In the run-up to the UN Climate Change Conference in Paris, Allianz is announcing plans to integrate climate protection into its entire business portfolio. “Our knowledge of risk, our financial resilience and long-term investments horizon enable us to now offer more effective support for climate protection while making the most out of long-term opportunities for our customers”, says Oliver Bäte, CEO of Allianz SE. He will introduce the following four measures:
1. Transparency across entire investment portfolio
For the first time, Allianz investments will be analyzed across the entire portfolio using 37 environmental, social and corporate governance criteria. These include greenhouse gas emissions, energy efficiency, data protection and corruption.
Allianz invests more than 630 billion euros, mainly on behalf of the individuals it insures, of which over 90 percent are invested in fixed-income securities and equities. Based on the information provided by the rating agency MSCI ESG Research, transparency across the entire portfolio will be achieved by mid-2016, enabling a more targeted management of risks and opportunities. “When investing our customers' money, we focus on attractive returns that remain stable over the long term”, Andreas Gruber, chief investor of Allianz, explains. “In this respect, it is becoming increasingly important to take environmental and social risks into consideration early on. With our new approach, we can achieve greater transparency and ensure that our investment strategy will become even more sustainable in the future.”
2. Phasing out coal
Aware of the two-degree-target of the Paris climate negotiations as well as the economic risks involved, Mr Bäte announced that Allianz will stop financing coal-based business models. It will no longer invest in companies that derive more than 30 percent of revenue from coal mining or generate over 30 percent of their energy from coal. Equities amounting to 225 million euros will be divested by March 2016 while bonds amounting to 3.9 billion euros will be expiring.
3. Insuring climate risks in developing countries
Allianz plans to offer greater protection from climate change to those at risk in developing countries. It is already a leading micro-insurer, offering insurance policies for just a few cents to 57 million individuals. In Asia, Allianz is working on an insurance model for rice farmers based on satellite technology. In another business 125 million small-scale farmers are already reinsured in China and India. As part of the Munich Climate Insurance Initiative (MCII), Allianz and other insurers are designing new climate insurance approaches for over 400 million people in developing countries, a target set by G7.
4. Financing a low-carbon economy
By 2035, annual investments required for the move to alternative energy sources will have risen from the current value of 380 billion to 780 billion US dollars (IEA). This amounts to less than one percent of the total assets under management of pension funds and insurance companies (92 trillion US dollars). Allianz is one of the leading private investors in renewable energy, with more than 2.5 billion euros committed. “In the medium-term, we want to at least double our investments. Given unequivocally positive signals and reliable framework conditions for long-term investors, climate protection is unlikely to fail because of a lack of funding”, Mr Bäte emphasized.