Insurers pick up the pace as they look to responsible investment
A recent survey with 217 decision-makers in the insurance industry1 by market research firm Info Pro Digital Etudes in partnership with Ostrum AM and French insurance publication Argus de l’Assurance reveals that insurers are stepping up their responsible investment strategy and highlights their need for support in this arena.
Spurred on by regulation and the Covid-19 crisis
Interest in sustainable finance has been gathering speed for the past several years, with 53% of survey respondents deciding to bolster their moves to green their assets following implementation of Article 173 of the French Energy Transition for Green Growth Act. Other regulatory aspects, such as the Paris Agreement (41%) and Sustainable Finance Disclosure Regulation or SFDR (41%) have also fueled insurers’ growing awareness on sustainable investment.
Additionally, 81% of insurance industry decision-makers stated that they had intensified their consideration of responsible investment as a result of the Covid-19 crisis.
Most important criteria in investment choices
Insurers already seem to have a clear idea of the most critical ESG criteria to analyze in their investment choices, with CO2 emissions leading the way as the most important criterion (68%), followed by the ecological transition with a social dimension (55%), according to the survey.
Obstacles still remain
Despite a reasserted determination, insurers are faced with certain obstacles, with 83% viewing capital requirements introduced by Solvency II as the main hindrance, while 64% of respondents also see today’s low interest rates as an impediment to the development of responsible finance in the insurance industry.
According to the survey, 92% of respondents also perceive obstructions to the incorporation of ESG criteria into their strategies, primarily due to a shortage of resources (48%), data (33%) and time (32%), as well as a lack of methodology (29%).
Lastly, data quality and the ability to produce the reports required by regulation seem to be a key concern for insurers now more than ever, in a sector where IT systems can sometimes be outdated and complex, while data sources may be patchy.
When choosing a partner, 61% of decision-makers questioned will look first and foremost at the quality of data reporting and will expect information on their carbon footprint (63%), ESG coverage of their portfolios (47%) and their SRI exposure (42%). Insurers also seek support in measuring the impacts and consequences of regulation (46%) as well as the application of their commitments (41%) when deciding on their management policy.
1 Methodology: research by Infopro Digital Etudes carried out online between February 24 and March 22, 2021, for Ostrum AM with 217 decision-makers who read Argus de l’assurance i.e. senior management, risk management departments, investment departments, compliance/internal audit departments, etc.
Ostrum Asset Management
An affiliate of Natixis Investment Managers.
French Public Limited liability company with board of Directors.
Share capital €48 518 602.
Regulated by the Autorité des Marchés Financiers (AMF) under no. GP 18000014.
RCS Paris n° 525 192 753.
43 avenue Pierre Mendès France 75013 Paris, France.
www.ostrum.com
Natixis Investment Managers
Natixis Investment Managers is a subsidiary of Natixis.
Portfolio management company - French Public Limited liability company
RCS Paris n°453 952 681
Registered Office: 43, Avenue Pierre Mendes France – 75013 – Paris.
www.im.natixis.com
This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material.
Spurred on by regulation and the Covid-19 crisis
Interest in sustainable finance has been gathering speed for the past several years, with 53% of survey respondents deciding to bolster their moves to green their assets following implementation of Article 173 of the French Energy Transition for Green Growth Act. Other regulatory aspects, such as the Paris Agreement (41%) and Sustainable Finance Disclosure Regulation or SFDR (41%) have also fueled insurers’ growing awareness on sustainable investment.
Additionally, 81% of insurance industry decision-makers stated that they had intensified their consideration of responsible investment as a result of the Covid-19 crisis.
Most important criteria in investment choices
Insurers already seem to have a clear idea of the most critical ESG criteria to analyze in their investment choices, with CO2 emissions leading the way as the most important criterion (68%), followed by the ecological transition with a social dimension (55%), according to the survey.
Obstacles still remain
Despite a reasserted determination, insurers are faced with certain obstacles, with 83% viewing capital requirements introduced by Solvency II as the main hindrance, while 64% of respondents also see today’s low interest rates as an impediment to the development of responsible finance in the insurance industry.
According to the survey, 92% of respondents also perceive obstructions to the incorporation of ESG criteria into their strategies, primarily due to a shortage of resources (48%), data (33%) and time (32%), as well as a lack of methodology (29%).
Lastly, data quality and the ability to produce the reports required by regulation seem to be a key concern for insurers now more than ever, in a sector where IT systems can sometimes be outdated and complex, while data sources may be patchy.
When choosing a partner, 61% of decision-makers questioned will look first and foremost at the quality of data reporting and will expect information on their carbon footprint (63%), ESG coverage of their portfolios (47%) and their SRI exposure (42%). Insurers also seek support in measuring the impacts and consequences of regulation (46%) as well as the application of their commitments (41%) when deciding on their management policy.
Ostrum Asset Management
An affiliate of Natixis Investment Managers.
French Public Limited liability company with board of Directors.
Share capital €48 518 602.
Regulated by the Autorité des Marchés Financiers (AMF) under no. GP 18000014.
RCS Paris n° 525 192 753.
43 avenue Pierre Mendès France 75013 Paris, France.
www.ostrum.com
Natixis Investment Managers
Natixis Investment Managers is a subsidiary of Natixis.
Portfolio management company - French Public Limited liability company
RCS Paris n°453 952 681
Registered Office: 43, Avenue Pierre Mendes France – 75013 – Paris.
www.im.natixis.com
This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material.