Zurich UK has switched almost $1bn (€847m) of its investment portfolio into a new ESG benchmark as it continues to take action to curb carbon emissions.
The benchmark – MSCI USA ESG Universal Sector Neutral Select Capped Index – delivers a 30% cut in carbon emissions of its constituents and enhanced ESG outcomes when compared to its parent index, the MSCI USA Index.
Zurich worked with asset manager DWS in putting together the index, which was developed by MSCI. It assigns 629 companies an ESG score based on MSCI’s ESG ratings methodology. The index, which is sector neutral, will be managed, calculated, and distributed by MSCI.
Zurich – which manages £25bn (€28.9bn) of pension and life insurance assets – switched almost $1bn of its passive US equity mandates into a fund managed by DWS that tracks the new index and applies a further screen excluding companies that do not meet Zurich’s ESG policy.
Zurich’s analysis shows that for every $1m invested in the fund, exposure to financed carbon emissions drops from 58 tonnes to 41 tonnes without adversely impacting expected returns or increasing risk.
A Zurich spokesperson told IPE that by using an index that invests more in companies that emit less carbon “we increase the cost of capital to the higher emitting companies”.
“We hope that the wider use of indices such as this can drive change by encouraging more firms to speed up the transition to net zero,” he added.
LPFA signs up to CDP’s disclosure request
The London Pensions Fund Authority (LPFA) has furthered its commitment to drive corporate environmental transparency by signing CDP’s 2021 disclosure request across climate change, water and forests.
CDP is a global non-profit charity that runs a global environmental disclosure platform and holds the largest Task Force on Climate-related Financial Disclosures (TCFD)-aligned environmental database in the world.
LPFA has joined over 590 investors with more than $110trn in assets and 150+ large purchasers with over $4trn in procurement spend in requesting thousands of companies to disclose their environmental data through CDP.
By completing CDP’s annual request for disclosure via completion of its TCFD-aligned questionnaires, companies can demonstrate the transparency and accountability vital to tracking progress toward a low-carbon, sustainable future.
Lyxor and Bridgewater launch first sustainable fund
Lyxor Asset Management and Bridgewater Associates have launched a multi-asset sustainability strategy for investors seeking to achieve both financial and sustainability goals at scale, they announced.
It is the first sustainability fund the partnership has launched since Bridgewater appointed Carsten Stendevad, former CEO of the Danish labour market pension fund ATP, and Karen Karniol-Tambour, the long-time head of investment research, as co-chief investment officers for sustainability.
The All Weather Sustainability Fund leverages Bridgewater’s systematic research process to assess and select public market assets aligned to the United Nations Sustainable Development Goals (SDGs) and utilises the portfolio engineering of its pioneering “All Weather” asset allocation framework.
Available in a UCITS format with daily liquidity, the fund is managed by Lyxor and sub-advised by Bridgewater.