Reinsurer Munich Re promises to make asset portfolio climate-neutral by 2050

Reinsurer Munich Re has joined the Net-Zero Asset Owner Alliance, promising to make its asset portfolio climate-neutral by 2050. "We extend our climate strategy with this step, and assume social responsibility," CEO Joachim Wenning wrote in a byline article published in Frankfurter Allgemeine Zeitung. He called the commitment a "highly complex and costly endeavour" because his company needs to develop new expertise for evaluating the risks and returns of huge renewable projects, amongst other challenges. "A completely different challenge is the climate-friendly handling of government bonds, the most important asset class for insurers," Wenning explained. "How do we deal with US, European and Chinese government bonds in 2030, 2040 or 2050 if greenhouse gas emissions continue to be too high? This is a question that investors need to ask themselves."

Wenning also said initiatives by a coalition of the willing are not sufficient. "To put it bluntly: Most coal companies will continue to produce coal because they don't have sufficient economic incentives not to," he said. Wenning advocates a significant increase in the price of CO2 and a stable and reliable framework for investment in renewable energies. He described the "Green Deal" initiative of EU Commission President Ursula von der Leyen as "a first courageous step in the right direction."

Net-Zero Asset Owner Alliance was founded under United Nations leadership in September by institutional investors that manage combined assets of more than four trillion dollars, including insurers Allianz, Axa and CNP Assurances. The step is in line with other initiatives in the financial sector aimed at making investments more sustainable.