EU life insurers will boost ESG investment – survey

A recent survey conducted by AlphaReal reveals a significant shift among European life insurance companies towards investments with positive environmental and social impacts, with the findings coming from insurers managing a collective €2.73 trillion in assets.

According to the survey, a vast majority (92%) of these insurers plan to increase their allocations to environmentally and socially beneficial investments, with the remaining 8% intending to do so shortly.

Specifically, for investments with a positive environmental impact, half of the insurers aim to increase their allocations by 15% to 20% over the next two years. A further breakdown shows that 26% plan a 10% to 15% increase, 18% are looking at a 20% to 25% rise, 5% aim for a 25% to 30% hike, and 1% intend to boost allocations by 5% to 10%.

In terms of assets with a positive social impact, 40% of the insurers anticipate an increase of 15% to 20% in the next two years. Additionally, 27% expect to raise their investment by 20% to 25%, 22% by 10% to 15%, 8% by 25% to 30%, and 3% by 5% to 10%.

The survey also sheds light on the importance of environmental, social, and governance (ESG) considerations in investment decisions. For 22% of the respondents, ESG factors are “very important,” and for 77%, they are “important.” Only a marginal 1% of the participants hold a neutral stance on ESG issues.

A substantial 94% of the surveyed European life insurers have pledged to achieve carbon net zero by 2050. The remaining 6% are in the process of establishing such a commitment in the near future. This data underscores a growing trend among life insurers in Europe towards sustainable and socially responsible investment strategies.

“The insurance industry is essential in helping to drive investment in long term projects such as green energy and social infrastructure, including affordable housing, schools, and hospitals,” said Edward Palmer, AlphaReal CIO, joint deputy CEO and head of sustainability. “This research shows the importance placed by the sector in providing the necessary capital to support progress towards environmental and social goals.”

Elsewhere, a recent survey from Beazley indicates a shift in the risk landscape for business leaders, encompassing aspects from employee risks to reputation management and ESG regulation.

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