt, but in a colorful basket of goods.

They are inexpensive because they "only" track an index and no investment managers have to be paid to put together the equity fund.

They are tradable on the stock exchange.

From my point of view a perfect product, which brings a good return (provided you can trust the last 100 years of stock market and are optimistic about the future) and liquidity and is safer than an investment in individual stocks.

So in the summer of 2017, I bought my first ETFs and set up a savings plan. At the time, sustainable ETFs were rather rare and I didn't care. What I wanted was yield, yield, yield! Admittedly, this was a very limited view of things, but for me, the only thing that counted in this context was a good price-performance ratio.

The sustainable awakening

It wasn't until two years later in May 2019 that more questions came up in me, triggered in part by this blog post.

"To act ethically means not to base one's decision solely on self-interest, but to try to adopt an impartial, in a sense universal point of view that takes into account the interests of all those affected by the action. Or in the wording of Immanuel Kant's famous formula: "Act only according to that maxim according to which you can at the same time want it to become a general law." I searched for further answers and breathed life back into a stagnant discussion in the securities forum for a short time.

The central questions were: How would I like to be at the end of my investment life? What answers will I give my children? Is it only about getting the optimum return? Who "pays for the extra return" that I get in the end (nature, the climate, people...)?

And then the following happened: NOTHING.

I had done some basic research and questioned my principles, but had done nothing with them.

"Knowledge without action is useless."

But maybe it just needed a little time to grow inside. It wasn't until this year that I began to devote more time to the topic of sustainable investing.

When I asked when GLS Bank would also offer sustainable ETFs in its custody account, a nice bank advisor answered the following a few months ago:

"Anyone who wants more than returns at any price and has understood that money doesn't work, but that people work with money - also wants to know who they are dealing with."

It may be that this is just a standard communication message from the bank, but I was touched by the sentence.

And here I am, only this time I also want to take action with the knowledge and report on it.

Who has also set off?


The information has been prepared solely for information purposes. The information does not constitute investment advice, an investment recommendation or an invitation to acquire or dispose of financial instruments.

The fund compass - active and sustainable!

When it comes to mutual funds, there are several camps and two stand out in particular:

  • ETF fanatics who rely on passively managed index funds.
  • Fund evangelists who only care about actively managed mutual funds.

Both investment opportunities have their advantages and disadvantages. If you take the classic investment triangle of...

  • Profitability
  • Security
  • Liquidity

...underlying, then I personally would be on Team ETF immediately. And for a long time I was.

However, since I started the investment quad...

  • Profitability
  • Security
  • Liquidity
  • Sustainability

...base my investment decisions on, my attitude towards actively managed funds has changed. In this article, I would like to discuss the most important differences between ETFs and active funds and show what options you have as a private investor.

Differences between active funds and ETFs

Let's start with the similarities. Both investment products bundle a large number of securities (often stocks) into a single investment product. That is also the only commonality.

The key differences are:

The most serious differences lie in the costs and the number of securities in a fund.

The issue surcharge and ongoing costs

In the case of actively managed funds, a so-called front-end load must be paid once, i.e. investors who wish to pay in €10,000, for example, do not receive fund units for the full amount. A fee is therefore charged for the purchase, which makes it possible to invest in the fund in the first place. This fee is called issue surcharge, agio or also load.

The formula for calculating the issue surcharge is:

Issue price € x 100 : Redemption price - 100 = Issue surcharge (percent)

If, for example, a fund is sold at an issue price of 70€ and redeemed at 66.50€, the difference is 3.50€ and thus an issue premium of 5%.

The ongoing costs are also higher than with an ETF. Where the costs of an ETF end, the costs of an actively managed fund only begin.

Actually, these are all reasons that speak against active funds. Nevertheless, this investment class has a major advantage over ETFs. Especially when it comes to the aspect of sustainability.

The number of titles

It quickly becomes apparent that the number of company stocks in an actively managed fund is significantly lower than a sustainable ETF. The GLS Bank equity fund invests in 113 companies whereas an MSCI World SRI ETF has 372 companies in its portfolio. This has implications for diversification and security. The risk of a total loss is theoretically lower with an ETF.

Due to active company selection by fund managers, actively managed funds perform better than ETFs when it comes to sustainability.

The human factor

ETFs track an index by computer. Active funds, on the other hand, are managed by real people. The assets are invested according to defined criteria and parameters. As a result, many actively managed funds have stricter sustainability requirements than ETFs. A so-called investment committee decides on the final selection.

In addition, fund managers can actively influence the companies in which the fund invests. For example, contact is made with the companies in order to discuss controversial topics such as occupational health and safety, controversial cooperations or animal testing directly with the company managers. In principle, this voting right is only possible with ETFs if the ETF provider actually physically holds the shares. In order to keep costs low, ETF providers often lend out their portfolios or do not fully track broad indices in particular. In these cases, the voting rights are forfeited. If the index is mapped synthetically by the provider via a swap, this option is also forfeited.

How do I find the right fund?

With equity funds, it's like with food. As a consumer, seals give me orientation, transparency and security. I trust institutions like Bioland, Demeter and Naturland more than other supposed organic seals, and the same is true in the world of sustainable finance.

FNG Seal

An important seal has been developed by Forum für Nachhaltige Geldanlagen e.V. abbreviated FNG, the professional association for sustainable investments in German-speaking countries. The aim of the association is to achieve improved legal and political framework conditions for sustainable investments.

The FNG seal was introduced in 2015 after a three-year development process and is the seal of quality for sustainable investment funds in German-speaking countries. Funds that are certified have to pass this certification every year. The certification criteria are divided into so-called mandatory criteria, which represent the minimum standard, and optional criteria, which are applied in a graduated model. The most sustainable investment products receive an FNG seal with 3 stars.

The minimum standard criteria essentially include consideration of labor & human rights, environmental protection and anti-corruption as summarized in the globally recognized UN Global Compact. Investments in armaments, nuclear power and coal etc. must be excluded. In addition, all companies of the respective fund must be analyzed for various sustainability criteria and be assigned to Article 8 or 9 in the Sustainable Finance Disclosure Regulation (SFDR). Funds that can particularly distinguish themselves in the tier model through institutional credibility, product standards and portfolio focus receive up to three stars. There is also the European counterpart Eurosif and country-specific associations such as UKSIF or Spainsif. I must critically note that the FNG seal is a quality label that can be purchased. An applicant has to pay 4,200€ for the first time and in the following year the fee costs 3,700€ per year.

Ecoreporter seal

The Ecoreporter seal, on the other hand, is independent and cannot be purchased. There are also no gradations as with the FNG stars, i.e. no distinction is made between bronze, silver, gold. The criteria were developed together with INAF, the Institute for Sustainable, Ethical Finance. The seal is awarded in three categories: Banks, Financial Products & Institutional Investors.

Sustainable Finance Disclosures Regulation

In March 2021, the EU Sustainable Finance Disclosure Regulation (SFDR) was launched. It is intended to enable investors to compare different financial products with regard to their environmental, social and governance (ESG) objectives. The aim is to encourage the private sector to invest more in sustainable investment products in order to promote the transformation of the European economy towards a more sustainable one.

Basically, the SFDR divides financial products into three classes:

Where can I find the right fund?

One way to find the right fund is the database Fair Funds, which is operated by the non-governmental organizations (NGOs) Facing Finance and urgewald. The database offers various filters and choices to narrow down the individual search scope of sustainable funds. For example, controversial issues such as armaments and environmental destruction can be excluded. A total of 2,113 funds licensed in Germany are evaluated, and the results unfortunately suggest that not everything that calls itself sustainable is green.

Key findings:

  • 1,814 funds are invested in companies that violate ESG standards and sustainability criteria
  • Of around 650 sustainability funds, only 100 are free of controversy
  • Out of 237 funds reviewed with FNG victory

Sobering results that suggest that there is simply still a lot of greenwashing going on.

For other databases that can make it easier to find a sustainable active equity fund, see:

A selection of actively managed sustainable funds

In my search for the holy grail, I kept coming across the following active equity funds, which ecoreporter has analyzed and summarized here.

Which funds do you have in your portfolio?


The information has been prepared solely for information purposes. The information does not constitute investment advice, an investment recommendation or an invitation to acquire or dispose of financial instruments.

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Lukasz is an experienced, young investment autodidact who has been looking more and more into the potential sustainable consequences of his financial investments over the last few years. In his blog he shares any knowledge, as well as tips and tricks that have helped him on his way and lets you participate in his journey.


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