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QBE Insurance Group Limited

PRI reporting framework 2019

You are in Strategy and Governance » Objectives and strategies

Objectives and strategies

SG 05. RI goals and objectives

05.1. Indicate if and how frequently your organisation sets and reviews objectives for its responsible investment activities.

05.2. Additional information. [Optional]


SG 06. Main goals/objectives this year

06.1. List the main responsible investment objectives that your organisation set for the reporting year.

Responsible investment processes

Key performance indicator

          Ongoing RI / ESG knowledge development and training for the Investment team
        

Progress achieved

Regular RI / ESG knowledge development and training has been established with the Investment Team. In 2018, topics included; TCFD, Climate change and long term social and demographic trends. The intent of these is to provide insight and supplement ongoing ESG awareness.

Key performance indicator

          Improve the accuracy and ratings of external ESG research providers with respect to QBE and by doing so, increase internal stakeholder awareness /value of ESG
        

Progress achieved

Building on 2016 and 2017, QBE engaged ESG research providers (DJSI / FTSE4Good, MSCI, Sustainalytics, etc) leading to improved inclusion in indices and improved ratings and accuracy of reports for QBE, including QBE's inclusion in FTSE4Good (Australia) and Bloomberg Gender Equality Index. We were also recognised as a top 200 company by Equileap in the 2018 Gender Equality Global Report & Ranking. 

Key performance indicator

          Continue to broadly influence the adoption of ESG considerations and awareness across business, including in sustainability and sustainable insurance initiatives.
        

Progress achieved

Responsible Investments is represented in the QBE Group Sustanability Committee, an executive committee reporting to the Board Risk and Capital Committee (BRCC), responsible for the delivery of sustainability strategy, initiatives and reporting requirements.  It is made up of senior representatives from group departments involved in the day-to-day management of sustainability issues, including Risk, Finance, Investments, Investor Relations, People, Communications, Legal, Company Secretariat and Compliance.                          

QBE has increased engagement in ESG issues and continues to advance sustainability considerations across the business.   Responsible Investments considerations have been incorporated in a whole of business sustainability review; and in 2018, QBE increased resourcing in this area by creating a Head of Environment and also a new ESG Risk team with responsibility for coordinating the ongoing integration of climate-related risks and opportunities within the business. In collaboration with the business, the ESG Risk team is responsible for the day-to-day management of climate-related risks and opportunities and acts as an expert team for the Group and divisions. The team collaborates with subject matter experts and monitors market, technology, policy and regulatory changes.  

Key performance indicator

          RI objectives: See progress below.
        

Progress achieved

RI objectives for the reporting year included:

(I) Continue to implement RI strategy and update the RI policy.

    QBE has continued to implement the RI strategy and updated the RI policy.

(ii) increase the depth of ESG integration into external managers.

    QBE have extended the coverage of ESG integration to other asset classes and also enhanced the process

(iii) extension of ESG integration in the Fixed Income process

    QBE have extended ESG integration to include Supranationals and also implemented more frequesnt ESG reviews on corporate issuers who have been flagged with a lower ESG rating.

iv) continue to work across the business to develop a whole of exclusions approach and

    The whole of business exclusions policy is complex for a global corporate and is an ongoing piece of work that has board support. This continues to progress.

(v) Continue to grow impact investments pool.

    QBE increased the pool of impact investments 26 to 32 securities and to cUSD450m.

vi) Develop an investments "climate chage position paper"

    As part of QBE's committment to the TCFD an internal investments Climate Change Position Paper has been developed.

 

          External Manager Review
        

Key performance indicator

          Review of external managers with ESG considerations
        

Progress achieved

In 2018, we improved our approach to reviewing external managers and introduced formal reviews that includes ESG related considerations as a standing agenda item. This continues to help QBE to build our knowledge and forms a baseline understanding of our managers and enables QBE to engage on material issues. 

other description (2)

          Review investment strategy to ensure it appropriately reflects consideration of climate-related risks and opportunities
        

Key performance indicator

          Develop Investment Climate Change Strategy and Integrate climate change risk factors into investments
        

Progress achieved

QBE’s fixed income portfolio represents approximately 85%-90% of our overall investment assets, and ESG factors, including climate-related factors that support our alignment with the Paris Agreement, are embedded in our investment decision making process.

We utilise relevant climate data and research from external providers to ensure that all securities being considered for inclusion in the portfolio, and the overall portfolio itself, meet our criteria for managing climate-related risks. These criteria are evolving to include both minimum standards as well as an ambition to manage the overall portfolio carbon metrics to an environmentally responsible level over time. During 2018 we initiated dialogue with the largest greenhouse gas emitters in our credit portfolio in relation to their commitment to implementing the TCFD recommendations.

QBE’s growth asset portfolio represents approximately 10%–15% of our overall investment assets, with external managers and passive index vehicles used to access various asset classes. Our selection process includes engagement to ensure alignment where practical to our direct investment philosophy, and to advocate for change where opportunities exist for more responsible climate risk management.

other description (3)

          Understand portfolio exposure to transition risks.
        

Key performance indicator

          Coal exposure analysis and transition risk portfolio analysis.
        

Progress achieved

Transition risk may arise in our investments where companies within our portfolio are not aligned to the Paris Agreement targets, and so expose QBE to sudden drops in asset values or increased credit risk. Predominantly, transition risk is associated with carbon intensive industries. We assessed our credit portfolio by applying the 2 Degrees Investing Initiative (2Di) Paris Agreement Capital Transition Assessment Tool (PACTA) to confirm that our credit portfolio is aligned to the Paris Agreement, both now and in five years’ time.

We performed an internal analysis to assess coal-specific transition risks in the total investment portfolio. We identified investments in companies fitting one or more of the following criteria as coal-related assets:

• companies that have expansion plans for coal;

• companies that have 30% or more revenue from coal or coal share of

power generation;

• companies whose annual coal production equals 20 million tons or more; and

• companies whose installed coal-fired capacity equals 10,000 MW or more.

The analysis confirmed that we have less than 1% of our investment portfolio in coal‑related assets. The analysis affirms our investment philosophy and our focus on contributing to a low-carbon economy.

Financial performance of investments

ESG characteristics of investments

Key performance indicator

          ESG Down Weighting Incorporated into Credit Analysis Process
        

Progress achieved

In the Fixed Income Corporate Credit analysis and assessment process corporates, which perform poorly on ESG factors are down-weighted, within the existing investment scoring process.

Key performance indicator

          ESG integration in Fixed Income portfolio
        

Progress achieved

QBE has enhanced ESG integration in the Investment Credit Selection and Monitoring process. Corporate entities under consideration are subject to an ESG Assessment, including independent external ESG ratings, and Portfolio Manager assessment.  Monitoring and watch list practices incorporate ESG data and externally sourced controversies research. ESG considerations complement these practices, including issuers where there is increased potential for risk. Per above companies which perform poorly in relation to ESG are down-weighted in internal investment selection processes.

Other activities

Key performance indicator

          Join RI industry networks and other information sharing initiatives
        

Progress achieved

We continue to join industry and government discussions to share best practice on responsible investing, and regularly contribute to a range of submissions, research papers, forums / panels. During 2018, we joined the Investor Group on Climate Change, where we participate in member meetings and the Adaptation Working Group. As a member of the Responsible Investment Association Australasia (RIAA), we participate in the Impact Investment Forum and the Human Rights Working Group,

We are an active participant in the global field of responsible investing and impact investing, with our representatives attending the following events this year:

• Winter Innovation Summit in Salt Lake City;

• PRI in Person conference in San Francisco;

• RIAA annual conference in Melbourne, where the Group Investments team presented on an impact management panel;

• Asia Pacific Impact Summit where we shared our perspectives as a global investor in social impact bonds (SIBs);

• Global Steering Group for Impact Investing Impact Summit in India where our impact investing program Premiums4Good was profiled as a leading example of mobilising capital for impact; and

• Gender‑Smart Investing Summit held in London, where we showcased our commitment to women’s empowerment and gender equality.

Key performance indicator

          
        

Progress achieved

QBE sponsored and participated in the UN Environment Programme Finance Initiative (UNEP FI) conference on Financing a Resilient and Sustainable Economy in Sydney on 23-24 July 2018, which aimed to bring together Australian sectors to develop a financial sector roadmap for sustainable finance.

The Sustainable Finance Roadmap working Group in Australia is a joint convening of RIAA, UNPRI, IGCC and others.  QBE is an active participant in efforts to develop and Sustainable Finance Roadmap for the Australian financial services market, connected to other international practices.

06.2. Additional information.


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