Investor demand for environmental, social and governance (ESG) appropriate investment opportunities and asset classes is expected to become a key driver for the insurance-linked securities (ILS) market going forwards and a new fund launch from giant asset manager BlackRock only serves to reinforce this belief.
While there are still very few insurance-linked securities (ILS) or catastrophe bonds that are considered to be fully ESG aligned, this is expected to increase over time.
However, ILS and catastrophe bonds in particular, are seen as having inherent ESG related qualities.
They are vehicles for provision of disaster risk and recovery financing, are seen to protect society against the environmental impacts of weather and natural disaster events, and they are issued out of a highly regulated marketplace with strong governance already in-place.
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