As Direct Line Group’s investment strategy evolves, the company is regularly looking for ways to align its investment practices with environmental, social and governance (ESG) issues. The investment strategy is determined by the Director of Investment Management and Treasury and approved by the Direct Line Group Investment Committee.
To date, the Direct Line Group investment strategy has reflected the following initiatives:
- Fixed income assets account presently for 76% of the total investment portfolio benchmark. Initiatives within fixed income include:
- 67% are managed in portfolios where investment objectives include the requirement to achieve at least an ‘A’ ESG rating score using the MSCI methodology,
- portfolio managers are encouraged to prefer investments in green bonds where they offer a similar risk-reward profile to other issues,
- the company has committed to reducing the Green House Gas Emissions Intensity* by 50% before the end of 2030 (benchmarked against the end of 2020 GHG emissions intensity),
- issuer exclusions include (1) companies which manufacture cluster munitions, (2) mining companies that generate >5% of revenues from thermal coal production**, (3) electricity generators that derive >5% of revenues from thermal coal power generation** and (4) any companies that are developing new thermal coal plants or new thermal coal mines.
- All externally managed assets are run by managers who are currently signatories to the United Nations-supported Principles for Responsible Investment,
- Almost 90% of the investments in the infrastructure debt portfolio are in schools, hospitals and other social infrastructure assets,
- The commercial property portfolio invests only in assets with an energy efficiency level of D or higher (or with apportioned funds to achieve this level), exceeding the government’s present minimum requirement of an E rating. The portfolio also has a tailored set of 2022 ESG targets which cover, inter alia, carbon, energy, water and waste.
*Green House Gas (GHG) Emissions Intensity = Metric tonnes CO2e (CO2 equivalent) GHG emissions
Million $ Sales
**Companies with an approved Science Based Targets Initiative plan may be held in the portfolio