ESG in Insurance Linked Investments

As part of our core beliefs, PGGM integrates environmental, social and governance ("ESG") factors in the due diligence process of its ILS managers and (re)insurance companies.

During the assessment of the ILS managers and (re)insurance companies and the assessment of quality of their risk management processes, we investigate which ESG policies the ILS managers and (re)insurers have implemented and to what extent the convictions behind these policies are part of their culture. Besides scoring all our ILS managers and (re)insurance companies on ESG topics, we seek to incorporate specific ESG criteria in the investment itself as to ensure the lowest chance of our client having undesired exposures, as reflected through the PGGM Exclusion List. Lastly, we engage actively with the ILS managers and (re)insurance companies to expedite the ESG progress of the ILI industry.  
 
We believe that the ESG debate surrounding the ILI industry has been focusing on the environmental (‘E’) aspects, more specifically, around the climate change. The industry believes that environmental risk induced by the climate change need to be largely accounted for in the pricing of risk. In other words, the risk takers, including PFZW, must be compensated for possible elevated frequencies of natural catastrophes and for possible higher severities of such events. This leads to the notion that such risk must be, first and foremost, well captured in the catastrophe models and view of risk of our partners.