Swiss Re Announces Net-Zero Climate Targets in Underwriting, Investments

March 16, 2021

Swiss Re announced new measures to support the transition to a net-zero economy by 2050, which encompass re/insurance underwriting, asset management and its own operations.

“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,” said Swiss Re’s Group Chief Executive Officer Christian Mumenthaler. “What needs to follow now is action. We are moving ahead in all areas of our business to accelerate the transition towards net zero.”

(Editor’s note: net zero indicates a balance achieved between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere).

A wrapup of Swiss Re’s new measures to achieve net-zero climate targets is detailed below:

1) Net-Zero Targets for Exiting Thermal Coal Underwriting

Updating its 2018 thermal coal policy, Swiss Re said it 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.

Swiss Re said its 2018 thermal coal policy marked a first step towards a comprehensive policy, ultimately aiming to transition Swiss Re’s re/insurance business to net-zero emissions by 2050. In 2020, Swiss Re revised the oil and gas policy in the same framework, and at the beginning of 2021, it gradually started withdrawing insurance support from the most carbon-intensive oil and gas production.

2) Net-Zero Targets for Investment Portfolio

As a founding member of the UN-convened Net-Zero Asset Owner Alliance, Swiss Re said it has previously committed to transition its investment portfolio to net-zero greenhouse gas emissions by 2050. Swiss Re’s targets for how to achieve this include:

  • Reduce carbon intensity of corporate bond and listed equity portfolio by 35% from 2018 levels by 2025.
  • Exit coal-based assets for the portfolio by 2030.
  • Engage with portfolio companies on developing climate strategies.
  • Increase investments in renewable and social infrastructure by US$750 million by 2024, and expand green, social and sustainability bond exposure to US$4 billion, also by the end of 2024 (from US$2.6 billion at end of 2020). (Editor’s note: “Social infrastructure” includes schools or student dorms)
  • Report annually on progress made towards targets.

3) Net-Zero Targets for Its Own Operations

Swiss Re is committed to achieving net-zero emissions by 2030 for its own operations, focusing primarily on emission reduction measures. The company began to source 100% of its power from renewable sources in 2020. 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.

Swiss Re also has introduced a triple-digit real internal carbon levy on both direct and indirect operational emissions (such as from business travel). The new Carbon Steering Levy has been set at US$100 per tonne of carbon dioxide (CO2) as of 2021 and will gradually increase to US$200 per tonne CO2 by 2030. The levy gives the company “a strong incentive to further reduce its operational emissions.”

It also provides a 10-year funding scheme to move from carbon offsetting to supporting carbon removal projects, enabling the compensation of any unavoidable emissions. Swiss Re said it has already started to engage in the emerging carbon removal market. In 2019 the group participated in the world’s first auction for negative emission certificates, and last year signed a collaboration agreement with Climeworks, one of the world’s leading direct carbon air capture companies.

The new targets have been defined in accordance with science and the Net-Zero Asset Owner Alliance Target Setting Protocol, which Swiss Re played an instrumental role in developing.

“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,” said Swiss Re’s Group Chief Investment Officer Guido Fürer.

“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,” he added.

Swiss Re listed the climate action groups in which it participates:

Popular Today