Daily ESG Briefing: Zurich moves $1bn into ESG benchmark

The latest developments in sustainable finance

Zurich Insurance Group has switched almost $1bn of its passive US equity mandates into a new ESG benchmark developed by MSCI. The sector-neutral index overweights firms with a good and improving ESG profile based on MSCI ratings, and has a 30% lower emissions profile than its parent. The $1bn will be invested through a fund managed by DWS. 

There is a clear correlation between sustainability and dividend growth, according to new research by Fidelity. The firm awarded around 4,900 a sustainability rating from A to E, and found that firms with an A rating had five-year dividend-per-share growth of more than 5%, while B and C rated firms had around 3.5% and 2% respectively. Fidelity’s research did show that E rated firms had a higher dividend yield, with A, B, C and D rated firms roughly equal although it said that the small number of E-rated stocks allowed individual companies to skew the median more than in other groups.

More than 100 issuers on the London Stock Exchange have secured a Green Economy Mark – a label that uses FTSE data to identify listed companies and funds with more than half their revenues in green products and services. Companies with the mark, which represent a combined market cap of £148.5bn, include Severn Trent water, Smurfit Kappa and the Gore Street Energy Storage Fund. 

The majority of general partners in the private equity space have decided not to invest in a company due to ESG or ethical considerations – up 7% from last year – according to Investec’s annual trends survey. This was most common in continental Europe, where 67% of general partners reported having avoided an investment on ethical grounds, and in funds larger than £1bn, where 83% reported having done so.

The Finance Ministers of 48 climate-vulnerable economies have established a joint sustainable insurance facility. The V20-SIF aims to mobilise international finance and technical expertise to develop “customised climate-smart insurance solutions for MSMEs in order to build their resilience to the impacts of climate change. It will be hosted by the UNEP Principles for Sustainable Insurance and initially funded by the German government.