Bert Flossbach (Flossbach und Storch AG) spoke in an exciting presentation at the FONDS professionell KONGRESS in Mannheim about the risks that the sustainability trend could open up for the entire financial sector. The comparison with the diesel scandal is no coincidence, as ESG ratings also allow different interpretations.
Sometimes the ratings of companies such as Tesla or VW are above-averagely sustainable, sometimes not at all – every provider of ESG ratings comes to its own conclusions, which may well contradict each other. Flossbach therefore recommended that companies carry out these ratings themselves, and above all to the best of their knowledge and belief. Consistency would not be possible here. If, however, some providers were too aggressive with the important issue of sustainability and awarded seals without this being really appropriate, the industry would be threatened with its own diesel scandal – said Flossbach.
The situation would fuel the current lack of clarity, which Flossbach illustrated with an advertisement in the Financial Times. There, Larry Fink (BlackRock) was asked to use his influence to persuade Jamie Dimon (JPMorgan Chase & Co.) to adopt a more sustainable policy.
Flossbach concluded his lecture with a working hypothesis: In his opinion, Roaring Twenties were unlikely. Growth is likely to be rather low, but inflation will rise. With regard to assets, Flossbach sees a selective risk of inflation. While he sees not only a good risk/reward ratio for equities, but also an interesting risk buffer, he believes that bonds that are considered safe, such as Bunds, will fail – especially in passive investments such as ETFs. That is “over”.
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