"Green finance" is a catchphrase that institutional investors are increasingly willing to explore and exploit.

 But the business model based on the principles of a sustainable economy hasn't produced a large amount of investment products yet. At least this is the sober analysis that the participants of the latest "Fair Finance Week" conference in Frankfurt, Germany, have come up with.

They were in agreement that a complete U-turn in the current financial system was not on the cards.

Politicians, economists, scientists and representatives of civil society are using the forum to debate how the banking sector can act in a more sustainable way, pretty much in line with the recommendations of the European Commission, which in summer published a batch of guidelines to this end.

There's talk about whether non-green investments should entail larger equity capital requirements to make them less attractive for lenders. Sustainable financial products would by contrast involve investments in environmentally friendly projects, but also those aimed to fight corruption or strengthen human rights.

Sustainability as a concept of life

"Sustainability is a concept of life permeating the whole business model in all its aspects," said the head of NGO Finance Watch at the Fair Finance Week meeting. "It's not just about CO2 emissions, but also about wage gaps and inequality."

But most of all, it's about the stability of the financial system, argued Sven Giegold, a finance expert from the environmentalist Greens in the European Parliament. He spoke of "tipping points" that could easily lead to non-sustainable products losing their value fast.

Giegold insisted that banks have to make precautions for such a scenario in order to prevent the financial system from destabilizing.

Standards for sustainable investments

Deutsche Börse's Kristina Jeromin said some lenders were making good progress in this regard. She cited France's BNP which had set its own standards for sustainable investments. One of the rules there is to provide maximum transparency about the performance of relevant products.

"Everything starts with transparency," she said, adding that it was crucial for the step-by-step transformation of a given business model, and that many lenders still had a long way to go to adapt their product portfolio accordingly.

Jeromin called on consumers to ask for sustainable products. She mentioned, though, that consultants were insufficiently trained and could easily claim that sustainable investments involved lower yields than conventional ones.

More than climate protection

Sven Giegold said German politicians tended to confine sustainability in the finance sector to investments helping to protect the climate. He believes that a widening of the concept needs to be fought for in Brussels and mentioned that the French government had been supporting initiatives to this end.

It was also a matter of size, he argued. Only the EU as a bloc was big enough to make its voice heard internationally when it came to factoring in ethical considerations in investments and fighting for ecological and social agendas.

Giegold warned, however, that pan-European standards would invariably constitute a compromise, so no one should be nurturing unrealistic hopes.

He praised the ethically-oriented lenders as pioneers on the road to sustainable banking, saying he counted on their continued role as "a thorn in the side of the conventional finance industry."