This year has seen the full range of weather hit Canadians coast to coast – from hail and flooding to intense heat and wildfires, which recently flared up again in British Columbia. Natural catastrophes are only one piece of the puzzle when it comes to the conversation around sustainability and the role of insurers in dealing with the risks posed by climate change, but they’re certainly a big part of the discussion, especially since some insurance companies experienced financial losses following a stormy 2017.
After a report from the Asset Owners Disclosure Project (AODP) revealed that European-based insurers outpaced American and Canadian companies in their approach to climate-related risks, Zurich spoke to Insurance Business about how it has developed a successful sustainability approach. The company landed in the top 10 companies evaluated for the AODP report, and has been focused on responsible investment since 2012 via three pillars, one of which is integrating environmental, social and governance (ESG) factors into an investment strategy. The second pillar of that strategy is called impact investing.
“We made an initial commitment of a US$2 billion investment in green bonds back in 2014 and we actually achieved that last year, so we’ve now doubled our commitment to US$5 billion,” said Linda Freiner, global head of sustainability for Zurich. She went on to explain that the third pillar of the investment strategy has been collaboration. “We have been part of driving the growth of the green bond market, but we’re also members of the Green Bond Principles, the Investment Leaders Group, and a lot of other types of communities that really want to drive change in the investment sector.”
At the end of 2017, Zurich re-examined its sustainability ambitions and the company’s goals going forward, which now also encompass broader themes of change impacting the insurance industry.
“As an insurer, we have a much, much more important role to play in climate change – there is no doubt about that within the industry,” said Freiner, adding that developments in the workforce – namely, an aging population, the gig economy, and a heightened emphasis on employee well-being – and their impact on business has become part of the sustainability framework, as has digitalization. “All insurance companies are digitalizing at very, very fast speeds and we are responding to what we believe our customer needs in terms of their expectations.”
Sustainability, after all, doesn’t just mean making decisions that are good for the environment. For Zurich, it also means ensuring the company is in it for the long haul.
“What we are aiming for at the end of the day is to really make sure that our business is fit for the next 10 years. This is really about, how can we secure the long-term growth of the company,” said Freiner. “The insurance industry is changing so quickly that we need to adapt, similar to many, many other industries at the moment, to make sure that we actually grow in a sustainable manner.”