Bank für Kirche und Caritas (BKC), a founding member of SfC, continued the engagement dialogue with the investment manager of the Plenum CAT (catastrophe) Bond Fund.
The asset class of catastrophe bonds transfers a part of the risk of catastrophes from governments and people directly to capital markets. It hence provides disaster risk capital to recover from major weather events and high-impact regional catastrophes.
However, those bonds could be a vehicle to tackle the effects of climate change related weather catastrophes but no or very little transparency exists concerning these matters in CAT bond contracts. That leads to the problem, that CAT bonds might include some insurances for coal power plants, to point out just one example that BKC intends to bring up in its engagement initiative.
The engagement dialogue headed by BKC, also on behalf of SfC, focuses – alongside other issues – on supporting the fund management in setting up a sustainability audit and an engagement process with the CAT Bond’s sponsors
(reinsurers). Plenum already agreed on some remarkable steps towards integrating ESG aspects and has been awarded the FNG Label – a German sustainability fund rating – at the end of 2018.