This pillar refers to the systematic integration of ESG criteria along the investment process, from portfolio definition to monitoring and reporting. As part of our active risk management, we announced in 2017 that we had switched to ESG benchmarks.
These have been adopted in our investment mandates and consist of better-rated companies from an ESG perspective. This allows us to have both the right measurement and appropriate incentives for our portfolio managers in place. If benchmarks are not applicable, a minimum ESG rating threshold is applied to our mandates. For actively managed listed equities and corporate credit mandates, external managers have limited leeway to invest into securities they deem to have a positive ESG trend but are not yet included in the benchmark (see below). At the end of 2018, approximately 45% of our investment portfolio was managed externally, and more than 96% of those assets were managed by PRI signatories.
For our real estate portfolio, we focus on certified buildings, such as the Minergie label in Switzerland, or the world-wide known LEED certification. By the end of 2018, the value of our Minergie-labelled buildings reached USD 0.4 billion, or 23% of our Swiss portfolio. Furthermore, we also invest in the US, UK and Australian real estate markets, reaching a total size of USD 1.7 billion by the end of 2018.
The investment managers’ approach to sustainability includes “GreenGuide: Sustainable Property Operations”, a best-practice guideline for sustainable and efficient real estate operations; “ULI GreenPrint Foundation”, a global environmental management platform; and “LEED Certification” from the U.S. Green Building Council. We also benchmark our US portfolio against GRESB, an industry-driven organisation transforming the way capital markets assess ESG performance of real asset investments. Our US portfolio outperformed the GRESB average of 68/100 with a score of 78/100.
Executing our shareholder rights is another part of Swiss Re’s commitment to being a responsible investor. To reflect this pledge in our voting behaviour, we have defined principles in our Asset Management Voting Policy. See: www.swissre.com/our-business/managing-our-assets/Responsible-Investments-Shaping-the-future-of-investing.html
- Investments hold an ESG rating of BB or better
- Green bond mandate considering ICMA Green Bond Principles
- Active mandates benchmarked against ESG BB and better indices with limited leeway to deviate from the benchmarks
- Reinvestment universe of buy-and-hold mandates restricted to ESG rating BB or better
- ESG inclusion in infrastructure loans
- Active mandates benchmarked against MSCI ACWI ESG Leaders Index restricted to BB and above and limited leeway to deviate from it
- New investments are only made into Private Equity funds, which adhere to ESG guidelines
- Swiss Re reviews ESG performance and compliance for each potential investment
- ESG regarded as an important metric for the portfolio. Attractive initiatives that offer a high ESG impact are considered for both new acquisitions and the existing portfolio
- Benchmarked against different sustainability standards depending on the location of the property (Minergie standard, GreenGuide best practice, GreenPrint Environmental Management Platform, LEED certifications, GRESB scoring)