In 2019, Allstate formed a Responsible Investing Committee with representatives from The Allstate Corporation and Allstate Investments. The Responsible Investment Committee’s actions include monitoring ESG investing trends, understanding ESG investing best practices and periodically reporting about its activities to other senior leaders within Allstate, among other responsibilities. In conjunction with the Investments Risk Committee, the Responsible Investment Committee also monitors our investment portfolio for potential short- and long-term exposures to climate change.
- We classify sectors based on exposure to environmental risks, including climate change, and incorporate environmental risks in the sizing and maturity profile of our positions. Sectors with higher potential exposure are primarily invested in public markets, providing flexibility to adjust exposures.
- We classify commercial real estate investments based on their modeled exposure to catastrophe risks and incorporate these risks in our underwriting and insurance practices.
- We continue to evolve our risk management processes regarding climate risk.
Policies and practices
In June 2020, Allstate’s Investment Management Committee adopted our Responsible Investing Policy. The policy outlines our expectations for investment professionals to incorporate and consider ESG factors, subject to client investment policy requirements, when making investment decisions and requesting our external money managers to do the same. The policy applies across all asset classes in our investment portfolio.
We expect our investment professionals to refrain from making certain types of investments that may result in significant ESG-related risks and consult with the RIC, as needed, on any related asset selection decisions. In addition to our Responsible Investing Policy, our Investment Management Guidelines state that investment managers’ analysis and decision-making should consider ESG issues alongside Allstate’s values and reputation when assessing the risk/return trade-off of a particular investment. Investment managers are expected to act in accordance with the letter and the spirit of the guidelines, subject to client investment policy requirements.
In 2020, we provided training to our investment professionals on our Responsible Investing Policy and related ESG information, which will be offered every year. We also incorporated tools for ESG and climate-related data into our processes, and trained the Investments team on their use. In 2021, we began using ESG data feeds and analysis from expert research firms to assess our assets, exposures and ESG risks.
Finally, our commitment to pursue science-based targets puts us on a path to evaluate the Scope 3 emissions in our investment portfolio. We look forward to providing additional information in the future.
We prohibit investing in certain entities whose activities are fundamentally inconsistent with Allstate’s values or are likely to result in reputational or other significant risks. These restrictions include: investments in companies that predominantly conduct business in the civilian firearms industry; or majority ownership interest or control of a company that operates a coal or other mine (either directly or through a subsidiary) or provides services to those mines.
Programs and performance
In addition to incorporating ESG considerations broadly across the entire portfolio, as of December 31, 2020, Allstate also had about $8.7 billion invested in specific socially responsible designated categories. These categories include municipal bonds in education ($2.8 billion), utilities ($1.2 billion), and not-for-profit health care ($0.9 billion), affordable housing ($1.6 billion), sustainable real assets ($1 billion), diverse managers ($0.5 billion), renewable energy ($0.2 billion), and other ESG ($0.5 billion).
As of December 31, 2020, we had grown our low-income housing tax credit portfolio to $1.1 billion through an additional investment of approximately $300 million during the year. The 2020 activity adds over 19,000 units to our total portfolio of over 115,000 units. The low-income housing tax credit portfolio provides new and/or preserves existing affordable housing, targeting tenants at or below 60% of area median income. During 2020, we expanded our investments focused in renewable energy with approximately $70 million committed across fund and direct opportunities.
We’re also proud of our Diversity and Emerging Managers program, which influences equity in our financial markets by supporting diverse investment professionals. The goal of the program is to identify the next generation of women and minority investment managers, with comparable, top-quartile risk-adjusted return expectations. We collaborate with GCM Grosvenor to select firms that are at least 33% owned or controlled by women and/or minorities and at least 50% of the firm’s profit is paid to women and/or minority staff. Additionally, we have committed to doubling our trading volume with minority-owned firms, subject to our internal policy and procedural requirements.