Octopus Group survey reveals insurance industry approach to renewables
Insurers plan to divest 21.2 percent of their portfolios from fossil fuels over the next decade and to ramp up allocations to renewable energy to 10.6 percent over the same period, according to a new survey by Octopus Group, a group of ethically-minded financial services and energy supply businesses.
The report, titled The Great Transition: Opening the Renewables Floodgate, examines Global institutional investors’ approach to renewables. It found that 63 percent of the insurance companies surveyed believe that institutional investors can make a material difference to fighting climate change, versus 71 percent across total sample. Some 38percent cite the positive impact of an investment in terms of mitigating climate change as the key driver for changing their investment strategy.
However, there is still a significant amount of capital left untapped: 25 percent of the insurers surveyed have no allocation to climate-saving sectors at all, versus 16 percentacross the total sample. Only 13 percent of the insurers surveyed who have divested or plan to divest from assets that have a negative impact, plan to reinvest into assets that have a positive impact on climate change - versus 19 percent across total sample.
The report identified a number of barriers to investing thatneed to be addressed:
half of the insurance companies surveyed cited a lack of renewable energy investment skills, while a quarter cited energy price uncertainties, and a quarter cited liquidity issues.
“Our children’s futures will be shaped by decisions that are made now by the global investment industry,” said Matt Setchell, co-head of Octopus Renewables. “Given the scale of the challenge and the limited time we have to make a change, the guardians of trillions of dollars of capital have a crucial role to play in averting a climate crisis. While the report provides a glimmer of hope that this change will happen, we can’t rely on divestment from fossils fuels as the only answer.
“It’s disappointing that the proportion of capital divested from these assets and reinvested into climate-saving causes such as renewables and clean tech isn’t higher. If we are to unblock investment into these areas, institutional investors will need to become comfortable with different types of investment risks. This in turn demands better, wider-ranging products to accommodate institutional investors’ objectives, so more of them feel ready to divert funds into assets that will help save the planet.”
Get all the latest re/insurance industry news with our daily newsletter - sign up here.
Property/casualty insurance industry’s surplus sets new record
Markel CATCo portfolio managers to launch new investment manager
US property/casualty mutual insurers see improved results: AM Best
Startup GreenKite offers services for insurers
Värde Partners and Agam Capital form life and retirement solutions joint venture
GE and wider long-term care industry face problems: AM Best
Insurers should be exempt from pillar one of OECD digital tax proposals, says Insurance Europe
Economic outlook deteriorates worldwide, says Statista
Combined Insurance recruits two senior leaders
Globe Underwriting appoints Dan Watson as senior engineering underwriter
MedPro acquires renewal to SRCS’ healthcare professional liability business
EmergIn Risk makes two prominent hires and opens Miami office
Feature: 10 ways insurers are using insurtech to drive new business
