GERMANY - Approximately 50% of German retirement providers are using ethical criteria within their investments, but not all of them are adopted on a wider scale, a study has claimed.

Assets in various pension vehicles including pensionskassen, pensionsfonds and insurance-based solutions are estimated to have increased tenfold from €416bn in 2006 to €4trn in 2030, noted a study (in German) on ethical investment among German pension providers, commissioned by  the German Environmental Ministry and Fortis Investment.

At least half of the vehicles surveyed said they were using some form of ethical criteria in their investment, but some of them only for certain asset classes or certain funds.

"Although Germans are internationally regarded as pioneers in the protection of the environment and 86% of pension fund members do not want to see their money being invested in products which harm the environment or which violate human rights, theGerman retirement provision is seen as being backwards in the integration of sustainable investments," pointed out SD-M, a German consultancy on sustainability, which researched the paper.

However, Fortis is convinced there is a trend towards increased use of sustainable investments especially in the wake of the financial crisis.

But the study also found that the current mix in the funds' asset allocation is focused too little on sustainable long-term profits.

"The experts found that the share of fixed-income investments was too high," the study noted - "even if the current market environment is suggesting something different".

Around 85% of all German pension assets is invested in fixed-income.

"Good or very good long-term profit is expected for equities and equity funds including climate change and water funds."

Other generators of long-term growth were said to be private equity, including clean tech funds, and commodity funds.

Fortis argued retirement vehicles which usually have an investment horizon of 27 years and more should take these figures into account and change their asset allocation accordingly.

The study also claimed there was a need for tax-incentives to increase sustainable investment among institutional investors.

It also found there were no regulatory obstacles to such investments as perceived by retirement providers but rather "a lack of an active, large sustainable investor to set an example".