Insurance giant Zurich says it “will invest what is needed” to meet a shortfall in the environmental and social targets of its impact investment portfolio.
Three years ago, the firm announced an impact strategy with three targets: invest $5bn, avoid five million tonnes of CO2 equivalent per year and benefit five million people.
Speaking to RI, Johanna Köb, Zurich's Head of Responsible Investment said it had run the numbers and the portfolio had passed $5bn. However, it helped save just 2.9 million tonnes of CO2 and benefitted four million people.
“The obvious question is: ‘Okay, one down, what do we do next?’” she said. “We made the decision to say it’s about the impact. It’s about the outcomes. And given what we have learnt so far and the tools we have now at our disposal, what we’ll do next is take it to the next level and prioritise the impact.”
The approach still requires portfolio managers to meet traditional investment standards, but Köb says Zurich is creating a “mindset change”.
“We want them to look out for impact investment opportunities. If you have a choice between a green or conventional bond, take the green one. Unless, of course, it doesn’t fit the portfolio or meet performance expectations.
“We’ve really been training all our people to understand the dollar impact and wherever you can look for those opportunities to tilt towards impact.”
Zurich’s impact investment portfolio, which currently stands at around $5.4bn, includes green bonds, social and sustainability bonds, private equity funds active in areas such as financial inclusion and clean technology, as well as impact infrastructure loans for projects such as wind or solar farms.
The firm has an in-house impact measurement tool, which it shares with other asset managers to try and support the development of common measurement standards.