Swiss Re today has announced new measures to support the transition to a net-zero economy, encompassing both asset management and underwriting as well as its own operations.
The Swiss Re Group, one of the world’s leading providers of reinsurance, has announced ambitious carbon reduction target for its investment portfolio of 35% by 2025 and confirmed it aims to achieve a full phase-out of thermal coal by 2040.
Swiss Re’s Group Chief Executive Officer Christian Mumenthaler said: “Climate change remains the biggest challenge we face as a society. 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.“
As a founding member of the UN-convened Net-Zero Asset Owner Alliance, Swiss Re has committed to transition its investment portfolio to net-zero greenhouse gas emissions by 2050. Today, Swiss Re announced concrete targets for how to achieve this:
- 2025 carbon intensity reduction target of 35% for corporate bond and listed equity portfolio; 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 systematically 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 USD 750 million. In addition, target to expand green, social and sustainability bond exposure to USD 4 billion by the end of 2024 (from USD 2.6 billion at end of 2020).
- Swiss Re will report on progress towards targets on an annual basis.
The ambitious targets build on the already substantial decrease of the carbon intensities in Swiss Re’s corporate bond and listed equity portfolio of around 30% between 2015 and 2018.
Taking action includes expanding Swiss Re’s green, social and sustainability bond exposure to USD 4 billion – an ambitious target within the industry relative to total assets under management and increasing social and renewable infrastructure investments by USD 750 million.
Another measure that Swiss Re has implemented is the aspirational and new framework to engage with companies in the equity portfolio. This includes taking an active dialogue with them to limit global warming to 1.5°C.
Swiss Re’s Group Chief Investment Officer Guido Fürer said: “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 emissions economy.
“While we have already made considerable progress by substantially cutting 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 amongst the investor community.
With an update of its thermal coal policy, Swiss Re is accelerating its move to net-zero in insurance underwriting. In 2023, Swiss Re will tighten its coal policy by introducing new thermal coal exposure thresholds for treaty re/insurance across its property, engineering, casualty, credit & surety and marine cargo lines of business. The thresholds will be lowered gradually and will lead to a complete phase out of thermal coal exposure in OECD countries by 2030 and in the rest of the world by 2040.
For its own operations Swiss Re is committed to achieving net-zero emissions already by 2030, focusing primarily on emission reduction measures as part of its strategy to ’do our best’. Since 2020, Swiss Re is sourcing 100% of its power from renewable sources. To prevent going back to the pre-pandemic travel intensity, Swiss Re has set itself a 30% reduction target for flight emissions for 2021, relative to the 2018 level.
By Rachel Cooper; Climate Action.