Nearly all insurers have set climate transition-related objectives in their portfolios, including more than half that have set net zero targets, and most report a growing conviction towards investing in the low carbon transition, with plans to increase allocations in clean energy infrastructure and transition-focused technologies, according to a new survey released by investment giant BlackRock.
For the report, BlackRock surveyed 410 senior insurance industry executives in 32 markets across North America, EMEA, Asia Pacific and Latin America, representing investable assets of approximately $27 trillion.
The survey found that 99% of insurers globally have set a low-carbon transition objective within their investment portfolios, including 56% that have set a net zero target date. Other key climate-related investment goals that have been set by insurers include year-on-year emissions reduction targets, cited by 52% of respondents, minimum allocations to low-carbon transition strategies by 49%, and temperature alignment by 22%.
The insurers cited management and mitigation of climate risks as the top driver for setting their low carbon transition objectives, reported by 57% of respondents. Other key motivating factors underlying climate-related portfolio objectives included responding to stakeholder and beneficiary interest at 54%, contributing toward real world impact at 42%, and fulfilling regulatory obligations at 47%.
The survey also found growing investor confidence in climate-related investments, with approximately two thirds (66%) of respondents reporting having greater conviction towards investing in the low-carbon transition than they did a year ago.
Among insurers planning to expand their low-carbon transition strategies for their investments, top targeted thematic areas included transition technologies such as batteries, carbon capture, and energy storage, cited by 63% of respondents, and clean energy infrastructure including wind and solar, by 59%. Additional targeted investment themes included natural capital and biodiversity, at 41%, and transition metals and materials at 37%.
By investment category, the insurers reported impact strategies as the top area in which they planned to increase transition-related allocations, cited by 62%, followed by emerging markets at 58%, growth/buyout private equity at 58%, and green bonds at 53%.
In the report, Mark Erickson, Global Head of the Financial Institutions Group at BlackRock said:
“Insurers are positioned to play a key role in filling the global gaps that exist for both transition and infrastructure financing.
“The low-carbon transition is an area of focus for insurers, with 99% of those we surveyed having set at least one type of transition objective within their investment portfolio. Insurers are also becoming a driving force behind transition finance initiatives, which in the past were chiefly the domain of industry and public bodies. Today, insurers are mobilizing insurance-sector capital and collaborating with asset managers to bring blended finance solutions to this funding gap.”
Click here to access the survey.