Financial regulators sharpen climate risk focus, asset managers see ESG investments bloom

Brandan Holmes of the Insurance team and James Leaton of the ESG team discuss why global regulators are zeroing in on financial sector climate risks. Plus, the Asset Management team’s Steve Tu talks about how and why US ESG investments are surging in popularity, and Francisco Uriostegui discusses the benefits and challenges for Mexican pension funds of incorporating ESG screening into investment decisions.

Inside the episode:

• Brandan Holmes of the Insurance team and James Leaton of the ESG team discuss why global regulators are zeroing in on financial sector climate risks.  (begins at)
• Steve Tu of the Asset Management team talks about how and why US ESG investments are surging in popularity, and Francisco Uriostegui discusses the benefits and challenges for Mexican pension funds of incorporating ESG screening into investment decisions. (begins at)

Asset Management Week - Register today!

Join Moody’s the week of March 22nd for 4 days of in-depth discussion as we look to answer the question – How are asset managers allocating their capital and efforts to invest in the future growth and competitiveness?

Related content:

• ESG – Global: 2021 outlook – Stimulus, transparency and policy alignment to amplify ESG trend  - As the global economy recovers from the coronavirus pandemic, ESG issues will assume greater importance in the actions of policymakers, regulators, investors and corporate decisionmakers.
• Insurance – Global: Global insurance regulators increase focus on climate risk  - Regulators around the world are encouraging the insurance industry to improve its understanding of, and ability to manage, the financial risks related to climate change.
• Allianz, AXA, Swiss Re, Munich Re, Zurich: Retreat from coal reduces liability and stranded asset risk, a credit positive  - Major European (re)insurers are limiting their investment and underwriting exposure to coal. This protects them against climate change liability risk, and the risk of asset stranding.
• Financial Institutions – Europe: BoE climate change stress tests will reinforce risk management for banks and insurers - Climate change stress tests are credit positive as they will help banks and insurers understand the consequences of climate change for their business, and support their risk management.
• Insurance – Global: The impact of environmental, social and governance risks on insurance ratings - In this report we explore the environmental, social and governance risks that insurers face, and explain how we incorporate them into our insurance ratings.
• Funds & Asset Management – US: ESG investment outperformance overcomes investor hesitancy, a key barrier to growth - Environmental, social and governance themed investments have become one of the best performing investment categories in recent years, paving the way for continued growth of this strategy.
• Asset Managers – Global: Beyond passive, ESG investing is the next growth frontier for asset managers  - ESG is a unique growth opportunity for asset managers because it promises to deliver value in a more holistic manner, getting beyond investment outperformance which is a zero sum game.
• Funds & Asset Management – Mexico: ESG factors improve risk analysis, but adoption will take time with market limitations - ESG investing could provide useful framework to pension asset managers, but significant changes will be gradual given fewer investment options in the local market and legacy portfolios.