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by regulation seem to be a key concern for insurers now more than ever, in a sector where IT systems can sometimes be outdated and complex, while data sources may be patchy.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.
About Ostrum Asset Management
Ostrum Asset Management draws on its investment expertise to enhance the impact of its clients’ commitments as they act together to support European citizens’ life plans, health and retirement.
A European institutional investment management leader1, Ostrum Asset Management supports its clients in their liability-driven investments, offering both asset management solutions on the back of its long-standing fixed-income and insurance-related management expertise (equity and fixed income), and investment services via its innovative technological platform.
Ostrum Asset Management is a well-established responsible investment advocate2 and manages €440 billion3 in assets for large institutional clients – insurers, pension funds, health insurers, corporations – as well as €575 billion3 in assets under administration for professional investors worldwide across all asset classes.
Ostrum Asset Management is an affiliate of Natixis Investment Managers.
1. IPE Top 500 Asset Managers 2020 ranked Ostrum AM as the 77th largest asset manager, as at 12/31/2019. Any reference to a ranking, a rating or an award provides no guarantee for future performance.
2. Ostrum AM was one of the first French asset manager signatories to the PRI in 2008. More details; www.unpri.org
3. Source: Ostrum Asset Management, consolidated data at end-March 2021. Administered assets include Ostrum AM's assets. The services provided for a given client may concern certain services only.