Environmental and social investment criteria
VIG Insurance Group manages around EUR 37.3 billion in investments (► for more information please visit our Interactive Key Figures Tool). The Group makes it an absolute priority to invest the premium payments in a way that ensures it can fully meet its obligations to customers at any time. It therefore focuses on security for investments, with a preference for good credit ratings and, as a result, stable returns. At the same time, however, VIG Insurance Group also takes responsibility for the social and environmental effects of its investments.
Objectives
- No new direct investments in coal
- Existing direct investments in coal will be reduced by significantly more than one half by the end of 2025 and completely eliminated from the portfolio by the end of 2035 at the latest (Based on the investment portfolio in March 2019)
- Implementation of an investment strategy intentionally aimed at increasing the share of environmentally friendly investments
- No direct investments in companies involved in the production or trade of banned weapons
No investments in coal and banned weapons
VIG Insurance Group does not invest in companies whose practices conflict with sustainability principles. The climate change strategy, for example, which was adopted in 2019 and slightly adapted in 2021, requires the Group to completely eliminate investments in the coal sector. No new direct investments are being made in companies that meet the following criteria:
- more than 30% of revenues from thermal coal extraction and/or
- annual production of more than 20 million tonnes of thermal coal and/or
- more than 30% of total energy production from thermal coal and/or
- more than 10 gigawatt hours of energy generated annually from thermal coal.
Existing investments in companies in the coal sector will be reduced by significantly more than one half by the end of 2025 (compared to March 2019) and completely eliminated from the portfolio by the end of 2035 at the latest. These investments serve to fulfil the commitments made under insurance policies and can therefore only be eliminated from the portfolio before maturity in individual cases.
The Group has also committed to not investing in any company that produces or trades in banned weapons. This includes biological and chemical weapons, cluster munitions, including ground-launch and air-drop systems, anti-personnel mines, nuclear weapons and depleted uranium munitions.
Continuous increase of investments in green bonds
The VIG Insurance Group climate change strategy also specifies that the share of environmentally friendly investments is to be increased. Green bonds, that is, bonds used to fund environmentally friendly projects, are one example of this.
| 2021 | 2020 | 2019 | 2018 | |
|---|---|---|---|---|
| Green Bonds (in EUR mn) | 436 | 238 | 154 | 70 |
VIG was the first insurance company in Europe to issue a benchmark sustainability bond.
VIG Insurance Group issued a EUR 500 million sustainability bond in March 2021. Around 50 institutional investors in twelve European countries subscribed to the bond. More than three quarters of them manage portfolios that explicitly focus on sustainability. In addition to improving the long-term financial planning of the Group, the capital is also being used for investments in both social and environmental projects. This makes the VIG Group the first insurance company in Europe to place a sustainability bond – not just a green bond focusing on environmental projects – on the market. The net proceeds from the issue are being used for projects in the areas of renewable energy, green buildings and clean transportation, as well as social projects for more affordable housing and better access to basic services such as education and healthcare.
Controlled investments
A sustainability bond framework developed in-house establishes clear criteria for which green and social projects the capital can be used. Sustainalytics, an independent ESG rating agency, assessed the framework as credible and effective. A sustainability bond committee ensures that the capital is used in accordance with the framework. It consists of representatives from different areas of the Group, such as Treasury, Asset Management, ESG and Compliance, and decides whether the capital from the bond can be allocated to a project.
Successfully funded projects
The capital from the sustainability bond was allocated to the examples presented here:
More detailed information on the use of the capital and the impacts achieved is provided in the allocation and impact report for the sustainability bond.
VIG provides support for environmentally friendly, affordable housing
More than 100,000 homes at affordable rents
The increasing cost of housing is a concern for many people. Experts are now calling affordable housing the social issue of the 21st century. One of the ways the VIG principal shareholder and VIG Insurance Group fulfil their social responsibility is by investing part of their capital in non-profit housing societies in Vienna and other Austrian states. Social housing does more than help people who are worried about the rising cost of housing. The non-profit housing societies also ensure that the residential buildings are socially mixed and offer inclusive forms of housing. Environmental factors are also addressed. Energy-efficient construction and renovation of existing buildings reduces the need for heating, which in turn reduces emissions of climate-damaging greenhouse gases.
Investment in the real estate start-up Gropyus
The company is located in Vienna, and plans, builds and manages buildings. Sustainable materials, especially wood, reduce the environmental footprint, while automation and digitalisation reduce costs. Gropyus aims to make sustainable and, in the future, affordable housing possible for everyone and currently operates in Germany and Austria. As part of the VIG investment, these activities are to be expanded to other countries in the CEE region.
Fore more information on the cooperation please see the press release: Vienna Insurance Group launches cooperation with GROPYUS