ESG investments are balancing out the accumulation of overdue tasks or obligations.
Prisma Life Embraces Sustainability in Capital Investment Strategy
Prisma Life, a leading insurance provider, has been making significant strides in integrating Environmental, Social, and Governance (ESG) factors into its investment strategy. This shift towards sustainability reflects a broader trend in the insurance industry, driven by regulatory changes such as the EU transparency regulation and the Corporate Sustainability Reporting Directive (CSRD).
In line with this trend, Prisma Life has been centralizing ESG considerations in its advisory services, helping clients manage ESG-related risks and aligning insurance products with sustainable investment strategies.
One of the key areas where Prisma Life has shown commitment is in the purchase of green bonds. The company has invested in green bonds from countries like Hungary and Chile, demonstrating its dedication to supporting sustainable projects.
Prisma Life's capital investment has become more resilient to crises due to its focus on ESG criteria. The company achieved climate neutrality in 2020 by switching buildings to green electricity and restricting mobility during lockdowns. Additionally, the remaining emissions were offset by purchasing CO2 certificates.
The company's operational CO2 consumption reduced by 30% last year, from 51.1 to 35.4 tons. Compared to a standard portfolio, Prisma Life has saved 56 percent of emissions in its coverage stock, amounting to over 19,000 tonnes of CO2.
Prisma Life's commitment to sustainability extends beyond its investment strategy. The company has been actively reducing paper usage, replacing paper flyers with online media.
Looking ahead, Volker Schulz, responsible for Prisma Life's capital investment, announced that the company wants to further expand its focus on sustainability in capital investment. This includes converting an Asia equity fund from DWS to an ESG fund.
Prisma Life regularly adds new investment funds to its portfolio, including 13 exchange-traded funds. Although a direct return comparison with a portfolio without ESG filters is difficult, Prisma Life's exclusion criteria have not harmed its return.
In the context of the evolving regulatory landscape, intermediaries in the insurance sector are expected to enhance sustainability transparency, integrate ESG considerations deeply into their advisory and product strategies, communicate climate-related risks effectively, and help clients navigate evolving market conditions with technological support and fairness in conduct. This evolution transforms intermediaries into strategic partners central to sustainable insurance solutions and community resilience.
[1] European Insurance and Occupational Pensions Authority (EIOPA). (2021). Sustainable finance: Supervisory priorities for 2021.
[2] International Association of Insurance Supervisors (IAIS). (2020). IAIS climate risk disclosure for insurance companies: A global view of the insurance sector's response to climate risk.
[3] Insurance Europe. (2020). Insurance Europe responds to IAIS consultation on climate risk disclosure for insurance companies.
[4] European Commission. (2019). Proposal for a regulation of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment.
[5] European Commission. (2020). Proposal for a directive of the European Parliament and of the Council amending Regulation (EU) 2019/2088 as regards disclosure of non-financial and diversity information by certain large undertakings and groups.
- Prisma Life's commitment to sustainability extends not only to its investment strategy but also to environmental science, as seen in its efforts to reduce paper usage and achieve climate neutrality.
- In the science of finance and business, Prisma Life's approach to sustainability is significant, as it demonstrates how investment strategies can be aligned with environmental-science goals, such as supporting sustainable projects through green bond purchases.
- As the regulatory landscape for sustainability evolves, Prisma Life, like other intermediaries in the insurance sector, must enhance transparency, deeply integrate ESG considerations into advisory and product strategies, and communicate climate-change risks effectively, reflecting the broader trend in the insurance industry.
