SOGELIFE: Positive Investment product

SOGELIFE is becoming ESG by nature or what we call, ‘ESG by design’. The idea is to grow around three pillars of responsibility: responsible investor, responsible insurer, and responsible employer. It is a strategic objective for our company and we want it to be part of our DNA.

Our business model is B2B2C so it is not us, but our clients and partners who make the investment decisions. Our role within this model as a responsible investor is to offer our clients opportunities for sustainable investment such as the Positive Investment product.

We are collaborating closely with our stakeholders to develop our ecosystem and produce a ‘shared value’, a principle promoted by the INDR through the ESR label. Our objective within this as a responsible insurer is to redirect client towards investing responsibly.

 Finally, as a responsible employer, we have implemented initiatives which enable our staff to have an improved work/ life balance, strengthened our learning platform and engaged in a microfinance project matching experience with entrepreneurship.

The SOGELIFE Positive Investment product is a life insurance contract available to Luxembourg, French and Monegasque residents, which is 100% dedicated to ESG investment. Clients may invest via unit linked funds, bespoke dedicated internal funds and specialist insurance fund structures, with underlying assets held in some of the best performing companies and funds when it comes to fostering ESG pillars, such as energy and ecological transition or creating positive social impact.

It is the latest insurance product to offer investment transparency, flexibility all the while upholding the traditional advantages of inheritance and succession planning.

Furthermore, the attributes of the Positive Investment product are deeply rooted in SOGELIFE’s three SRI Principles, which are: exclude sectors that operate against human dignity or nature; promotion of the best performing companies; exuding the ESG ethos and commitment to energy and ecological transition. Therefore, the funds that are accepted to enrich our product offer now or in the future must be labelled by LuxFLAG, ISR in France or by answering to our own specific best in class acceptance criteria.

Taking this into consideration, SOGELIFE’s Positive Investment has the characteristics of a highly differentiating product which has the desire to give meaning to our client’s investments and commitment to the future.

We regularly monitor and control the underlying funds which our clients invest into. This ensures these investments comply with our strict eligibility and best in class criteria.  By using a specialised software we screen and score thousands of investment funds against 450 metrics held within 10 dimensions over the 3 ESG pillars. These entities must score at least 60 out of 100 to be considered, which is quite a high tolerance considering, as only 25% of the total ESG funds available have passed our test.  So, between our own analysis, LuxFLAG or ISR we are confident of our 100% ESG offer and best in class criteria.

On the client side we are working on a schematic which highlights the ESG levels within our clients’ individual portfolios, thus being transparent and influencing by providing in-depth and independent ESG information.

As touched on previously, life insurance allows for succession planning, but furthermore it is there for our clients to transmit certain values. These are investors who wish to invest in positive values, across time and generations, investing in companies of the future.

A few years ago, the feeling was that there were higher entry costs and lower returns with investments linked to the environment and sustainability. Today costs are much lower and interestingly the returns can be higher than other investments. We confirmed this point when developing our ESG investment selection, by performing numerous benchmark tests. So not only is one investing in an environmentally friendly manner but investment gains are made from that decision.

We conducted a historic analysis over a 5-year period by measuring the performance of the funds offered within our SOGELIFE Positive Investment product (benefiting from the integration of sustainability principles). We discovered on parallel, with non-SRI funds holding comparable strategies that the inclusion of sustainability criteria generated a significant over performance (average of +10 points on our panel).

SRI really does have the double bottom line of creating positive effects and better investment returns.

Quite simply we wanted the LuxFLag Label in order to validate our commitment of being a sustainable and responsible insurer and that we are on the right path with our objectives.  This certification proves to our clients and partners that we are taking the issue of sustainability seriously by offering insurance propositions which meet LuxFlag’s criteria.

However, this is not a one stop accreditation, we have defined select criteria linked to our best-in-class ambition. We continuously monitor the funds offered to ensure that they meet SOGELIFE’s and LuxFLAG requirements. This is also a way of building confidence, while ensuring that our clients have access to the most effective financial products.

I suspect this would be, amongst other factors, due to the B2B2C business model many of us operate under. This puts us at the end of the value chain in terms of investment decisions.  What we can do is push from the other side in order to drive the industry forward, by being a thought leader, anticipating the future needs of our clients, developing offers, offering transparency and positioning ourselves in preparation for the change to the client’s way of thinking.

In terms of our offer, life insurance as a long-term commitment plays a role in the future of sustainable finance. We want to be part of this, but even now, we are a little early with the SOGELIFE Positive Investment product, because the value chain is not fully ESG. However, through this product, we are pushing it to become so.

SFDR is a step in the right direction but is not enough for clients to develop a comprehensive understanding of the impact of their investments, nor to measure if the players across the value chain are meeting the promises made to them.  For this, life insurance companies need to go the extra mile and provide clients with much more than basic regulatory reporting.  They should be influencing their clients in their investment decisions by enabling them to measure the sustainability impact of their investments, but also have them benchmarked against non-sustainable investments.  This is a big challenge because there is lot of data to manage, but it’s also a big opportunity.

Firstly, Luxembourg presents many advantages for life insurance, as a country it offers stability and security for the investor proven by its AAA rating, and it has an established collaborative regulator which allows for clients to invest in a wide variety of financial instruments.

From a finance level, it is a leading European banking and investment fund player, with the supporting ecosystem of knowledge and talent surrounding these elements.

As a further layer, the Grand Duchy has key players who are committed to sustainable finance. There is a particular emulation here from several parties such as: ACA or the Luxembourg Green Exchange, who also help to spread this and many other Luxembourg initiatives.

These three areas combined, offer clients an unparalleled advantage in their choice of sustainable investment.