Zurich measures environmental impact
The investment landscape in the UK is changing with the increased influence of ESG teams at institutional investors which are looking in far closer detail at the environmental impact of portfolio companies. Linked to this has been the growth in green bonds in Europe where major insurance companies, like Zurich have taken a lead. BBVA is forecasting issuance of USD 220 billion in 2019 for the green bond market.
The interest has grown since we first covered this topic with Eversheds Sutherlands - comparing Germany and the UK - and more recently at a December 2018 round table with Aviva Investors and Future Cities Forum looking at sustainability and environmental impact in the real assets sector.
Zurich Insurance Group (Zurich) has announced that using a newly developed framework, it has for the first time successfully measured the environmental and resilience effects of its impact investment portfolio.
The analysis showed that the underlying investments helped to avoid 3.4 million tons of CO2 - equivalent emissions worldwide and improved the lives of 2.4 million people. This takes Zurich already over halfway toward achieving the ambitious impact investment targets it introduced in 2017. The targets are to achieve total impact investments of USD 5 billion that would result in avoiding 5 million tons of CO2 - equivalent emissions while improving the lives of 5 million people each year.
Reliable measurements are an essential part of delivering on Zurich's impact investing promises. 'As a responsible investor, we use capital markets to search for - and fund - solutions to many of the pressing social or environmental issues of our time', says Urban Angehrn, Group Chief Investment Officer. 'Besides tracking our exposure targets, we want to know what our investments achieve in terms of impact. Being able to aggregate impact across asset classes and instruments is essential for our mission'.
The measurement methodology for the impact of Zurich's green bond portfolio has been developed in close collaboration with BlackRock, the international investment firm. In addition, for its social and sustainability bond, impact private equity and Swiss real estate investments, Zurich has developed a methodology to similarly aggregate numbers on CO2 - equivalent emissions and the number of people who benefitted.
The analysis based on this approach demonstrates what Zurich's impact portfolio achieves in contributions toward the company's impact investment objectives; mitigating environmental risks and increasing the resilience of people worldwide.
Urban added ' We will be delighted to introduce the new framework to other asset owners and asset managers. We strongly believe that measuring the impact of investments is one of the key deliverables on Zurich's sustainability ambition to facilitate transitioning to a low-carbon and inclusive economy'.