The Plenum CAT Bond Fund, the flagship offering from Zurich based specialist insurance-linked securities (ILS) and catastrophe bond investment manager Plenum Investments, has become the first ILS fund strategy to receive a German sustainable investment accolade.
The cat bond fund has been awarded the FNG Label by the German “Forum Nachhaltige Geldanlagen e.V.”, acknowledging that as a form of reinsurance and risk transfer, the cat bond instruments invested in promotes and works to safeguard sustainability.
Plenum Investments adopts an environmental, social and governance (ESG) approach to its investment allocations, assessing positions on a range of criteria to ensure suitability of the cat bond assets invested in.
As a form of insurance, reinsurance or pure risk transfer, that shifts natural catastrophe risks away from those unable to bear them to the capital markets where they can be diversified away within the deepest and most liquid pools of capital available, the ILS structure offers an ESG relevant investment opportunity to institutions.
“CAT bonds already contribute significantly to achieving sustainability,” explained Dirk Schmelzer, Partner at Plenum Investments Ltd. and responsible for refining the company’s ESG analysis.
“However, there is still a long way to go to convince CAT bond sponsors to better respond to the information needs of ESG-orientated investors,” Schmelzer continued.
Plenum said that one of the firms goals is to help transform the catastrophe bond market into a fully ESG compliant investment universe.
“Taking a long-term perspective, we believe that the capital market will be a substantial and responsible carrier of natural disaster insurance risks,” Schmelzer said.
The FNG Label was developed to provide a level of quality assurance for sustainable mutual investment funds, putting in place and working to improve quality standards for sustainable investment products.
We’ve written a number of times in the past (here, here and here) on the fact insurance-linked securities (ILS) and catastrophe bonds should be considered a socially and environmentally responsible investment, given the key role the structures and their capital provides in managing and responding to natural disaster risks globally.
It’s encouraging to see a fund in the sector being acknowledged for its ESG status.