Sustainable Finance is a holistic approach to managing the economic, social, and environmental aspects of financial transactions. German Sparkassenstiftung (DSIK) prioritizes investments that promote renewable energy and energy efficiency (Sustainable Finance), while also helping people adapt to climate change (Climate Finance).

What is Sustainable Finance?

DSIK defines Sustainable Finance as encompassing Green Finance, which includes any financial initiative, process, product, or service designed to protect the natural environment or manage the environmental impacts on finance and investments. This includes transitioning to a low-carbon economy.

The Four-Way Win of Sustainable Finance

German Sparkassenstiftung believes that Sustainable Finance can create a win-win situation in four key areas:

1. Environmental Benefits: Protecting and enhancing the natural environment.
2. Health and Prosperity: Improving the well-being and financial health of local communities.
3. Business Growth: Strengthening the economic resilience of businesses, particularly micro, small, and medium enterprises (MSMEs).
4. New Opportunities: Creating new business fields and income sources.

Key Activities in Sustainable Finance

DSIK's Sustainable Finance initiatives focus on three main areas:

• Product Design and Implementation: Developing and implementing financial products for sustainable green technologies, assessing portfolio exposure to climate change effects.
• Innovative Customer Services: Adopting new approaches to enhance customer service related to sustainable finance.
• Risk Management Systems: Supporting the development of effective risk management systems through programs like the Sustainable Finance Compass and ESG Risk Radar.

Supporting MSMEs and Regional Development

Focusing on MSMEs, DSIK leverages the experience of German Sparkassen to promote sustainability and support Germany’s energy transition ("Energiewende"). This involves financing small-scale projects that bolster regional development, fostering a culture of sustainability within local Sparkassen. Efforts include reducing paper usage, adopting sustainable building practices, and improving financial processes for more efficient resource use.

Guiding Principles of Sustainable Finance

DSIK’s work in Sustainable Finance is guided by key principles that ensure profitability and social responsibility go hand in hand:

• Profitability and Social Mandate: These are not contradictory goals; both can be achieved together.
• Sustainable Growth: Profitability is essential for sustainable growth.
• Contextual Customization: Projects and products must be tailored to specific contexts.

German Sparkassenstiftung is committed to making Sustainable Finance a practical and impactful reality, fostering a future where financial growth and environmental management go hand in hand.