"Sustainability is a strategic priority"

Why is sustainability a key strategic area for the insurance industry?
Sustainability has been a strategic priority for the insurance industry for many years. Not only do certain sustainability topics have a material impact on our business activities, but the insurance industry also plays an important role in tackling sustainability challenges and providing peace of mind to individuals and businesses. 

As a result, stakeholders ranging from shareholders to clients and from regulators to civil society have heightened expectations for companies to improve their sustainability performance. Therefore, a proactive approach to managing sustainability risks and opportunities is key to our license to operate.

Embedding sustainability across all our business activities – including operations, investments and underwriting – allows us to increase our own company’s resilience as well as that of our clients and partners. 

Which sustainability-related issues are most significant for insurers and Swiss Re?
Climate change and energy security remain a top global priority. Tackling climate change requires a dual approach: mitigating climate change by reducing emissions and adapting to the impacts of climate change. Beyond that, social impact is also gaining increasing relevance. 

In 2022, Swiss Re conducted a materiality assessment by surveying a wide range of internal and external stakeholders to identify the most material sustainability topics for our company. Climate change, natural catastrophe protection, decarbonisation and financial inclusion were rated as topics where Swiss Re’s activities potentially have the highest societal impact.

Financial inclusion is an important social topic that refers to the availability, accessibility and affordability of financial services such as insurance. This is particularly relevant for ensuring that individuals have sufficient financial protection against life and health risks. 

Can you explain Swiss Re’s Group Sustainability Strategy?
Our Group Sustainability Strategy focuses on two sustainability ambitions: advancing the net-zero transition and building societal resilience. 

The first ambition centres on climate mitigation and decarbonisation, in line with Swiss Re’s ambition to reach net-zero greenhouse gas  emissions by 2050 across our entire business. The second ambition focuses on disaster resilience – including climate adaptation – and financial inclusion. 

Underpinning our strategy are three sustainability enablers that help us deliver on our strategy. First, we recognise that our sustainability efforts must begin with and build on our own people and operations. To this end, we were one of the first multi-national firms to set a triple-digit internal carbon price, which incentivises action on our operational emissions reduction while raising the funds to purchase high-quality carbon removal certificates. Second, our ESG Risk Framework helps limit our exposure to downside sustainability risks.

All of this is supported by a robust governance structure with strategic discussions relating to sustainability taking place at the Group Sustainability Council, Group Executive Committee and Board-level committees.

What have been the key achievements since the strategy’s launch?
We have made significant progress on our ambition to advance the net-zero transition, particularly on the underwriting side of the business. In 2023, we published insurance-associated emissions in line with the Partnership for Carbon Accounting Financials standard for the first time. While climate targets were already in place for our operations and asset management, in 2023, we also set near- and medium-term targets for underwriting that aim to increase the share of companies aligned to net-zero 2050 in our single risk re/insurance portfolios.

When it comes to our own operations, in 2023, which was the first full year without COVID-19 travel restrictions, we reduced greenhouse gas emissions from business air travel by more than 60%  compared to the baseline year 2018.

How is Swiss Re helping clients to address sustainability issues?
We help clients address key environmental and social challenges. We do so by building on our established modelling and underwriting capabilities and working closely with our clients and partners to develop innovative risk transfer solutions. For  example, in 2023, Swiss Re provided reinsurance cover for the construction and operation of over 20 wind farms, solar farms and battery energy storage systems in the Philippines – thereby supporting the country’s renewable energy goals.

Through our long-standing public-private partnerships with Turkey and Morocco, our earthquake reinsurance provided much-needed disaster resilience in the wake of the devastating earthquakes that struck both countries.

Another example is our parametric flood risk solution, which contributes to financial inclusion by specifically supporting low- and middle-income communities in New York City’s flood-prone neighbourhoods.

How does Swiss Re tackle emerging sustainability risks and opportunities?
Identification and monitoring of relevant developments are key to managing risks and seizing opportunities. Swiss Re has several expert teams supporting the early detection and monitoring of relevant sustainability trends, including technology trends on the path to a low-carbon economy. In addition, both Corporate Solutions and P&C Re have dedicated centres of competence for renewable energy. We are investing in the knowledge, data and expertise our clients need to navigate this complex and evolving risk landscape.

What are the priorities for the coming years? 
We must be prepared to meet increasing and globally fragmented sustainability-related disclosure and regulatory requirements. Looking at the bigger picture, if we want to increase societal resilience, we must pursue two strategies: reducing expected losses and expanding insurance coverage. We aim to continue to provide quality coverage for clients, narrow the protection gap and foster financial inclusion. We will continue to diligently implement our decarbonisation targets and measure our progress against those targets. Finally, we can only make the world more resilient if our organisation remains resilient.

Patrick Raaflaub, Group Chief Risk Officer
Patrick  Raaflaub joined Swiss Re in 1994  and held  a variety of senior positions in finance and controlling. In 2008 he joined the Swiss Financial Market Supervisory Authority (FINMA) as Chief Executive Officer. He returned to Swiss Re as Group Chief Risk Officer and member of the Group Executive Committee in 2014. He is Chairman of the Group Sustainability Council.

This interview was originally published in the Swiss Re Business Report 2023.