"Finance is an essential great enabler of climate action." That’s what Simon Stiell, United Nations (UN) Climate Change Executive Secretary, said at the last UN Climate Change Conference, COP28. From funding new tech and mitigating risk to scaling sustainable initiatives, finance can be a powerful catalyst for transforming ideas into action.
How does specialty credit fit into the picture? Here, Allianz Trade’s Sustainability Expert, Julia Elena Taubenberger, and Deputy Global Head of Specialty Credit, Pierre Lamourelle, discuss the role of our Specialty Credit Green2Green solution in supporting a sustainable transition.
How did Specialty Credit Green2Green come about, and what is its significance?
Pierre Lamourelle: At Allianz Trade, there’s been a long-term commitment to, and enthusiasm for, supporting players who are having a positive social and environmental impact. Given our client portfolio and leading position in the industry, we knew we had a great opportunity to drive long-term impact in this area.
It’s important to understand that, in the Specialty Credit unit, we address non-standard trade credit insurance needs for clients. We handle cases that don’t fit traditional trade credit insurance, with 60-70% of our portfolio focused on financing projects for commercial banks and multinational corporations, particularly infrastructure projects. Our expertise spans from short-term trade finance to long-term projects, such as offshore wind farms.
To support sustainable growth, we developed the Allianz Trade Specialty Credit Green2Green solution, marrying business sense with positive environmental impact.
How has this product evolved recently?
Julia Elena Taubenberger: Allianz Trade launched Specialty Credit Green2Green in 2020, and we recently certified it using the Allianz Group’s Sustainable Solutions framework.
This internal framework is based on objectives and product elements derived from the EU’s taxonomy and the United Nations Sustainable Development Goals. A Sustainable Solution certified under the Allianz Group’s framework is an insurance product or service that substantially contributes to one or more environmental, social or governance objectives, without doing significant harm to any of the other objectives.
With this internal framework, we can label insurance products that generate sustainable value creation by meeting certain criteria, even for products like specialty credit that aren’t covered by the EU's taxonomy regulations.
Allianz Trade’s Specialty Credit Green2Green solution focuses on projects in low-carbon technologies across sectors such as energy, fuel or transport, covering the financing of such a project and ensuring that investments in Green Bonds1 are held for the upfront premium for the duration of the policy.
Pierre: A key aspect to highlight is the concept of the virtuous circle at work here. For clients, this means we demonstrate a strong commitment, willingness and, most importantly, capacity to insure Green2Green transactions.
The second part of the circle is that we hold 100% of the upfront premium in certified green bonds, reinforcing our dedication not just to insuring transactions, but also in guaranteeing that every premium dollar contributes to a sustainable future.
What are some examples of projects currently supported by Specialty Credit Green2Green?
Pierre: Our purpose-led approach within the Specialty Credit team at Allianz Trade means we are committed to getting involved in projects that have a positive environmental impact.
We completed a deal with a large European investment bank to support the first large offshore wind farm in France. Allianz Trade is covering the initial construction phase, followed by a 17-year operational phase. Construction was completed on schedule with 80 turbines installed to generate 480 megawatts of power – enough to supply energy to over 400,000 homes.
Building upon our commitment to supporting the development of renewable energies, we worked closely on a project aimed at developing solar power in Asia, financing a 150MW+ ground-mounted solar photovoltaic project. The project has in place a 20-year offtake agreement signed with one of the largest power utility companies in the country.
Our commitment to impact underwriting can also be seen in the transport sector, where we recently supported the European Bank for Reconstruction and Development (EBRD) to replace a fleet of public buses in northern Europe. Allianz Trade provided insurance to finance the transition to modern, battery- and electricity-powered trolleybuses, supporting the eventual transition to an all-electric fleet upgrade.
Why is it important that Allianz Trade is offering a product like Specialty Credit Green2Green?
Pierre: First and foremost, we are firmly committed to the Paris Agreement, aligning our strategy with its goals. Echoing the vision of the Allianz Group, Allianz Trade is dedicated to making a positive environmental impact – not just in our operations but also in our role as an insurer.
Julia: Exactly – what we do as an insurer is crucial. By providing insurance for technologies which are critical for the transition and decarbonization of our economy, we offer the confidence and support necessary for these initiatives to succeed and help drive more sustainable economic growth.
Pierre: Scalability is key to growing these technologies and having a real impact on the economy. And it needs to be a global effort. From financial services providers to public institutions, we need to combine pockets of capabilities.
In this context, our role extends beyond being just a financial service provider; we are actively shaping the industry by leading in sustainability. As part of the Allianz Group, we set ambitious targets and are a member of international coalitions like the Net-Zero Asset Owner Alliance (NZAOA).
How do you see Specialty Credit Green2Green developing in the future?
Pierre: Specialty Credit Green2Green is expanding across various technologies, and we’re committed to deepening our understanding of their impacts and identifying the technologies of tomorrow. This involves developing our expertise to better assess all the risks associated with these projects, including non-financial risks.
Our differentiating factor at Allianz Trade is that we have all of this expertise internally. We collaborate closely with Allianz's Property & Casualty (P&C) division, for example, whose engineers help us evaluate the technical risks in complex environments like offshore wind farms.
As a multiline insurer with massive capabilities and scale, we are thrilled to be able to continue supporting our clients – and supporting the shift to a greener future.
