The partner at Union Square Ventures continues to believe in crypto “as a fundamental innovation.”
(Photo: picture alliance / Andreas Gebert)
new York Sustainability is one of the megatrends – and also lucrative. Banks and fund houses have long recognized this. They all strive for a “green” image. According to the German fund association BVI, in the first quarter of this year, 40 percent of all money invested in mutual funds had “sustainability characteristics”.
Albert Wenger has a clear opinion on the subject: “ESG is bullshit,” says the venture capitalist in an interview with the Handelsblatt. ESG (“Environment, Social, Governance”) reflects the topics of environment, social issues and good corporate governance. Many banks and companies are only fooling people to adorn themselves with a green image, he says. As an example, he cites companies in the S&P 500 ESG sustainability index. At the end of May, for example, the US electric car manufacturer Tesla was dropped from the index, while the largest US oil company Exxon Mobil is still in it.
Wenger is a partner at New York-based venture capital firm Union Square Ventures (USV), one of the best-known US technology investors. With its fund, USV invests in companies in the early stages of growth. As early as 2007, the company put money into the short message service Twitter and the online marketplace Etsy. UPS also invested in the Fintech Stripe early on.
In Germany, the topic of ESG also concerns the financial sector. There was a recent raid on DWS. Deutsche Bank’s investment company is suspected of having systematically exaggerated its commitment to sustainability and green investments – also known as “greenwashing”.
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Of course, there are still uncertainties and questions in a developing area like ESG, in which the standards have not yet been set, said Deutsche Bank CEO Christian Sewing in his function as President of the Association of German Banks (BdB) recently in an interview with the German Press Agency (dpa). But: “All market participants are aware of how dangerous allegations of greenwashing are,” he said.
Expert expects further allegations
Christiane Hölz from the German Association for the Protection of Securities (DSW) fears that these were not the last allegations: “The market is growing rapidly, everyone only wants to invest in sustainable products,” she told Handelsblatt. However, investors cannot always rely on the ESG label. “It is very difficult for investors to recognize right away whether they are really investing in sustainable companies,” says Hölz.
According to Hölz, however, funds are also faced with challenges. There is often a lack of data from companies on the extent to which they meet the ESG criteria at all, she said. “Therefore, there is always a risk of greenwashing, whether consciously or unconsciously.”
UPS itself also relies on sustainable investments. Last year, the venture capital firm launched its own climate fund to invest in high-yield technologies that also help fight the climate crisis.
But the venture capital firm isn’t just putting the money into climate-friendly technologies. USV was also one of Coinbase’s early investors. While USV is no longer invested in Coinbase, one of the world’s largest crypto exchanges, Wenger still believes in cryptocurrencies “as a fundamental innovation.”
The Terra crash in mid-May, which wiped out an estimated $50 billion and shook the crypto world, did not change that. Terra is a so-called stablecoin, which should be linked to a base value from the real economy with stable value. Terra is indirectly tied to the US dollar. However, the link to the US currency, which was supposed to be maintained via a complex system of linking to another cryptocurrency called Luna, collapsed during the market turmoil.
“It happened exactly what a lot of people predicted,” says Wenger. The hope was that there would be an actual benefit from Luna, that Luna itself was worth something. But that hope was wrong, he says. Other cryptocurrencies such as Bitcoin or Ethereum have also experienced significant setbacks in recent weeks.