Responsible investments – The next steps in our journey
A year after the first publication on the switch to ESG (Environmental, Social and Governance) benchmarks, Swiss Re has published a new report "Responsible investing – The next steps in our journey". The publication shares first-hand insights on how ESG criteria have been implemented, and confirms the initial finding that integrating them makes economic sense.
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It is Swiss Re's vision to make the world more resilient. Swiss Re was among the first in the re/insurance industry to switch to ESG benchmarks and is aiming to integrate ESG criteria across the entire investment portfolio. Today, we apply ESG criteria to close to 100% of our investment portfolio.
In the publication released today, we are looking back at 12 months of experience and are sharing first-hand insights and key learnings from implementing ESG criteria to all asset classes. Furthermore, we re-assessed our statement from last year that ESG makes economic sense: "The empirical evidence confirms our initial findings: ESG benchmarks improve the risk-adjusted return profile over the long term", says Guido Fürer, Group Chief Investment Officer of Swiss Re.
Accelerating the adoption of ESG
In the last few years, the responsible investment topic has gained momentum in the finance industry with investors and advisors publishing numerous papers. However, moving the global asset base towards responsible investing remains a challenge and the wish list first stated in the publication "Responsible investments – Shaping the future of investing" remains valid.
As long as ESG is not yet an integral part of all financial analyses, investors need to make an effort and actively integrate sustainability considerations in their investment decisions. But that requires clear definitions and methodologies, as well as standardised reporting on ESG risk.
In mid-June, Swiss Re was elected to the EC technical expert group on Sustainable Finance, which will develop an EU classification system to determine whether an economic activity is environmentally sustainable. "Close collaboration between the private and public sectors helps overcome obstacles, and the EC Action Plan on Financing Sustainable Growth is a great step in that direction," Guido Fürer adds.
Swiss Re advocates that if institutional investors followed the ESG route the impact could be very powerful taking the sheer size of USD 75 trillion of institutional assets into account. This would mark a big step forward in making the world more resilient.