The FINANCIAL — Zurich Insurance Group (Zurich) is going to invest up to USD 1 billion into green bonds issued by the World Bank, International Finance Corporation (IFC) and other development institutions, according to Zurich Insurance Company Ltd.
Green bonds are impact investments, which fund projects around the world that help mitigate climate change and assist communities to adapt to its consequences. As of today, the commitment made by Zurich is the largest investment in green bonds globally and is a part of the company’s responsible investment strategy, according to Zurich Insurance Company Ltd.
“Responsible investment at Zurich is about “doing well and doing good”. We manage our investment portfolio of over USD 200 billion in a way that achieves superior risk-adjusted returns relative to liabilities for the benefit of our customers and shareholders, while also creating value for our employees and communities in which we live and work. Zurich recognizes that creating value for all its key stakeholders is crucial to long-term success. Green bonds are a good fit with Zurich’s overall investment strategy as well as its impact investing aspirations, targeted to support sustainable development and resilient communities. It is an opportunity to invest both with impact and at a return fully compensating for the risk,” said Cecilia Reyes, Chief Investment Officer.
Zurich has a direct interest in sustainable economic growth and the development of resilient communities. Also, as a global insurer with a fast growing footprint in many emerging markets, the Group is directly exposed to the challenges related to potential effects of climate change or the intensive use of scarce natural resources. In line with this, Zurich is building a portfolio of impact investments addressing these challenges. Through this particular investment, Zurich will effectively support more sustainable growth and development – without sacrificing investment return, according to Zurich Insurance Company Ltd.
“Zurich will be supporting projects in our member countries for climate change mitigation and adaptation. An example of a project that would be eligible for support from green bonds is the Private Sector Renewable Energy and Energy Efficiency Project in Turkey. The project invests in solar, geothermal and other renewable energy resources and in energy efficiency in the private sector. This project is reducing carbon dioxide emissions by over 1.4 million tons of per year. By investing in World Bank green bonds, Zurich is not only making a good financial choice, but will also help achieve a positive social and environmental impact, while promoting governance practices consistent with high standards of integrity," said Doris Herrera-Pol, Director and Global Head of Capital Markets, World Bank.
BlackRock was selected to be responsible for security selection, buying or selling green bonds for the portfolio, in accordance with guidelines, clearly defined by Zurich. “We are proud to team up with Zurich as the company commits to the green bond market segment at this important stage of the market's development. By encouraging transparency, liquidity, rigorous inclusion credentials, and impact reporting, we can together contribute to the creation of a robust and credible market, which will have a greater impact than any singular investment in green bonds. BlackRock's commitment to impact investing spans asset classes and enables our clients to access investment strategies that target a reasonable risk-adjusted rate of return in addition to positive and measureable social or environmental outcomes,” Ken Wilson, Vice Chairman, BlackRock said.
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