ESG and Insurance Investing: A Guide to Responsible Investing

ESG and insurance investing is a growing trend that can help you make more responsible investment decisions. ESG stands for Environmental, Social, and Governance, and it's a framework for evaluating the impact of your investments on the world.

Investors are increasingly looking for ways to align their investments with their values, and ESG investing is a key part of that. By considering the ESG factors of a company, you can get a more complete picture of its potential for long-term success.

Research shows that companies that prioritize ESG factors tend to outperform those that don't, with some studies showing that ESG stocks can outperform their non-ESG peers by as much as 4.8% per year. This is likely because ESG companies are better positioned to manage risks and capitalize on opportunities.

ESG in insurance investing is a growing trend that focuses on integrating environmental, social, and governance (ESG) considerations into underwriting, investment, and operational areas of insurance businesses. Insurers like Manulife have multiple levers to implement their sustainability strategies and make lasting impacts.

Simon Ireland, Managing Director, International ANZ, highlighted the need for insurers, investors, and third-party advisors to come together to bridge sustainable financing needs and investor expectations. This collaboration can help bridge the gap between insurers' business strategies and their sustainability goals.

Halina von dem Hagen mentioned that most insurers, including Manulife, focus on four key channels to execute their ESG ambitions: insurance products, investments, third-party mandates, and own operations. Manulife, for instance, has CAD40 billion of green assets on its balance sheet, including in sectors such as renewable energy and agriculture.

Liza Jansen emphasized the importance of ESG integration in investment strategy and tracking impact in portfolios. Nearly 90% of Manulife's third-party fund offerings fully integrate ESG considerations, demonstrating the industry's progress in this area.

Establishing a strong governance structure is crucial for effective decision-making and balancing competing priorities in ESG transformation. This structure should facilitate the integration of ESG into the overall organizational strategy.

Having a diverse ESG governance body with skill sets to understand ESG reporting requirements can help organizations manage the various projects involved in ESG transformation. This body should work on fostering a corporate culture aimed at reducing environmental risks and increasing climate resilience.

Industry collaboration is also essential for addressing the common barriers to operationalizing sustainability metrics into insurance workflows. A robust and credible emissions measurement process can help meet regulatory reporting requirements while improving transparency across the market.

Building a Governance Body is crucial for effective ESG transformation. Insurers should consider establishing a diverse team with skill sets to understand each aspect of ESG reporting requirements and their effective execution.

This team should work on integrating ESG into the overall organizational strategy by fostering a corporate culture aimed at reducing environmental risks and increasing climate resilience. By doing so, ESG can become an integral part of the overall corporate vision and future planning at the organization.

A strong governance structure can facilitate effective decision-making and balance competing priorities. This is especially important in the insurance industry, where insurers have been proactively monitoring climate risk for years.

To build a robust plan, insurers should treat this as a large-scale change and establish key timelines, internal and external stakeholders, and interdependencies. This will allow them to manage the various projects and achieve the expected results.

Here are some key considerations for building an ESG governance body:

A well-established ESG governance body can help insurers achieve robust governance and transparency within the organization.

We're working with industry leaders to address the challenges of operationalizing sustainability metrics into insurance workflows. Moody's is partnering with us to help achieve this goal.

One of the key solutions we're exploring is the Insurance-Associated Emissions Solution. This tool helps us understand and manage the complex risks related to climate change and portfolio emissions.

We're also using ExposureIQ to operationalize ESG and emissions analytics. This platform provides us with a robust and credible emissions measurement process.

Moody's has established expertise in this field and is well-placed to help us achieve our goals. Their collaboration with us represents an important step on the path toward insuring the transition.

Here are some of the featured solutions we're using to support sustainable underwriting and reporting:

ESG investing is a powerful tool for responsible investing, allowing you to screen investments based on corporate policies and encourage companies to act responsibly.

Many brokerage firms offer investment products that employ ESG principles, making it easier to incorporate these values into your portfolio.

Here are some key ESG investing strategies:

By incorporating ESG principles into your investment strategy, you can make a positive impact on the world while also protecting your portfolio.

ESG investing screens companies based on criteria related to being pro-social, environmentally friendly, and with good corporate governance.

The key difference between ESG investing and sustainable investing lies in their focus. ESG investing looks at how a company's management and stakeholders make decisions, while sustainability considers the impact of those decisions on the world.

Choosing investments can be a daunting task, but one approach is to consider Environmental, Social, and Governance (ESG) investing. Many brokerage firms offer investment products that employ ESG principles.

To know which investments are ESG, you can look for financial firms that have ESG ratings and scoring systems. For instance, MSCI has a rating scheme covering over 8,500 companies, giving them scores and letter grades based on their compliance with ESG standards and initiatives.

Several financial firms, like Morningstar and Bloomberg, have also created criteria for scoring companies on the ESG objectives. This can help you make informed decisions about which investments align with your values.

If you're looking for a more comprehensive approach, you can use ExposureIQ, which simplifies the process of translating ESG and emissions goals into actionable strategic insights. This can help underwriters and portfolio managers leverage ESG insights alongside traditional risk factors.

Here are some key factors to consider when choosing ESG investments:

By considering these factors and using tools like ESG ratings and ExposureIQ, you can make more informed decisions about your investments and align them with your values.

Sustainable insurance solutions are on the rise, with many insurers making rapid strides in integrating Environmental, Social, and Governance (ESG) considerations into their businesses.

According to Halina von dem Hagen, most insurers, including Manulife, focus on four key channels to execute their ESG ambitions: insurance products, investments, third-party mandates, and own operations. These channels enable insurers to make lasting impacts on sustainability.

Insurers are creating behavioral products that link premiums to incentives supporting well-being and sustainability, such as Manulife's insurance offerings, which aim to improve customers' well-being and promote healthy lifestyles. These products are a key part of insurers' sustainability strategies.

Manulife has CAD40 billion of green assets on its balance sheet, including in sectors such as renewable energy and agriculture, and is adding to this portfolio at a rate of CAD1 billion annually. This investment in sustainable assets is a significant step towards achieving net zero emissions.

Here are some key features of sustainable insurance solutions:

ESG investing is a way to screen investments based on corporate policies and encourage companies to act responsibly. Many brokerage firms offer investment products that employ ESG principles.

By using ESG investing, you can help your portfolio avoid holding companies engaged in risky or unethical practices. This can give you peace of mind knowing you're not supporting companies that don't align with your values.

Some investment firms use a variety of ESG factors to identify companies positioned for strong long-term performance. These firms set criteria based on analysts' research and identify relevant issues facing specific sectors, industries, and companies.

Here are some key ESG metrics to consider: