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Insurers apprehensive about rising ESG requirements

Insurers are becoming increasingly concerned about greenwashing as ESG requirements become tougher according to a new global study conducted by Ortec Finance.

The study conducted among investment management professionals at life insurers, London market (re)insurers and investment managers revealed that nearly half (45%) are very concerned about the current level of greenwashing when it comes to investing, with 53% quite concerned.

The participating institutions are also planning to increase portfolio allocations to green bonds and specialist climate focused funds over the next two years, with 62% boosting allocations to green bonds and 75% to specialist climate focused funds. However, the study found that 80% of the participants expect the range of investment opportunities available to insurers to narrow over the next two years because of increasingly stringent ESG requirements.

Only one in five participants (18%) believe the industry as a whole has very good ESG strategies and programmes currently in place. That rises to 21% when companies were asked about the strategies and programmes their own organisation has in place.

Ortec Finance managing director and head of insurance and investments Hamish Bailey said, “There is strong demand among insurers and insurance asset managers for specialist climate focused funds and green bonds but that is running up against increasing concern about the current level of greenwashing.

“Insurers increasingly need support in identifying investment opportunities which deliver for their institution and also meet ESG requirements, which means a tougher focus on greenwashing,” said Mr. Bailey.

The study conducted in November 2023 included 100 investment management professionals at life insurance companies, Lloyds of London insurer and reinsures and at fund managers who support insurers. Study participants are located in the UK, the USA, France, Germany, Hong Kong, Italy, Netherlands, Singapore and South Korea. Collectively the organisations they work for manage around $5tn.


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