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Swiss Re outlines new climate targets

Swiss Re outlines new climate targets | Insurance Business UK

Swiss Re outlines new climate targets

Swiss Re has announced new climate measures to support the transition to a net-zero economy. The measures encompass both asset management and underwriting, as well as the insurer’s own operations.

“Climate change remains the biggest challenge we face as a society,” said Christian Mumenthaler, group CEO of Swiss Re. “The stakes are high and require immediate attention. Signing up to net-zero emissions by 2050 and setting concrete climate targets are important first steps. What needs to follow now is action. We are moving ahead in all areas of our business to accelerate the transition towards net-zero.”

Investment portfolio

Swiss Re, a founding member of the United Nations-convened Net-Zero Owner Alliance, has committed to transition its investment portfolio to net-zero greenhouse gas emissions by 2050. The new measures announced by the reinsurer include concrete targets to reach this goal:

  • A reduction in carbon intensity of 35% for corporate bond and equity portfolio by 2025; direct real estate portfolio already ahead of 1.5°C pathway by 2025.
  • Long-term objective to exit coal-based assets for the portfolio by 2030.
  • Swiss Re will engage with portfolio companies on developing climate strategies as part of a broader engagement framework.
  • Target to increase investments in renewable and social infrastructure by $750 million. Target to expand green, social and sustainability bond exposure to $4 billion by the end of 2024 (from $2.6 billion at the end of 2020).
  • Swiss Re will report progress toward targets on an annual basis.

The new targets build on the decrease in carbon intensities of around 30% between 2015 and 2018 that Swiss Re has already achieved in its corporate bond and listed equity portfolio. The new goals have been defined in accordance with the Net-Zero Owner Alliance Target Setting Protocol, which serves as a guide for alliance members.

To increase the transparency of its actions, the reinsurer has advanced its climate approach in asset management with the following four steps:

  • Set targets: Define targets to reach net-zero emissions.
  • Take action: Actively manage transition and physical risks, and support real economy transition to net-zero.
  • Measure: Monitor trajectory of needed development toward net-zero.
  • Report: Inform shareholders and other stakeholders of developments.

“We believe that by engaging with the real economy and supporting the companies we invest in to develop a climate strategy and to manage related risks, we will improve our risk-adjusted returns while also propelling the transition to a net-zero economy,” said Guido Fürer, group chief investment officer at Swiss Re. “While we have already made considerable progress by substantially cutting the CO2 emissions of our portfolio, today’s announcement is another important step in the race to net-zero. As asset owners, we can play a meaningful role, and I’m pleased to see momentum building among the investor community.”

Thermal coal phase-out

Swiss Re has also updated its thermal coal policy. In 2023, the reinsurer will introduce new thermal coal exposure thresholds for treaty reinsurance across its property, engineering, casualty, credit and surety and marine cargo lines of business. The thresholds will be lowered gradually, leading to a complete phase-out of thermal coal exposure in OECD countries by 2030 and the rest of the world by 2040.

Swiss Re operations

Swiss Re has committed to achieving net-zero emissions for its own operations by 2030. Since last year, the reinsurer has been sourcing 100% of its power from renewable sources. To prevent a return to pre-pandemic levels of travel, Swiss Re has set a target to reduce flight emissions for 2021 by 30% relative to the 2018 level.

Swiss Re is also the first multinational company to introduce a triple-digit real internal carbon levy on both direct and indirect operational emissions. The new levy has been set at $100 per ton of CO2 as of 2021 and will increase to $200 per ton by 2030. The levy gives the reinsurer a strong incentive to reduce its operational emissions and provides a 10-year funding scheme to move from carbon offsetting to supporting carbon removal projects.