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ESG rules boost insurer greenwashing concerns
Strong demand by asset managers for specialist climate-focused funds, green bonds
The Asset 13 Mar 2024

Insurers are becoming increasingly concerned about greenwashing as environmental, social and governance (ESG) requirements become tougher, according to a recent global study among investment management professionals in life insurance.

Nearly half (45%) are very concerned about the current level of greenwashing when it comes to investing, with 53% quite concerned, finds the study from Ortec Finance, a global provider of risk and return management solutions for insurers and other financial services companies.

Institutions questioned are 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, they are concerned that the range of investments insurers can access will shrink over the next two years due to increasingly stringent ESG requirements. Around 80% expect a rise in the range of investments becoming unavailable for investment because of ESG requirements, with 9% predicting a dramatic increase.

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

“There is strong demand among insurers and insurance asset managers for specialist climate-focused funds and green bonds,” says Hamish Bailey, Ortec Finance’s managing director for the UK, and head of insurance and investment. “But that is running up against increasing concern about the current level of greenwashing and a belief that the range of available investment opportunities will narrow over the next two years as ESG requirements become tougher.”

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