ESG Criteria – What Contribution Can the Insurance Industry Make to the Transformation?

The investment required for the transformation to a climate-neutral economy in Europe is estimated by the European Commission at 7% to 8% of gross domestic product per year (base scenario). The insurance industry can support the transformation primarily through an ESG-compliant investment strategy, especially within unit- and index-linked life insurance. The restructuring of investments covering actuarial reserves in traditional life insurance, however, is currently limited by the low volume of issuance of ESG-compliant securities in Europe and Austria. In addition, ESG reporting by non-financial companies and the preparation of external ESG-ratings are still in its infancy. Life insurance companies can bundle ESG-relevant information into products for customers in a cost-effective and credible way; government subsidies and regulatory simplifications in sales would stimulate demand for ESG-compliant life insurance policies.