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The road to impact investing – a journey for insurers

The road to impact investing – a journey for insurers

05-05-2021 | Insight
Sustainable investing has risen to the top of insurers’ agendas – but how to make an impact with it?
  • Clara Yan
    Clara
    Yan
    Head of Insurance Analytics
  • Jessica Lenehan
    Jessica
    Lenehan
    Insurance Solutions Manager

Speed read

  • Impact investing is increasingly important for insurers’ SI agendas
  • Sustainable Development Goals offer a means of making an impact
  • Robeco’s strategies usable for unit-linked platforms and balance sheets

Many insurance companies are keen to embrace more sustainable ways of investing their clients’ premiums, as combatting climate change grows in importance, and Covid-19 continues to dominate. As such, they are seeking strategies that embrace environmental, social and governance (ESG) factors.

What may be still missing though is how to make an impact in the process. This can be done by impact investing, which is defined as “investments in companies, organizations and funds with the intention of generating a social and environmental impact, alongside a financial return.”

And there are various ways of doing it, such as through thematic strategies covering issues such as climate change, to more bespoke vehicles that target the Sustainable Development Goals. These offerings are structured not only as ‘off-the-shelf’ investment funds, but also as customized segregated accounts. This means insurers can tailor the strategies according to their sustainability agendas.

Climate investing: from urgency to solutions
Climate investing: from urgency to solutions
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Finding the right strategies

But how to go about it? And with such a wide array of worthy causes available, what sustainable projects should an insurer embrace? Some strategies may be suitable for decarbonizing an insurer’s balance sheet, while others might work better on unit-linked platforms or segregated accounts as means of earning returns in a more sustainable way.

To answer some of the conundrums, Robeco’s Insurance Solutions team has produced an article explaining the issues in depth. It gives the background on the topic and the various solutions available, backed with case studies on how insurers are actually dealing with the issue today.

“Focusing on impact investing has become a core tenet of an insurer’s sustainability and community engagement approach,” say the article’s authors, insurance specialists Clara Yan and Jessica Lenehan.

“In this paper, we focus on how insurance companies are framing their agendas around sustainability, and the different impact investment tools they are using to translate their sustainability goals into tangible results.”

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