The head of responsible investment at global insurance giant Zurich Insurance Group confirms that his firm will prioritize impact investing activity, but when describing the approach they will take, he hinted at the desire to play it safe.
Specifically, Manuel Lewin wrote in a post on the Stanford Social Innovation Review that Zurich will focus on “opportunities where the return fully compensates for the risk”, rather than providing higher-risk capital to fund, for instance, early-stage enterprises where there is a tradeoff between returns and impact.
Lewin explained that Zurich, being a firm with increasing presence in emerging markets, is exposed to the risks associated with climate change, scarce natural resources, and extreme poverty, but by pursuing impact investments they can mitigate such risks.
Already the firm pledged a low-risk $1 billion impact investment into green bonds to diminish the effects of climate change.
“Green bonds are of the highest credit quality, and while returns are modest, so are the risks,” wrote Lewin.
Green bonds also complement Zurich’s portfolio well. Some 30 percent ($65 billion) of their portfolio is currently held in government bonds, government-guaranteed bonds, or supranational bonds – such as green bonds.
Though the green bond market is relatively small at around $10 billion, Lewin added, Zurich is counting on its ability to achieve true impact by investing in size.
Photo: Zurich Insurance Group
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