Generali to adopt new in-house methodology for selecting socially responsible investments

Generali Investments, the division that oversees the Generali Group's financial assets, has introduce a new proprietary methodology for investment selection based on Socially Responsible Investing criteria (SRI).

The group said initially, the new method will be implemented in three funds (two Euro-denominated and one unit-linked in the Generali France portfolio, with overall assets of EUR6bn.

As a result Generali expects that it will be one of the main investors on the French SRI market, which was worth more than EUR68b at the end of 2010.

The insurer added that Generali Investments will gradually extend the methodology to the group over the next few years.

Generali claims that it is completing its move into SRI by adopting a rigorous financial asset selection methodology. Developed over three years, the method integrates environmental, social and corporate governance criteria and is complementary to the fundamental financial analysis conducted for all investments.

Assicurazioni Generali CIO Philippe Setbon said that the insurance group’s investments adopt a prudent long-term approach that combines the constant pursuit of returns with a controlled level of risk.

"The new method allows us to examine and integrate into our investment decisions a series of non-financial variables, which, over the long term, could have an impact on the economic and financial performance of our assets, " Setbon said.

The core part of the Generali methodology is SARA. (Sustainable Analysis of Responsible Asset), an internal database developed by a Generali Investments team of specialists dedicated to analysis of socially responsible investments (SRI) and environmental, social and governance (ESG) criteria.

The database was used to conduct a non-financial assessment on the 465 companies in the MSCI Europe index, on the basis of 34 ESG criteria. In each activity sector, the 34 criteria are variously pondered to take account of all underlying risks.

The assessment led to the selection of 120 companies, which will form the Generali SRI portfolio in France.