Mutual insurers: Investing in the fight against climate change

18 Jun 2020

Many cooperative and mutual insurers are at the forefront of dealing with the impact of the climate crisis.

Among them is cooperative insurer Länsförsäkringar from Sweden, a member of the International Cooperative and Mutual Insurance Federation (ICMIF). During the first quarter of 2020 Länsförsäkringar increased its investments in green, social and other sustainable bonds by SEK 3 billion (USD 310 million).

More than 10% of the managed capital in Länsförsäkringar’s portfolio is now invested in sustainability-oriented bonds. 

“The share of investments in green, social and other sustainable bonds seems, in our own comparison, to be the highest in the industry among Swedish trustees right now, in relation to the total invested capital,” said Kristofer Dreiman, Head of Responsible Investments.

The insurer aims to increase the proportion of climate-smart and sustainable investments and to show the effects of these investments. It is doing so by reporting on how its holdings in sustainable bonds contribute to the UN's Sustainable Development Goals (SDGs). “The largest contribution has been made to Goal 13: ‘Take urgent action to combat climate change and its impacts’; followed by Goal 11: ‘Make cities inclusive, safe, resilient and sustainable’; and Objective 7: ‘Ensure access to affordable, reliable, sustainable and modern energy’", added Mr Dreiman.

So far this year Länsförsäkringar has invested SEK 1.2 billion (US $120 million) in social bonds on behalf of customers, financing social projects in the Nordic countries, Europe, Africa and in several emerging countries.

Another ICMIF member, Folksam from Sweden recently invested SEK 2.5 billion (USD 260 million) in a green bond issued by Kommuninvest. This brings the total amount invested in Green Bonds by Folksam Group to SEK 30 billion (USD 3.1 billion).

“Society is in the midst of a necessary green transition, which is largely driven by local projects in regions and municipalities. This investment contributes to pension money providing double benefits to savers by allowing the local transition to continue at the same time as pension money is growing,” Michael Kjeller, deputy CEO and Head of Asset Management and Sustainability, told ICMIF.

Folksam has also invested a total of SEK 1.7 billion (USD 170 million) in social bonds to counteract the social and economic effects of the Covid-19 (coronavirus) pandemic.

Investment is not the only way in which cooperative and mutual insurers are helping to tackle climate change. In Western Australia ICMIF member RAC WA has partnered with the University of Western Australia (UWA) to trial a new multi-mode environmentally friendly transport service, which aims to better connect staff, students and visitors to on-and-off campus facilities.

The service brings together a full suite of transport options, including bikes, e-bikes and car sharing, to help staff and students move between classrooms at various campus sites, and travel off-site when required.

RAC Chief Operating Officer Mark Weller said that by offering a variety of mobility options, the trial aimed to better understand the evolving nature of transport in Western Australia.

He said: “The 12-month trial aims to alleviate congestion and mobility issues across UWA and provide a valuable insight into how Western Australians want to move around their communities – in this case their universities.

“As part of our focus on creating more connected, liveable and sustainable communities, this trial is a new opportunity for RAC to explore the changing mobility landscape.

“It’s an important step toward better understanding the transport challenges Western Australians are facing, and what some potential solutions might be.”

Meanwhile, Dutch ICMIF member Alchmea has pledged to become completely climate neutral by 2030. The insurer has recently activated 3,200 solar panels, which have been installed above the parking lot of the company’s offices in Apeldoorn.

“The solar panels of the carport generate around 925,000 kilowatt hours per year, equivalent to the consumption of 250 households. In addition, 30 charging points have been installed within the parking area for electric cars with a simultaneous load capacity of 700kW,” said Theo Peters from Achmea's Facility Service Centre.

Last year Achmea also installed a geothermal connection to geothermal energy and a 'green roof' on the top of its building at the Tilburg office. And its brand Centraal Beheer has partnered with a trusted solar panel company in the Netherlands to help customers learn about the costs and how to go about installing solar panels on their roof. 

ICMIF CEO Shaun Tharbuck thinks the sector can play an important role in tackling the climate crisis. In a blog post on ICMIF’s website, he warned that urgent action is required before a point of no return is reached.

“Can we react collectively as the mutual sector to this crisis also, using both our assets and underwriting skills to fight the climate crisis, which is a slowly burning platform? It is a challenge we can and should rise to. Indeed, some members are doing so already. Can we harness the same collective response from the mutual sector to climate change as we are doing for COVID-19 and demonstrate, yet again, the mutual difference? I believe we can and hope that we will.”