15-04-2022 · Insight

The road to climate investing – a journey for insurers

Climate change is a major issue for insurers as the industry signs up for net zero carbon commitments while also trying to maintain returns.

    Authors

  • Hilde Faber

    Global Insurance Consultant

It is doubly important for the insurance industry, which is hit twice when it comes to tackling global warming. The bill for claims for weather-related damage is rising, while asset values which underpin the ability to meet liabilities will fall if the future climate risk is not removed.

So, how can insurers achieve the seemingly impossible and reduce their claims exposure while also reducing carbon risk in portfolios – and at the same time meeting their global responsibility towards net zero?

In an in-depth Q&A, Hilde Faber, Robeco’s global insurance consultant, answers several questions on how insurers can do this. She explains what the net zero commitment really means in practical terms, and why meeting the Paris Agreement through decarbonization matters so much for modern business.

Measuring carbon and risk

One section examines what other insurers are doing, partly through membership of the Net Zero Asset Owner Alliance, of which half are insurance companies. The question of how insurers can actually measure high carbon in their portfolios is tackled in depth, along with the vexed issue of including Scope 3 emissions.

If optimizing insurer considerations and implementing net zero sounds contradictory, Faber shows how this can be done in the kind of buy-and-maintain portfolio that many insurers embrace. The regulatory view of this issue is addressed, along with what it means for future investment performance, assessing risk and meeting disclosure requirements.

Download the full article here

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Important information

This information is for informational purposes only and should not be construed as an offer to sell or an invitation to buy any securities or products, nor as investment advice or recommendation. The contents of this document have not been reviewed by the Monetary Authority of Singapore (“MAS”). Robeco Singapore Private Limited holds a capital markets services license for fund management issued by the MAS and is subject to certain clientele restrictions under such license. An investment will involve a high degree of risk, and you should consider carefully whether an investment is suitable for you.