6 December 2019

Zurich's green bond portfolio hits $3.5bn

Zurich Insurance's portfolio of green, social and sustainability bonds has reached $3.5 billion, Danielle Brassel, a responsible investment analyst with the firm, told the Insurance and Climate Risk conference.

They represent the bulk of the insurer's $4.4 billion impact investment portfolio, which it intends to build to $5 billion, she said.

The company has been a strong supporter of the market for many years. It pledged to invest $1 billion in green bonds in November 2013 and doubled that target in July 2014.That commitment was fulfilled in August 2017.

The other key targets for its impact investments are to avoid emissions equivalent to 5Mt of carbon dioxide annually and to deliver benefits to five million people each year.These are the most commonly reported impact metrics and can be aggregated across various asset classes, she noted, although the data is far from perfect, as different issuers use different assumptions and a variety of baselines.

Collecting this impact data is highly laborious, as Zurich holds about 150 green, social or sustainability bonds but, fortunately, the 16 biggest issuers account for about 70% of the $3.5 billion she noted.

There is a surprising number of impact reports available, Brassel said. "If someone issues under the Green Bond Principles, they report ... they take it seriously".

However, the reports are not always easy to find, she warned. Sometimes the information on impact is included in the issuer's sustainability report, sometimes it is included in the company's annual report and sometimes it is presented in a special impact report. And, while the quality of reporting is variable, it has improved since last year, she said.

As part of its efforts to develop this market, Zurich has made its impact measurement methodology – developed in partnership with BlackRock – freely available on its website. It is inviting feedback and suggestions on how to improve its current approach and is particularly keen to work with other investors to develop a framework for the social metric 'people benefited'.