Sustainable Investment Management
To achieve the goal of the Paris Climate Agreement, the rapid and complete decarbonisation of the economy is a prerequisite.
The implementation of the goals of the Paris Climate Agreement - including a reduction of greenhouse gas emissions by 55 per cent compared to 1990 by the year 2030 - requires additional investments of around 180 billion euros per year from the EU's perspective. The financial sector plays a key role in this, as it could mobilise large amounts of private capital towards sustainable investments. UNIQA is committed to responsible and sustainable investment management.
We are convinced that a sustainable investment strategy can be economically successful in the long term and is a positive complement to the classic investment goals of "yield", "security" and "liquidity". For us, social and ecological criteria in the context of investment decisions are not a moral duty of care, but an economic imperative. Reputation among clients, the loyalty of qualified employees and corruption-free structures are also economic success factors for companies, countries and their investors.
Sustainability criteria do not replace the proven instruments of classical securities management, but complement them in a beneficial way. With an investment policy based on ESG criteria, i.e. the consideration of environmental, social and corporate governance aspects, UNIQA makes an important contribution to sustainability and climate protection.
From ÖGUT-certified investment to Paris target-compliant portfolio orientation and international commitment#
In 2019, UNIQA was the first insurer in Austria to receive the ÖGUT sustainability certificate in bronze for its investments. In 2020, we aligned our sustainability ambitions internationally and, as a signatory of the Principle of Responsible Investments (PRI), follow our sustainable investment goals within the framework of the established principles. In 2021, we also joined the Net-Zero Asset Owner Alliance (AOA), thereby aligning ourselves with the (interim) goals of the 1.5 degree Paris climate target path.
ESG criteria in investment
We evaluate our investments using a holistic ESG approach - analysing both the positive and negative aspects of a company or state.
In the area of climate policy, we also pay special attention to scientifically based emission reduction plans for greenhouse gases of a company or state. These plans are also included in our overall ESG assessment.
In addition, we consider the following goals to be relevant:
- the objectives, instruments and management of investments,
- the "state of the art" methods of sustainable investment, especially in the insurance and pension industry,
- relevant national and international standards (ÖGUT label, Austrian Eco-label, UN Principles for Responsible Investment, UN Principles for Sustainable Insurance),
- the requirements of international and national policies as well as the regulatory framework (e.g. Sustainable Development Goals, sustainability reporting, EU Action Plan for Financing Sustainable Growth),
- we are continuously improving our guidelines for responsible investments. In 2020, stricter negative criteria for fossil fuels were introduced.
In our investment selection process, we focus on the following issues and criteria for both companies and countries:
- Renewable energy production
- Low or significantly decreasing GHG emissions
- Measures and protection for biodiversity and ecosystems
- Products and services in the medical and health sectors
- Stable policies and outcomes on labour and human rights
- Stable policies and outcomes on corruption and business ethics
- Stable policies and outcomes on health and safety in operations and product safety
Sustainability risks are defined by UNIQA's exclusion and negative criteria. The identification of sustainability risks of the individual investments is carried out continuously in the analysis and decision-making process. These include corporate and governmental activities that we consider critical and therefore high risk in terms of sustainability. Specifically, these criteria refer to business areas (e.g. tobacco, coal), technologies (e.g. use of nuclear energy) or practices (e.g. corruption, human rights violations). These topics are regularly reviewed for completeness or further relevance and our guidelines are adjusted accordingly.
Exit from coal investments
In 2018, the "UNIQA Policy for Responsible Investments" was adopted and at the same time we started to phase out investments in carbon. Thermal coal continues to be an exclusion criterion for us. We had already sold all investments in coal-based companies by the end of January 2019. As part of the integration of AXA's former subsidiaries in Poland, the Czech Republic and Slovakia, all of our portfolios were analysed in depth using our new expanded database and examined for any coal exposure. The resulting coal investments of our new insurance companies were put on the sales list and were almost completely eliminated by the end of April 2022.
UNIQA Group Green Finance Alliance Commitment
As part of our Green Finance Alliance membership, UNIQA Group will implement the Science Based Target Initiative (SBTi) method for our approach in aligning our on-balance sheet direct investments with the 1.5 °C target of the Paris Agreement.
Regarding Fossil Fuels and Nuclear Power investments for our own portfolio, we are committed to the following targets set out by the GFA:
Coal: Thermal coal producers or utilities generating power from coal are currently already excluded if they generate >10% of revenue from coal. Moreover, we will phase out any company generating >5% revenue from activities in the coal sector by the end of 2030.
Oil: Unconventional petroleum projects will not be financed after 2022. In addition, no investments in projects with the aim to expand oil infrastructure or in companies generating >30% of revenue from the oil sector will be made after 2024. Moreover, we will phase out any company generating >5% of revenue from activities in the oil sector by the end of 2030.
Natural gas: No investments in projects with the aim to expand natural gas infrastructure or companies generating >30% of revenue from the gas sector will be made after 2025. Moreover, we will phase out any company generating >5% of revenue from activities in the natural gas sector by the end of 2035 (Exclusions exist for businesses and projects in line with the EU Taxonomy, SBTi and the Paris Agreement).
Nuclear power: No investments in nuclear projects with the aim to expand nuclear power infrastructure will be made after 2024 and we will phase out any company generating >5% of revenue from activities in the nuclear power sector by the end of 2035 (Exclusions exist for businesses and projects in line with the EU Taxonomy, SBTi and the Paris Agreement).
UNIQA Hybrid Green Bond
In 2020 UNIQA was the first insurance company in Austria which placed a “green” subordinate bond worth €200 million. The issue volume of this ten-year bond amounted to €200 million and will be invested in climate and environmental protection projects in Europe and in OECD countries. The primary focus will be on sectors such as wind and solar energy, waste recycling, environmentally friendly transportation solutions and water management. All projects are directly related to the SDGs with the topics of clean energy and water, innovative infrastructure and sustainable cities and communities at the top of the list.
The UNIQA Hybrid Green Bonds was set up in line with the Green Bond Principles issued by ICMA and was certified with the Austrian Environmental Quality Standard (Österreichisches Umweltzeichen, UZ 49). 1)
Within 1 year of issuance, and annually thereafter until full allocation of the Green Bond Proceeds, UNIQA will provide an External Report to investors. This will include (i) an Allocation Report and (ii) an Impact Report, subject to the availability of suitable information and data.
1) The Austrian Eco-label was awarded by the Federal Ministry for Climate Protection, Environment, Energy, Mobility, Infrastructure and Technology (BMK) on 24.9.2020 (UW 1360) with a one-year validity for the UNIQA Greenbond and its framework because, in addition to economic criteria, ecological and social criteria are also taken into account when selecting suitable green assets or projects financed by means of Green Bonds. The eco-label ensures that these criteria and their implementation are suitable for the selection of suitable shares/bonds/participation certificates or real estate, projects or forms of investment. This has been independently verified. The award of the eco-label does not represent an economic assessment and does not allow any conclusions to be drawn about the future performance of the financial product.