Institutions

Allianz hires MSCI to evaluate ESG risk for almost entire €630bn portfolio

Giant insurer wants to become “even more sustainable in the future”

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Amid all the attention surrounding Allianz’s decision to divest from the climate-unfriendly coal sector last week, a big sustainable investment move by the German insurer almost got missed.

Allianz has hired MSCI to analyse stock and bond investments with respect to ESG (environmental, social and governance) risk. The criteria for defining the risk come from MSCI and include greenhouse gas emissions, energy efficiency, data protection and corruption.

In the analysis, more than 90% of Allianz’s €630bn in assets – e.g. all the traded securities it owns – will be evaluated by MSCI between now and the middle of next year. “It is becoming increasingly important to take environmental and social risks into consideration early on,” said Andreas Gruber, Allianz’s Chief Investment Officer. “With our new approach, we can achieve greater transparency and ensure that our investment strategy will become even more sustainable in the future.”

The remaining part of Allianz’s €630bn portfolio consists of alternative investments, including property and renewable energy portfolio, which is worth €2.5bn.Until now, Allianz’s fund management divisions, including Allianz Global Investors and US-based bond specialist PIMCO, had been ordering ESG data from several sources for specific sustainable mandates. But as 2015 began, Allianz, a signatory to the Principles for Responsible Investment (PRI), decided on a group solution to ESG integration.

The insurance giant then initiated an RFP (request for proposal) with major ESG research firms in Germany.

Other firms that would likely come into consideration for such a pitch include Sustainalytics and Oekom Research, which like Allianz is based in Munich.

MSCI has been winning ESG business in Germany recently. In late October, it emerged that Bankhaus Metzler, a private bank that has become a leading responsible investor, had hired it to provide ESG research for its investment funds. Incumbent Oekom would continue to supply Metzler with ESG research on the institutional side.

MSCI says it has the capacity to provide ESG research on more than 6,000 stocks, 8,500 corporate bonds and more than 200 sovereign bonds.