ESG stands for Environmental, Social and Governance. These criteria cover environmental aspects such as climate protection and renewable energy, social factors including fair working conditions and human rights, and governance elements that reflect transparent and responsible corporate management. Based on the classic three-pillar model of sustainability, environmental, social and economic considerations are viewed together. A sustainability-oriented fund therefore assesses all three dimensions in combination rather than focusing on individual indicators.

The economic dimension is an integral part of sustainable investment strategies. Economic sustainability means that companies operate in a way that enables them to generate profits consistently over time. This can be achieved through investments in modern technologies or by focusing on future-oriented business models. In this sense, a "sustainable investment with stable returns" is possible when portfolio managers invest in financially sound companies with economically sustainable business models.

Relying solely on ESG metrics, SFDR classifications or sustainability labels can lead to an overly narrow perspective and ultimately to misguided investment decisions. None of these indicators on their own provides clarity on whether a company is economically viable or whether a fund has outperformed its peer group. Sound financial analysis remains essential.

The European Union has introduced new regulatory frameworks designed to increase transparency in ESG-labelled funds, although it does not define a universal standard for what constitutes a "green" investment. Under the Sustainable Finance Disclosure Regulation (SFDR), funds are classified as Article 8 (promoting environmental or social characteristics) or Article 9 (pursuing a dedicated sustainability objective). In Germany, for example, around 6,200 Article 8 funds (approx. EUR 4.4 trillion) and 613 Article 9 funds (EUR 224 billion) are registered.

This framework is complemented by the EU Taxonomy, which defines certain environmentally sustainable activities, and by ESMA guidelines introduced in 2024. According to these guidelines, funds that use terms such as "ESG" or "sustainable" in their name must allocate at least 80 percent of their investments to sustainability-related criteria. Overall, these regulations mainly strengthen disclosure obligations. For investors, the key remains unchanged: Reviewing fund details carefully is essential.

Relying solely on labels or ratings can be risky. Sustainability labels (such as the FNG label) and ESG ratings from different agencies offer guidance, but their assessments often diverge. Independent analyses have also highlighted shortcomings: One study found that around 70 percent of large asset managers’ passive "ESG" ETFs held companies involved in new fossil-fuel projects. Findings like these illustrate that "greenwashing" remains possible, even when a product carries a sustainability label.

For investors, the implication is clear: Fund prospectuses, investment strategies and annual reports should be reviewed thoroughly rather than relying on a single rating. ESG requirements are only one of many investment criteria. Economic fundamentals, opportunities and risks must never be ignored. Most investors pursue both sustainability objectives and financial objectives, such as long-term wealth accumulation for retirement. This financial goal must remain in view, because sustainability in investing has two dimensions: The environmental and social aspects, and the economic viability.

Sustainable investing brings together environmental and social responsibility with sound economic judgement. However, sustainability goes beyond ESG labels or regulatory classifications. It requires a holistic view of environmental, social and governance factors, as well as the economic viability of an investment. Investors should therefore avoid relying solely on ratings or labels. Instead, they should assess fund strategies carefully and focus on solid, future-ready business models. Long-term investment success depends not only on responsible intentions, but also on structured analysis and financial substance. In this way, sustainable funds can deliver both values and value creation.