QBE seeks to responsibly invest our proprietary assets, including our premium income, across the globe. As an international, multi-asset, multi-currency investor and signatory to the Principles for Responsible Investment (PRI), we factor ESG considerations into our investment decision-making processes to seek to manage risk, improve long-term, risk-adjusted financial returns, and align our approach with stakeholder expectations.
We believe that by investing responsibly, we can achieve better risk-adjusted returns with the aim of benefitting the planet and the communities in which we operate. As a responsible global investor, we recognise that our decisions can have a positive or negative impact on the economy, the environment, and our communities.
QBE maintains a multi-asset, multi-currency portfolio, with most of the portfolio invested in fixed income. Our assets are managed by a mix of in-house portfolio managers, analysts, and external fund managers.
QBE has a dedicated Group Impact and Responsible Investments (IRI) team that reports to the Group Chief Investment Officer (GCIO) and the Group Chief Financial Officer, a GEC member. The IRI team seeks to integrate ESG considerations into our investment decision-making process. The GCIO and the Head of IRI participate in numerous sustainability-related committees including the E&S GEC SC, ESG Risk Committee and Sustainability Committee.
Building trust with our stakeholders, and transparency in all our dealings, are important to us. We do this through public reporting, including the Principles for Responsible Investments, CDP, CSA, Modern Slavery and Human Trafficking Statement, our climate-related financial disclosures prepared in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures, and our annual Sustainability Report.
Our Responsible Investments approach is captured across the four pillars outlined below, and is underpinned by our Investment Philosophy Framework, the Impact and Responsible Investments Standard, QBE’s Environmental and Social (E&S) Risk Framework, and other relevant policies which inform the ESG factors in our investment decision-making processes and systems.
Our Environmental and Social (E&S) Risk Framework promotes informed decision-making consistent with QBE’s commitment to responsible investment. Our E&S Risk Framework outlines our approach to screening, and exclusions, to address key E&S risks across our investment activities. All direct investments are subject to the E&S Risk Framework, which specifies detailed commitments and criteria for a range of sectors we have identified as higher risk, including defence such as controversial weapons & firearms and energy such as coal, oil sands and Arctic drilling, oil and gas.
The E&S risk framework is available here: www.qbe.com/investor-relations/corporate-governance/global-policies
We consider ESG integration approaches across all asset classes through the inclusion of material ESG factors into investment analysis and decision-making. This is a collaborative process across our entire Group Investments team.
Our fixed income portfolio represents approximately 90% of our total investment assets, with investment grade corporate credit representing approximately 50%. All issuers must be consistent with relevant criteria set out in our E&S Risk Framework, Group Sanctions Policy, and Group Human Rights Policy. We integrate ESG into the credit analysis process through our internal, proprietary credit assessment framework that identifies suitability and eligibility for our portfolio. Screening for ESG performance includes a quantitative assessment using independent ESG ratings.
We also invest across multiple asset classes utilising external fund managers and are committed to ensuring they are aligned with QBE’s Responsible Investments approach. We are committed to a minimum of 90% of our external managers being PRI signatories. ESG considerations form an integral part of our manager selection, appointment, and monitoring processes. We conduct an annual ESG review of all existing managers, with additional engagement activities if material issues arise.
QBE believes that through our Stewardship approach we have the ability to improve the material ESG practices of the assets we are invested in, to both enhance long term value and minimise risk. Engagement is our preferred method to effect change in companies, issuers, and external fund managers. We believe that having meaningful dialogue on key ESG considerations is a critical component of our responsibility as an asset owner, to seek to ensure sustainable financial outcomes.
We engage with all our external fund managers and adopt targeted engagement with the top 20 highest emitters in our investment grade corporate credit portfolio. Our objective is to gain insight into these investees’ integration of material ESG issues. This allows us to understand our exposure to ESG risks and opportunities and gives us the ability to influence real world outcomes.
Impact investments seek to generate appropriate risk-adjusted returns along with a positive, measurable, social and/or environmental benefit. Over the last seven years, QBE has sought to maintain leadership in impact investing, and to support its growth and development among our industry peers and other asset owners. An integral part of our approach to impact investments is our Premiums4Good initiative.
Premiums4Good is our innovative impact investing initiative that sees us invest everyday premiums to make a difference to communities across the globe. Premiums4Good supports our belief that we can deliver attractive risk-adjusted returns and business value, while also seeking to deliver positive social and environmental impact. For more information on Premiums4Good, visit our website: Premiums4Good | QBE Group
Aligning with our broader climate strategy and our commitment to responsible investments, QBE became the first Australian headquartered insurance company to become a member of the Asset Owners Alliance (AOA) in 2020, joining an international group of institutional investors committed to transitioning their investment portfolios to net-zero greenhouse gas emissions by 2050.
As asset owners, we have a unique role at the top of the investment value chain, and we acknowledge both the responsibilities and opportunities that come with this role. In 2021, to deliver on our commitment to transition our investment portfolio to net zero by 2050 and set our initial intermediate targets, we established cross functional working groups. In 2022, these working groups continued this work with a key focus on implementation. For more information on our AOA commitment and progress made, please see our TCFD disclosure in the Annual Report.