Mutuals report surge in sustainable investment

Growing numbers of mutual funds  are shifting the investments into sustainable sources according to new research from the International Cooperative and Mutual Insurance Federation (ICMIF).

The federation has issued the ICMIF Members Sustainable Investment Report 2022 which found  its members have nearly $760 billion of assets under management in investments which are aligned to sustainable investment frameworks.

The report’s data illustrates how the Federation’s members are collectively investing $759 billion in sustainable investment frameworks, including green bonds, social bonds and resilience bonds for example, many of which will be targeting climate change and its effects. This represents an increase of 32% from the $576 billion collectively invested by members in 2021.

Shaun Tarbuck, ICMIF CEO said “The ICMIF Members Sustainable Investment Report reveals the results of the 2022 ICMIF Sustainable Investment Framework Survey which are testament to how our members have gone from strength to strength since the inception of this survey in 2019. Our latest findings show continued, solid forward-momentum from the mutual and cooperative insurance sector towards a greener future.”

He continued: “It is well-documented that sustainable initiatives improve a company’s financial performance; improve efficiency; reduce costs; and drive change. This allows the business to gain a competitive edge as well as significantly enhance the business’s image to employees, potential employees and other stakeholders such as member policyholders and investors. The cooperative and mutual insurance sector is ideally placed to take a lead in the field of sustainability and sustainable investments to form a ‘coalition of the willing’ and lead by example.”

The federation said the report highlights the ways in which ICMIF members are continuing to “lead by example” in sustainable investments.

“Cooperatives and mutuals are not driven by short-term decision-making, short-term profits or investor demands. Instead, being owned by member policyholders, they can take a more strategic, longer-term view, doing what’s right socially, environmentally and ethically too.”

The report’s key findings include:

  • The alignment of $759 billion to sustainable investment frameworks represents 51% of its members’ AUM that responded to the survey, compared to 38% last year.
  • There are multiple investment frameworks, but the United Nations Environment Programme Finance Initiative Principles for Responsible Investment (UNEP FI PRI) and the Principles for Sustainable Insurance (PSI) were the most popular frameworks.
  • The survey saw 55% of members invest in impact investing, up from 46% in 2020. Impact investing by ICMIF members has grown by 46% from last year (2021), to $15.6 billion.
  • Fifty eight percent of members that responded to the survey invest in sustainable bonds including green bonds, social and/or resilience bonds, amounting to $16.9 billion compared to $12.1 billion in 2021, up 40%.
  • Thirty seven percent of ICMIF members have made net-zero commitments, up from 18% last year.
  • Seventy five percent of ICMIF members said they actively report on sustainability in some way.

“Mutual and cooperative insurers represent almost 30% of the world’s insurance market and $10 trillion in assets,” said Tarbuck. “The insurance industry is uniquely positioned to assist with delivering climate action as it has both the assets to invest and the in-depth knowledge of the many risks that need to be mitigated both on a macro level and a community level to make people and the planet more resilient.”