Ethical investing: Does morality come at the expense of returns? Or can you have a clear conscience when investing without it costing you a penny?

Households’ financial assets have risen from €2.9 trillion to €4.6 trillion over the last 10 years. And this figure is expected to continue rising steadily. A significant proportion of these financial assets is transferred to younger generations through gifts and inheritances. This means that the ‘generation of heirs’ must make decisions regarding financial investments. In doing so, they are able to take ethical considerations into account.

On the other hand, ‘ethical investment’ remains a niche market in Germany. However, this market segment is growing. Nevertheless, marketing for these products is not sufficiently developed to reach all potential investors. Investors who wish to take ethical criteria into account alongside the traditional criteria (return, security, liquidity) when investing all too often have to seek out alternative banks or specifically ask their own bank about ethical investments. This requires a proactive approach. For this reason, the lessons in this ethos module are designed from the perspective of the investors themselves.

When it comes to ethical investments, active investors face a multitude of (sometimes specific) questions, which this ethos module addresses:

Do I even have any means of influencing how my money is put to good use?
Am I willing to go to the extra effort of making a values-based investment decision?
What investment alternatives do I have?
Do I have access to all the information I need to assess the investment products?
Can ethical goals be pursued without sacrificing returns?
Which banks actually offer ethically-oriented investment options?
Which advisers are qualified to provide value-based investment advice?
Can I really trust that these standards are being adhered to?
Are conventional forms of investment inherently ethically inferior? etc.

This teaching module includes a targeted market survey via the internet. This culminates in a criteria-based comparison of alternative ethical investments using utility analysis. This increases market transparency and provides methodological guidance on decision-making.

Curriculum relevance: Forms of investment and wealth creation are a standard element of both general financial literacy and commercial vocational training (particularly in banking professions). This module builds on the widely recognised ‘magic triangle’ of investment and expands it into the ‘magic square’. This module fills a gap in economic education for sustainable development.