Insurer in impact investment first

Zurich Insurance Group, (Zurich), has revealed it is to become the first large institutional investor to prioritise the ‘impact’ rather than monetary amount of its impact investment portfolio.

The move follows Zurich’s announcement that it had exceeded the $5 billion target for its impact investment portfolio set three years ago.

Under the scheme the insurer will focus on its targets of avoiding 5 million metric tons of CO2 equivalent emissions annually, the amount emitted in a year by one million cars, and improving each year the lives of 5 million people, comparable to the population of Ireland.  The firm said as of the end of September, the portfolio helped avoid 2.9 million tons of CO2 equivalent emissions and improved the lives of 4 million people.

Zurich’s impact investment portfolio of $5.4 billion includes green bonds, social and sustainability bonds, private equity funds active in areas such as financial inclusion and clean technology, as well as impact infrastructure loans for projects such as wind or solar farms. Zurich pledged it will continue building a portfolio “to deliver on its targets, going beyond the $5 billion investments originally targeted”.

“Over recent years, Zurich has developed a methodology to measure and aggregate impact across various asset classes,” it said. “Measuring impact for three years in a row has led to multiple lessons in how to measure and manage impact, specifically in how to interpret the impact intensities of various types of investments.”

Zurich said the experience it had built via the management of its investments enabled the insurer to prioritise the targeted impact, allowing committed funds to follow.

“Throughout this time Zurich has openly shared its accumulated knowledge and expertise with other asset managers to support the development of common measurement standards and pledges to continue to share future learnings,” it added.

The announcement has been welcomed by climate groups.

Amit Bouri, Co-Founder and CEO of The Global Impact Investing Network (GIIN) said: “The GIIN applauds Zurich Insurance Group for continuing to raise the bar on its impact investing, anchoring around impact targets while allocating capital in alignment with both its fiduciary duty and intention to generate a measurable, positive impact for people and planet. To achieve our biggest global goals, like the UN Sustainable Development Goals and targets set by the Paris Agreement, we will need the commitment of institutional investors around the world. Investors have a critical role to play in transforming our future, and our hope is that Zurich inspires other investors to join the effort to drive measurable, positive impact, so we can make progress toward the more sustainable and inclusive world we all seek.”

Diane Damskey, Head of Secretariat, Operating Principles for Impact Management, said: “Congratulations to Zurich Insurance Group on their continued leadership among impact investors and taking the step to manage their impact investment portfolio solely based upon impact targets. As one of the founding Signatories to the Operating Principles for Impact Management, Zurich’s team has contributed to this growing and collaborative group of asset owners and asset managers that are shaping the future of impact investing.”