Posted on: July 6th, 2017
Reports in the FT and elsewhere today announce the important news that SwissRe now integrates Environmental, Social and Governance issues across all their equity and fixed income investment assets.
They are doing so by using benchmarks based on the highly regarded MSCI ESG methodology.
My opinion on this is that this is an unambiguous and important signal to investors.
Insurers and reinsurers are in the business of understanding and managing risk. So, when a company with a reputation such as SwissRe states that ESG should be formally integrated into investment processes investors should take note.
I would however urge caution with regard to terminology – the longstanding challenge of my area of business. The FT and others refers to this as switching to ‘Ethical Indices’.
Whilst some will agree with this label others would not.
For many investors the use of the term ‘ethical’ implies that values based investment decision making (eg avoiding armaments, tobacco or pornography). There is of course a fine line in this regard, as demonstrated by Axa’s decision to exclude tobacco stocks across the board last year.
Given the wording of the SwissRe media release I would suggest that this shift in strategy relates entirely to sound longer term risk management – rather than making values based judgements.
Either way I very much welcome this display of leadership and hope many other investors and insurers will soon follow suit.
My thanks go to our friends at Synaptics for bringing this important news to my attention!
As ever, I can be contacted on Julia@sriServices.co.uk .
06 July 2017, Zurich
Swiss Re announced today that it has already consistently integrated ESG considerations into its investment process since the start of 2017. The company is convinced that taking ESG criteria into account makes economic sense and reduces downside risks especially for long-term investors. By implementing ESG benchmarks, Swiss Re has taken a step forward from considering ESG as an “add-on” approach to making it an integral part of its investment process.