Last November it gave a mandate to BlackRock to invest up to $1 billion in US denominated green bonds. The second billion will be invested in green bonds denominated in Euros, Sterling and Swiss Francs, reflecting the extent to which European green bond issuance has dominated the market over the past nine months.
Zurich says its commitment is dependent on the market continuing to “develop in a positive fashion” and that Zurich’s criteria for the use of proceeds as well as impact reporting continue to be met.
Zurich plans to integrate the newly available green bonds in existing bond portfolios on the balance sheets of Zurich companies in Europe. A dedicated in-house green bonds expert has been appointed to work with Zurich’s internal and external asset managers in Europe.
Nice signal to market. Now we just need the deal flow.
It’s worth noting that investors like insurance funds seek to match liabilities with assets in each country they operate in, rather than get entangled in currency risks. Zurich has taken a very public position on green bonds; it means you can expect them to be looking for local currency denominated green bonds in every country they operate in, from Mexico to South Africa.
That’s called an opportunity for issuers.
PS. I want to give a nod of recognition and thanks to Jeremy Leggett here, who, as an ex-oil industry engineer working for Greenpeace at the beginning of the 1990s developed the brilliant strategy to - successfully - engage the insurance industry on climate change. His strategic thinking inspired me then, and I'm now honoured to have him as a member of the Climate Bonds Advisory Panel. Of course, by the time he left Greenpeace to become a solar entrepreneur Jeremy didn't feel he'd achieve one of his key objectives: to shift the huge asset management arms of the insurance world, collectively managing $24 trillion. Well, it's now beginning to happen. Just took a little longer than expected. Here's to you Jeremy.