The winter season has brought a veritable shower of accolades for the sustainable finance sector. The German Sustainability Award (DNP), the new Fair Finance Guide rankings, and the FNG seal for ESG funds were all awarded to the green community within a few weeks. This shows that sustainability is no longer a niche topic, even in the world of awards. A large number of awards, seals and ratings have been established to make good commitment visible. However, the growing variety of categories and award winners raises questions.

The German Sustainability Award has established itself as one of the most prestigious. With categories such as Green Leasing, Greensurance, or Green Deals, it attempts to address different industry aspects of the financial world. Current award winners include Triodos Bank and Signal Iduna. However, the large number of categories is more than confusing. The fragmentation of the awards can dilute the signalling effect, making it difficult to distinguish outstanding from average performance. In addition, the diversification of the categories could be interpreted as an attempt to cover as many companies as possible.

The Fair Finance Guide takes a different approach. It assesses banks and financial institutions on the basis of criteria such as social justice, environmental protection and corporate governance. These criteria are based on international standards such as the Principles for Responsible Development, or the UN's Sustainable Development Goals (SDGs). Banks such as GLS Bank regularly achieve high ratings here. However, the complexity of the assessment models often makes it difficult for non-experts to understand the results. A lack of understanding of the underlying data, or inconsistent standards, can weaken the informative value. There is also a risk that these assessments are used for marketing purposes without sustainable progress being realised.

The FNG seal, awarded by the Forum Nachhaltige Geldanlagen, provides guidance for investors who favour green funds. It sets exclusion criteria such as investments in fossil fuels or controversial weapons, and defines minimum ESG requirements. But even here, the challenge remains: Funds with different sustainability approaches – from minimum standards to ESG pioneers – can be awarded a label. This waters dow the significance. In addition, many investors want a deeper insight into the actual impact of a fund than the label alone offers.

A shared problem is a form of awards inflation. More and more categories, gradations and classifications can lead to a situation where the overall good idea suffers. If almost every bank, fund or financial product can advertise with some form of award, the idea of excellent performance loses traction. This not only jeopardises the credibility of the awards, but possibly also that of the sustainability industry. Consumers could lose trust in awards, if the impression is created that they primarily serve as promotional tools for the green cause, rather than promoting transformation.

Another point is evaluation processes. Transparency and independence are crucial factors. A lot is certainly being done here. The DNP, for example, emphasises that judges have no conflicts of interest and adhere to strict compliance rules. The Fair Finance Guide and the FNG seal pursue similar principles. However, at first glance, it sometimes remains unclear how in-depth the audits actually are. This could be remedied by follow-up audits that document the progress made by the award-winning companies and products in the years following the award. Such audits would underpin the seriousness of the awards.

For the future, it is crucial that sustainability awards continue to develop their standards and increase transparency. This is the only way that awards can contribute to transformation. Sustainability must not just be a marketing label.