Allianz Global Investors (AGI) is looking at allocation with a social impact in a post COVID-19 world, Matt Christensen, the global head of sustainable and impact investing, said, speaking at the firm’s online event Private Markets Days last week.
“Coming out of COVID, you are going to get an increased appetite in product design that answer the climate change question, questions around planetary boundaries [meaning] biodiversity, circular economy, and questions around a post COVID world, what we would call inclusive capitalism, [meaning] housing, or education,” Christensen said.
One further area of interest for investments once the pandemic is over is healthcare. “In vaccines, in health care solutions, hospitals, low cost approaches in different developing markets, around clinics,” he said.
AGI plans to invest in affordable and accessible education, too: “I am extremely excited [about] some of the technology enabling education,” he said.
The asset management firm will look at biodiversity, circular economy, the demand around digital energy efficiency for infrastructure, hydrogen and gas, “which are increasingly looked at as part of the transition into a cleaner economy over time,” Christensen added.
Public equity and real assets, which represented a small part of allocations just few years ago, are now growing areas for impact investing. Christensen said impact multi-asset investments are interesting for clients, both on public and private markets.
For example, biodiversity touches on food security and agriculture, “so you can think of food in the area of public equity. On private markets you can think of natural capital or land-oriented investments around infrastructure, or look at the climate side of biodiversity in terms of carbon economics. [It’s] quite a spread on one theme,” he said, adding that this is an area with opportunities of scale.
AGI has already developed a product line over the years in renewables, for example: “This base is already in existence. These are products that we have available already,” he said.
Regulation and clients have lead to an “amazing push” of demand across private market assets, specifically on ESG integration. The European Union has set a series of regulations demanding asset managers to stick to higher standards to be able to play in the market.
“There is less room to have green washing or impact washing approach in an European context than in other jurisdictions because we would be called out,” Christensen said, adding that EU regulations are “upping the game [within] the asset manager profession.”
Exclusion is an issue that has evolved over time. It continues to be raised bringing challenges for investors. AGI may come to a point where it draws a line to pull investments from certain sectors: “If we never exclude, we may run into a credibility issue with our inventor base,” he said.
However, with a green transition plan in place in sectors that harm the environment, “we would have made very clear why we would exclude versus where we would [keep] a company,” he said.
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