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Bruno Servant & François Garreau : « Climate change and its consequences is a major challenge for the insurance industry and its business model »

According to Bruno Servant, CIO, Generali France and François Garreau, in charge of CSR, Generali France, as institutional investors, insurance companies have to take long term positions to manage risks in coherence with the long term horizon of its liabilities.

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Next Finance : In 2018, Generali announced the gradual end of investments in activities related to the coal sector, why?

François Garreau : Climate change and its consequences is a major challenge for the insurance industry and its business model. As institutional investors, insurance companies have to take long term positions to manage risks in coherence with the long term horizon of its liabilities. Generali will stop investing in companies : for which more than 30% of revenues derives from coal ; for which more than 30% of energy produced derives from coal ; mining companies producing more than 20m tons of coal per year. The same will apply to companies appearing in the Top 120 coal plant Urgewald list.

You were exposed to almost 2 billion euros to this sector in early 2018. How high is your exposure to coal today?

Bruno Servant: The exposure has been reduced by 310 m€ at the end of 3Q18. In France this exposure has been reduced by 90 m€. We are aligned with the 2°C trajectory on the coal sector.

Are there other areas in which you want to stop investing?

Bruno Servant: We apply our Ethical filter on all our direct equity and bond investments : the main criteria includes controversial weapons, coal and severe environmental damage, human rights violations, gross corruption. In addition we wish to engage on other topics with issuers to contribute to a just and value creating transition

For some insurers, a world that would warms more than 4 degrees is no more insurable. Do you share this opinion? Should not insurers be at the forefront of low-carbon investment?

François Garreau : The question of insurability will become all the more significant if global warming is not restrained. In line with this concern, our investment strategy and the engagement activities with our investee facilitate the convergence to a low carbon society, promoting a “just transition” that provides support and include also those who could be impacted by this shift. But as insurers, to tackle the risk of non-insurability, we have an important role also in increasing the resilience and the adaptation of our clients to the climate change through loss prevention program and the support to SMEs in developing sustainable business models, as we do with the program Generali Performance Global.

Will you change the composition of your general assets to increase the proportion of green assets and possibly also reduce the carbon footprint of your portfolio?

Bruno Servant: Yes, more green and sustainable assets, less carbon and more infrastructure. Also, our real estate investment policy has adopted sustainability measures since 2000 : considering all sustainability labels, more than 61% of the office rental space managed by Generali Real Estate are certified. GRE is a founding member of Circolab, which recycle materials coming from demolition work.

Are you able today to calculate the carbon footprint of your portfolio? If yes, in what way ?

Bruno Servant: The carbon footprint of the equity and bond portfolios of Generali France are computed since 2 years by an external specialized firm. We consider the average weighted carbon intensity measured in tons of CO2 equivalent per Revenue or GDP (direct emissions and indirects ones of first rank suppliers). This will allow us to measure over time the effect of the decarbonation policy. We will perform calculation of carbon footprint also for Real Estate this year.

Which asset classes are of most interest to you? Green Bonds? Green Real Assets (Infrastructure)?

Bruno Servant: The Group has made public clear target for these 2 types of assets. Bonds represent a major part of our asset allocation so we aim to increase significantly our holdings in green bonds. In France we have invested more than 240 m€ in green and sustainability bonds to reach a total positon of 620m€. in 2018 and at Group level the net investment in green bonds reaches 1.2B€ and 200m€ in infrastructure debt with an overall target of new investment of 3.5B€ by end of 2020 and 4.5b € by end of 2021 for these 2 types of assets.

At Savings level, will you broaden the range of your products to investment solutions giving pride of place to the renewable energies sector, to topics related to the energy transition, to major global issues (Water, Demography ...)?

François Garreau : We are pushing offers like the one related to the ageing of the population with “SRI Ageing Population” fund. Generali has launched Generali Sustainable Investment (GID), with the conviction that sustainable investment should not be at the expense of performance. GID provides access to various savings solutions, tailored to each investor profile. The goal is to meet the expectations of more than 50% of savers looking for impact and meaning.

RF 14 February

Article also available in : English EN | français FR

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