The topic of sustainability plays a significant role in financial markets, and it will continue to be a central theme in international markets in 2024. More and more issuers are entering the market with sustainable bonds, and the funds from these earmarked bonds are used to achieve the UN's Sustainable Development Goals. Many investors primarily think about clean drinking water, education, life on land and in water, affordable housing, and more. One area that is gaining increasing importance in the real economy and, consequently, in the financing sector through financial markets is gender diversity and inclusion. The focus is primarily on addressing the unequal treatment of men and women, particularly in terms of compensation, commonly referred to as the gender pay gap. This is prevalent in many countries, where women receive lower remuneration for the same job compared to their male counterparts.

Germany, as a location, still has significant catching up to do in this regard. In Germany, women earn almost 18% less than their male counterparts on average across all professional groups and positions. These findings stem from data from Eurostat, the EU statistical institution, for the year 2021. Consequently, Germany, often lauded as an economic hub within the EU, ranks third to last in various aspects. The gender pay gap is even worse only in Austria and Estonia. Clearly, Germany has substantial room for improvement in gender pay equality. Luxembourg, on the other hand, provides an example of a different scenario. In Luxembourg, women earned, on average, 0.2% more than men in 2021. A pay gap, albeit a minimal one, in favour of women. Many institutions are addressing gender diversity and inclusion, and gender bonds have already entered the market, with proceeds financing projects aimed at reducing gender gaps. Investment portfolios are also established to specifically target and support such projects. And it is expected that the theme will gain momentum in 2024, with more bonds and potentially other vehicles, such as dedicated funds, hitting the market.

However, the focus will not be limited to gender issues. It also involves the inclusion of homosexuals, bisexuals, people who identify as genderless, etc. – collectively referred to as LGBTQIA+. Many institutions are now initiating projects in this regard. Hence, the financial markets are already talking about DEI (Diversity, Equity & Inclusion) rather than merely gender diversity and inclusion in the workplace. DEI encompasses various aspects, including different nationalities, ethnic backgrounds, linguistic and cultural aspects, people with physical disabilities, varying levels of education, and more. Diversity encompasses a wide range of areas. Studies indicate that addressing this diversity and integrating individuals from various backgrounds enriches companies. As a result, companies and other institutions undergo further development with the introduction of new ideas and creativity. These factors propel an employer forward and enhance their attractiveness to individuals, particularly to newcomers in the workforce.

This obviously poses a significant financing requirement. But for the capital market, it also means the introduction of new products whose proceeds will be allocated to these specific purposes. There should be no concerns about a lack of investor demand for these new capital market products, as innovations of this nature have been well-received by the market and investors in recent years. This is evident not only in the case of Green Bonds but also in Social Bonds, where these new bonds are likely to be categorized in. Regularly, new issuers have experienced strong demand, reflected in well-filled order books. Concerns about market fragmentation and a resulting loss of liquidity in these securities are unlikely, as they can be conveniently grouped under Social Bonds – albeit with a specific focus. For investors, these products offer a positive outlook, providing them with the opportunity to finance a particular endeavor and thus diversify their portfolio thematically.