As a major institutional investor, Aegon recognizes that it has responsibility and an opportunity to drive climate action.
Fresh warnings have emerged at the United Nations sponsored 2019 Climate Action Summit this month that the world needs to drastically increase its reduction of emissions ambitions if there is to be any chance of meeting targeted limits of 1.5°C, as outlined in the Paris Agreement.
According to the World Meteorological Organization, we are facing an average increase in global temperatures of between 2.9°C and 3.4°C by 2100, bringing with it catastrophic weather patterns, and drastic changes to societal and economic stability.
Aegon case studies
The environmental issues have not been lost on big business, and insurance and finance companies are at the fore of the political and social debate, and money managers have a real role to play, according to Fanelli. "At Aegon, we have long recognized the responsibility to educate ourselves and our clients on how sustainability topics, and climate change specifically impact our investments," he says.
Fanelli points to the recent call by 14 insurers, including Aegon, for more tangible and consistent action. Representing more than $3.5 trillion of assets, those companies which contributed to cross-functional climate initiatives were featured in a report released last month entitled Insuring a Low-carbon future, published by the Asset Owners Disclosure Project (AODP). Five Aegon case studies demonstrating the company's contribution to cross-functional climate initiatives were featured in the publication.
These include Aegon's partnership with the UK's Cambridge University to better understand how to act upon the Environmental, Social, Governance (ESG) preferences of its retail clients. The survey-based pilot could ultimately result in unlocking demand from retail clients. "That means, in short, that we would plan to meet demand for more climate-aligned financial solutions," Fanelli says.
Emanuele Fanelli, Senior Responsible Investment Manager at Aegon Asset Management
Climate change strategies
The AODP provides a forum for insurers to share successful climate change strategies and best practices. One such initiative was Aegon’s hosting in July of a cross-functional global climate change educational workshop, and the launch of a fixed-income strategy in the US which factors climate-related elements into the long-term sustainability of the global economy, environment and society.
Fanelli: "We want to focus also on the opportunity side rather than risk management alone, and fixed income investors can play a pivotal role in driving positive climate action. In fact, our corporate debt engagement strategy looks to the low-carbon transition to strategically increase the number and quality of low-carbon products and solutions available in the real economy."
"In addition, we play an active role in the climate conversation and public policy debate both here in the Netherlands, and globally. As a major corporate we take our responsibilities seriously and contribute to a single powerful voice through our association with relevant collaborative initiatives, for example we recently endorsed a Global Investor Statement to Government on Climate Change, as Governments are coming under pressure to ramp up their national climate ambition in order to bring it in line with a pathway which will limit global temperature rises to 1.5°C," Fanelli said.
Better managing climate risk
Supported by over 60 practical examples provided by 14 insurers from nine countries, the AODP guide reveals how insurers like Aegon are better managing climate risks by connecting departments and business lines that have often worked separately.
Peter Uhlenbruch, Research and Engagement Manager at ShareAction/AODP and report author, said financial institutions have a "critical role to play" in helping secure an orderly transition to a less than 1.5° pathway.
Claiming that "too few" insurers were taking sufficient measures in the ESG sphere, he invited lagging companies to use the guide to learn from their proactive peers. "Education, collaboration, and partnership are a key thread running throughout this guide, of which much more will be needed from the industry to stand any chance of weathering the climate crisis," he said.