BlackRock Survey: Insurers Increasingly Focus on Clean Energy and Low-Carbon Investments

Global insurers are increasingly focused on low-carbon transition and clean energy infrastructure investments, according to BlackRock’s 13th annual Global Insurance Report. A staggering 99% of respondents have set low-carbon transition objectives within their investment portfolios, marking a significant shift towards sustainability in the insurance industry.

For the third consecutive year, insurers are planning substantial increases in private market allocations. According to the survey, 91% of respondents intend to increase investments in private assets over the next two years, with the figure reaching 96% for both APAC and North American insurers. This growth in private market interest reflects the sector’s recognition of private assets as offering both diversification and higher income generation. Mark Erickson, Global Head of BlackRock’s Financial Institutions Group, explained, “We’ve seen rapidly accelerated demand for private markets among insurers in recent years, given these investments’ dual benefits of diversification and increased income generation.”

Despite a complex macroeconomic landscape, insurers remain focused on navigating political and economic uncertainties. Regulatory developments (68%) and rising geopolitical tension (61%) were cited as top concerns, alongside interest rate risk (69%) and liquidity risk (52%). To manage these risks, many insurers are turning to external partners, with 40% of respondents noting the importance of partnering with investment firms that understand their business models and can help optimize risk evaluation and portfolio construction.

Nearly all insurers have committed to low-carbon transition goals within their portfolios, with 60% of respondents specifically targeting clean energy infrastructure investments such as wind, solar, and energy storage. A majority (57%) cited the management and mitigation of climate risks as a key motivation, while others pointed to stakeholder interest and regulatory requirements. Olivier Van Eyseren, Head of the Financial Institutions Group, EMEA for BlackRock, noted, “Insurers face unique challenges when evaluating strategic asset allocation to alternative investments, including regulatory issues, liquidity needs, and higher capital charges. An important part of our work with insurance clients is helping them navigate these short-term complexities while working toward the best possible long-term portfolio outcomes.”

The report found a notable increase in confidence towards low-carbon investments, with 66% of respondents stating they have more conviction in their low-carbon transition strategies than they did one year ago. This rising confidence is expected to drive further capital allocation towards sustainability-driven investments.

In response to growing complexity in asset management, insurers are investing heavily in technology to support their strategies. Integrated asset allocation (63%) and asset liability management (61%) were cited as top priorities, with 53% of respondents also seeking technology solutions to enhance private asset modeling.

Conducted between July and September 2024, the BlackRock Global Insurance Survey gathered insights from 410 senior insurance executives across 32 markets, representing nearly $27 trillion in assets under management. The comprehensive report tracks trends and strategic priorities within the insurance sector, offering detailed insights into regional and global investment behavior.