Global: Insurers increasingly concerned about greenwashing when it comes to investing
Source: Middle East Insurance Review | Apr 2024
Insurers are becoming increasingly concerned about greenwashing as ESG requirements become tougher, according to a new global study among investment management professionals in life insurers, London markets (re)insurers and investment managers who support insurers.
Nearly half (45%) are very concerned about the current level of greenwashing when it comes to investing, with 53% quite concerned, according to the study from Ortec Finance, the global provider of risk and return management solutions for insurers and other financial services companies.
Institutions questioned are planning to increase portfolio allocations to green bonds and specialist climate focused funds over the next two years, with 62% boosting allocations to green bonds and 75% to specialist climate focused funds.
However, they are concerned that the range of investments insurers can access will shrink over the next two years due to increasingly stringent ESG requirements. Around 80% expect a rise in the range of investments becoming unavailable for investment because of ESG requirements, with 9% predicting a dramatic increase, the study said.
Only one in five (18%) believe the industry has very good ESG strategies and programmes currently in place. That rises to 21% when companies were asked about the strategies and programmes their own organisation has in place.
Ortec Finance UK managing director and head of insurance and investment Hamish Bailey said, “There is strong demand among insurers and insurance asset managers for specialist climate focused funds and green bonds. But that is running up against increasing concern about the current level of greenwashing and a belief that the range of available investment opportunities will narrow over the next two years as ESG requirements become tougher. Insurers increasingly need support in identifying investment opportunities which deliver for their institution and meet ESG requirements, which means a tougher focus on greenwashing.” M