Responsible investing

Most consumers know us as one of America's largest insurers, but we're a lot more. Another way we provide security and protection for customers is through our activities as an institutional investor. We manage a $61.8 billion investment portfolio, and we know that environmental, social and governance factors influence investment performance. Allstate's investment analysis and decision-making processes consider these factors along with our values.

Allstate makes careful decisions about risk every day in our insurance underwriting business, and we consider risk just as seriously in our investments. As responsible investors, we consider ESG an essential component of comprehensive investment risk assessment. We have developed teams, policies, training and goals to guide Allstate investment decisions accordingly. We continue to increase the percentage of our portfolio allocated to responsible investments, actively evaluate how ESG issues influence investment performance and pursue investment strategies that capture additional risk-adjusted return from the transition to a lower-carbon economy.

Allstate's Responsible Investing Committee (RIC) includes representatives from a cross-functional group drawn from Allstate Investments, with the chairperson of the RIC also a member of Allstate's ESG Steering Committee. The RIC monitors ESG investing trends, evaluates ESG investing best practices, supports the work of the ESG Steering Committee, and periodically reports about its activities to other senior leaders within Allstate as well as to the Allstate Board of Directors. In conjunction with Allstate's Investments Risk Committee, the RIC monitors our investment portfolio for potential exposures to climate change risks or impacts. You can find more information about these risks in the Climate resiliency section section.

  • 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 through 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.

Since its adoption in June 2020, our Responsible Investing Policy has outlined our expectations for investment professionals to incorporate and consider ESG factors, subject to client investment policy requirements, when making investment decisions and requests that our external money managers do the same. The policy applies across all asset classes in our investment portfolio. We revisit the Responsible Investing Policy each year.

We expect our investment professionals to refrain from making certain types of investments that may result in significant ESG-related risks and to consult with the RIC as needed on any related asset selection decisions. In addition to the Responsible Investing Policy, our Investment Management Guidelines state that investment managers' analyses and decision-making should consider ESG issues alongside Allstate's values and reputation when assessing the risk/return trade-off of an investment. Investment professionals are expected to act in accordance with the letter and the spirit of the guidelines, subject to client investment policy requirements.

Our investment professionals participate in annual training, as outlined in the Responsible Investing Policy. In 2022, training was captured in part by an Allstate Climate Summit, with industry-diverse speakers presenting on climate topics such as climate risks and modeling, climate opportunities, regenerative agriculture, carbon pricing and more. We incorporate tools for ESG and climate-related data into our processes and train 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. By the end of 2025, we will establish a goal for financed emissions. You can read more about our commitment to net zero emissions in the Customer-centric and responsible products section of this report.

Restricted securities

Allstate expects our investment professionals to refrain from investing in companies, funds, or assets that are fundamentally inconsistent with Allstate's values or are likely to result in significant risks. The company does not invest in companies whose primary business is civilian firearms, or majority ownership interest or control of companies that (either directly or through a subsidiary) operate a coal or other mine or provide services to those mines.

Allstate has historically incorporated ESG considerations broadly across the entire portfolio. We're a founding member of Impact Community Capital, which will celebrate its 25th anniversary this year. As of Dec. 31, 2022, we managed a $61.8 billion investment portfolio, with $7.5 billion in responsible investment categories such as education, sustainability, affordable housing, health care, green bonds, diverse sponsors, natural capital and renewable investments. We integrate ESG considerations within our investment analysis and decision-making processes and have established climate change and IDE as two pillars important to our investing approach while we continue to meet stockholder need by having a positive financial impact.

We announced a goal in 2021 to expand climate-related investment capabilities and relationships, striving for at least $375 million in commitments between 2021 and 2022. We achieved this goal, and by year-end 2022, we had committed $469 million in climate-related opportunities. After an above average investment year of $408 million in 2021, we slowed our investment activity in 2022, impacting our goal of investing $300 million in new commitments to low-income housing tax credits for the year. Still, we committed $255 million in low-income housing tax credits, bringing our book value of capital to benefit underserved communities to $1.4 billion in 2022. We also exceeded our 2022 goal of maintaining 2% of trading volumes with minority, women and veteran banking enterprises. In doing so, we achieved 2.3% of total trading volume with these diverse brokers — a more than 4x increase relative to historical volumes of .5%. We aimed for $180 million in new commitments with diverse investment sponsors and managers in 2022, nearly three times our historical annual average. While we fell short during the year at $112 million (nearly twice our historical average) due to market dynamics, we closed an additional $65 million in commitments in January 2023 for a total of $177 million in new commitments.

In 2023, we will strive to increase the percentage of the portfolio invested in responsible investments, from 12% at year-end 2022.