German reinsurer Munich Re has signed up to the Net-Zero Asset Owner Alliance, an international group of institutional investors that have committed to decarbonise their portfolios to net-zero emissions by 2050.
Convened by the United Nations (UN), the Alliance aims to help avoid a global temperature increase above the 1.5°C Paris target, and already includes re/insurers such as Swiss Re, Allianz, Zurich, and Generali.
To achieve this goal, the Alliance will work closely with portfolio companies to change their business models and adopt more climate-friendly practices.
Munich Re said that committing to a climate-neutral investment portfolio would represent an expansion of its climate policy.
The reinsurer’s existing climate actions have included a move away from investment in any share bonds issues by companies that produce over 30% of their profits from coal-related activies, as well as the decision to stop underwriting coal industry activities.
“Though in practice, upholding such a commitment is extremely complex and involves considerable time, effort and expense. Increasing our investment in renewable energies is obviously a must,” said Munich Re CEO Joachim Wenning.
“But even there, we have to develop the skill set to properly assess the risks and potential of these often massive investment projects,” he added.
“This is our responsibility as the trustees of our clients’ money. At the same time, when we invest we will be conversing with companies in a variety of different sectors, in order to motivate them to increase their efforts on climate protection.”
Wenning also urged governments to create better incentives by increasing the price of carbon dioxide, while at the same time creating a stable and dependable environment for renewable energy investments.
“By acting strategically and long-term, politicians could allow the market economy to become a driving force – and an ally – in achieving the necessary transformation of our energy infrastructure to protect our climate,” he stated.