March 28, 2023

Ping An Investments Aligned With China’s Green Transition Policy, CIO Says

Insurer sets 20% annual growth targets for its green investments.

Reported by Michael Katz

China’s Ping An Insurance’s responsible investment priorities are aligned with the Chinese government’s green transition policy, CIO Benjamin Deng said recently.

“ESG in China is coherent,” Deng said at Insurance Asset Risk’s Asia 2023 Virtual Conference. “We follow the national policies toward net zero, and so we don’t have to fight our own battles to do better things.”

Deng said China-based insurance companies are able to make green investments with regulatory support, such as a 10% discount for the credit risk factor in green bonds under the China-Risk-Oriented Solvency System.

A 10% discount is given to the credit risk factor for green bonds invested by insurers as a way to help align them with national strategies toward carbon peaking and net-zero. C-ROSS II, intended to support small and medium-sized insurers and technology insurers, provides a 10% discount to the insurance risk factor for auto insurance businesses when their previous year’s premium income is less than 2 billion yuan ($290.4 million) and a 10% discount to the insurance risk factor for professional technology insurers. It also gives a 10% discount to the longevity risk factor to reflect supervisory encouragement to pension insurance products.

“All these things are helping in the same direction for us to invest in socially responsible and green target projects,” Deng said.

Ping An announced it has established annual growth targets for its green investments of at least 20%; at least 70% for green insurance premiums; and no less than 20% for green credit balance. Deng said the company is looking to meet all of the overall targets by 2025, with green investments and green credit of RMB400 billion and total green insurance premiums of RMB250 billion.

As of the end of September, Ping An’s green investment and financing totaled approximately RMB319.8 billion, while its green banking business amounted to RMB184.2 billion. Premium income of environmentally sustainable insurance products also totaled approximately RMB110.5 billion during the first three quarters of last year.

Deng said Ping An is investing in green and low-carbon assets, while also cutting back on the proportion of high carbon-emitting assets. He also noted that less than 2% of the company’s estimated RMB7.92 trillion in assets in investment and banking services were related to major high-carbon-emitting sectors, citing the firm’s 2021 Task Force on Climate-Related Financial Disclosures report.

China is the world’s largest emitter of greenhouse gases, releasing 12.7 billion tons of carbon dioxide equivalent in 2019 and a 26% share of global GHG emissions, compared to a 7% share for the 27 countries in the European Union.