Businesses which have a positive impact on climate change do not have to give up returns on investment, says a portfolio manager at leading insurance-linked securities manager Nephila.

Paul Broxup, who heads Nephila’s climate change and sustainable development investing, says renewable energy generation is a prime example of this.

In a video interview with Bermuda:Re+ILS at the Bermuda Climate Summit, he says: “There’s a perception, particularly in traditional investing, that having a positive impact means giving up some sort of return. In our view that is absolutely not the case.

“With insurance and reinsurance, we can direct capital towards projects that need to happen in order to move in the right direction for a sustainable economy and at the same time generate attractive returns,” Broxup says. “The key areas we see are in the renewables space. The amount of demand in those spaces for projects is huge, but projects need insurers in order to make them happen.

“There’s a big gap, particularly on project-based finance, where insurers have a role to play.”

“For us, it’s a combination of the opportunities happening and the positive impact those projects can have, which is huge. It has a fundamental role to play within the capital stack.

“There’s a big gap, particularly on project-based finance, where insurers have a role to play,” he adds.

“In solar or wind generation underwriting, ensuring price and generation stability, making sure that these projects can guarantee some type of return on their end, is absolutely vital for those projects to happen. We view insurance as being central to the move towards a more sustainable renewable economy.”