Environmental, Social and Governance (ESG) investment practices “Improve the risk-adjusted return profile over the long term,” according to Swiss Re’s Group Chief Investment Officer (CIO), Guido Fürer.
Swiss Re were one of the earliest re/insurers to adopt the criteria – which is now applied to nearly 100% of its investment portfolio – and claims that the benchmarks make economic sense.
Examples of the ESG criteria used by investors include impact on climate change or carbon emissions, water use or conservation efforts, anti-corruption policies, human rights efforts and community development.
An ESG-centered publication launched by Swiss Re also examines the remaining hurdles perceived to be impeding on the practice becoming a standard approach.
Swiss Re stated that significant improvement potential remains concerning the definition of standardised key metrics and increasing the importance of ESG in financial analysis.
In addition, the market volume of ESG investment products remains low, meaning opportunities to invest may not be as readily available as is necessary for broad adoption to occur.
Fürer concluded, “While it is a journey, we are convinced of being on the right track and reaffirm our commitment to responsible investing. We continue to call for a joint effort of the public and private sector to overcome the hurdles preventing many investors from investing responsibly and with a long-term focus.”