In the process of serving the goal of "carbon peaking and carbon neutrality", the advantages of insurance funds cannot be ignored, and the insurance industry and the insurance asset management industry are actively exploring green investment opportunities under the "double carbon" goal and seizing opportunities. Under the "double carbon" strategy, green investment has become a new blue ocean and investment outlet for insurance funds.
According to incomplete statistics, as of the end of June, the book balance of insurance funds invested in carbon peak, carbon neutrality and green development-related industries through bonds, stocks, asset management products and other means exceeded 900 billion yuan; as of the end of August, the registration (registration) scale of debt investment plans involving green industries in insurance capital entities reached 1,060.176 billion yuan.
Industry experts believe that insurance funds still have huge room for growth in green investment, which will provide long-term and stable financial support for strategic emerging industries, low-carbon energy-saving industries, cleaner production industries, clean energy and renewable energy industries. From the perspective of specific industries, the investment direction needs to pay attention to industries with relatively low carbon emission intensity such as consumption, medicine, and science and technology, and appropriately control investment in industries with relatively high carbon emissions such as steel and coal.
Green investment "long slope thick snow", insurance funds can effectively break through the dilemma of insufficient supply of high-quality assets
The "double carbon" strategy will promote the transformation of China's industrial structure from traditional manufacturing with high carbon consumption to high-end manufacturing with low carbon and environmental protection. From a macro point of view, the transformation of the country's economic structure and industrial structure change often require a large amount of long-term financial support and bring long-term stable returns. Insurance funds usually have a long duration, a large volume, the ability to bear a certain short-term cost, and the characteristics of funds match green investment.
Wang Junhui, president of China Life Asset Management, said that the "double carbon" strategy is the investment theme determined in the next few decades, as a large institutional investor, insurance institutions should grasp the long-term trend in a complex and uncertain economic and financial environment, and should take the "double carbon" strategy as one of the most core investment strategies.
In its view, compared with other funds in the capital market, the attributes of insurance funds are naturally compatible with green investment, and insurance funds have core expertise in long-term investment, value investment and risk management. By focusing on green investment, it can effectively break through the dilemma of insufficient supply of high-quality assets and alleviate the challenges of yield decline and volatility faced by insurance assets. In addition, with the continuous expansion of regulatory policies on the use of insurance funds, under the "double carbon strategy", the use of all kinds of investment advantages of insurance funds can fully demonstrate the value of green investment.
On May 20, 2021, the China Insurance Asset Management Association issued the "Proposal to Promote the Realization of the "Carbon Peak, Carbon Neutrality" Goal", and insurance institutions should actively explore the formulation of responsible investment principles and green investment standards for insurance funds, and deeply explore the investment opportunities of the "double carbon target". On the investment side, we advocate optimizing the use of insurance funds to help green development. The insurance industry should give full play to the advantages of large insurance funds and long terms, and provide long-term and stable financial support for strategic emerging industries, low-carbon energy-saving industries, cleaner production industries, clean energy and renewable energy industries. It is necessary to adhere to the concept of green finance, effectively identify, monitor and control environmental, social and governance (ESG) risks in insurance activities, and realize the risk control and commercial sustainability of the use of insurance funds.
Blue Whale Insurance learned from the industry that a number of insurance institutions have carried out green investment layouts, participated in a number of green project investment and construction involving energy, environmental protection, water affairs and other fields through private equity funds, industrial funds, etc., and further supported the development of green finance through green bond investment and asset management product investment.
According to incomplete statistics, as of the end of June, insurance funds were invested in carbon peaks, carbon neutrality and green development related industries through bonds, stocks, asset management products and other means of book balance of more than 900 billion yuan.
According to the latest data, as of the end of August, the scale of registration (registration) of debt investment plans involving green industries in insurance capital entity investment projects reached 1,060.176 billion yuan. Among them, the key areas of direct investment include transportation 330.622 billion yuan, energy 321.105 billion yuan, water conservancy 69.504 billion yuan, municipal administration 56.461 billion yuan, etc. The scale of registration (registration) of green investment in the form of equity investment plans for insurance funds is 11.4 billion yuan, of which 1.4 billion yuan is directly invested in the equity of environmental protection enterprises and 10 billion yuan is invested in clean energy enterprises.
The investment concept needs to be transformed from traditional risk-return to "risk-return + green"
It is worth noting that in the actual exploration, insurance institutions are also facing challenges such as mismatched investment periods, information asymmetry, insufficient capacity building for sustainable investment, and imperfect investment and financing systems and mechanisms, and need to further enhance their capabilities.
According to the survey results of the China Insurance Asset Management Association, although the concept of green finance and green investment is in a stage of rapid development, there are still some problems in the green investment of domestic insurance funds, such as the lack of green investment industry standards, resulting in more conservative green investment; the green investment of insurance funds does not yet have preferential policies at the national level, and the lack of enthusiasm.
It is understood that the CbRC is stepping up its efforts to study and formulate ESG investment guidelines for insurance funds, and intends to clarify relevant principles and refine relevant requirements in product design, investment process, risk identification, due diligence management, information disclosure, self-discipline management and other aspects.
Wang Xiangnan, deputy director of the Insurance and Economic Development Research Center of the Chinese Academy of Social Sciences, said in an interview with Blue Whale Insurance that the insurance industry in the "double carbon era" should actively assume responsibility and accelerate the study of the traditional insurance risks and growth prospects of various low-carbon new economies. In investment activities, more support will be given to the green and low-carbon transition, and attention will be paid to combining the responsibility of "double carbon" with the long-term return on investment.
Wang Xiangnan pointed out that due to the transformation of the whole society to green and low-carbon, in the next many years, the growth space of the new energy industry, environmental protection and energy-saving industry is large, and all kinds of funds will actively or passively increase investment. It is necessary to study the green industry from a longer-term perspective, track the market environment and policy changes, choose a green investment track suitable for insurance investment, and drive investment and risk control.
Fu Zhenping, actuarial and risk management consulting partner of EY (China) Enterprise Consulting Co., Ltd., analyzed that green investment is one of the main directions of insurance asset management in the future, in addition to supporting green clean power, new energy vehicles and other industries at the underwriting end and contributing to the green transformation of the industry, the investment side of insurance institutions needs to establish an ESG investment research system. From the perspective of the industry, the investment direction needs to pay attention to industries with relatively low carbon emission intensity such as consumption, medicine, and science and technology, and appropriately control investment in industries with relatively high carbon emissions such as steel and coal.
Wang Junhui pointed out that the green investment of insurance asset management institutions is by no means a simple investment and profit, but to actively integrate into the overall situation of green development through a whole process and deep transformation. It is necessary to accelerate the formation of an ESG green investment system, fully integrate ESG green factors into the investment decision-making system and risk control system, and realize the transformation of investment concepts from traditional risk returns to "risk returns + green". (Blue Whale Insurance, Li Danping, [email protected])
This article originated from Blue Whale Finance