The results reported for insurers at the Sustainable Finance Observatory are based on a survey conducted by the FFA in 2020 among a panel of 20 insurance groups managing €2.261 trillion in assets, i.e. 86% of total assets managed by French insurance companies at the end of 2019 (€2.616 trillion).
The "Number of insurers" breakdown: reported percentages refer to the number of insurers to whom the indicator applies relative to the total number of insurers comprising the panel (20).
The "Assets under Management" breakdown: reported percentages refer to total AuM managed by insurers to whom the indicator applies, relative to total AuM of the panel at end 2019 (€2.261 trillion).
Data were extrapolated based on the answers of companies participating in the panel to provide comprehensive overview of the market.
ESG integration involves the incorporation of environmental, social and governance (ESG) criteria into the investment decisions across all management processes. This calls for extra-financial analysis of the companies and countries in which insurers invest to select the most virtuous players and/or eliminate from the investment universe those whose practices are most harmful to the environment and society. This also involves so-called engagement initiatives, i.e. dialogue with these entities to influence their environmental, social and governance practices.
According to the International Energy Agency (IEA), to have any hope of keeping global warming below 2°C, all coal-fired power plants would have to be shut down by 2030 in the European Union and OECD countries, and by 2040 in the rest of the world. To achieve this goal, insurers have crafted exclusion policies aimed at gradually reducing their investments in the thermal coal sector.
Transition to a low-carbon economy
At the end of 2019, insurers' green investments stood at €92 billion under management, up 51% compared to the end of 2018. Direct investments in Green Bonds in particular increased significantly, amounting to €33 billion in assets under management at end 2019.
It should be noted that the definition of green investments used in the survey is not yet aligned with the criteria of the European Taxonomy, which was not operational in 2019.
The green investments presented here include all AuM at end 2019 invested in assets dedicated to environmental themes (environmentally themed funds (including green bond funds, listed equity funds including low-carbon funds and private equity funds), green infrastructure, direct investments in green bonds and green real estate, (according to the definition adopted by each insurer, generally real estate with environmental certifications).
For more details, please refer to the section entitled Méthodology
Supplying responsible products
Since the end of 2018, insurers have undertaken to include in their life insurance offerings at least one unit-linked product with an SRI, Inclusivity or climate label, notably the Greenfin label or the SRI (Socially Responsible Investment) label.
This voluntary initiative has since become compulsory. In application of the PACTE law, each multi-support life insurance policy must include at least one of the three categories of unit of account below as of 2020 and all three categories by the beginning of 2022:
- a unit of account (UA) meeting socially responsible investment criteria and which has obtained the SRI label;
- a UA meeting criteria for financing the energy and ecological transition and which has obtained the Greenfin label; or
- an Inclusivity UA