Responsible investing in action

Enhancement, Inclusion, Exclusion - Swiss Re walks the talk

Swiss Re’s investment philosophy is geared to the generation of long-term sustainable returns and a strong commitment to responsible investing. The company integrates environmental, social and governance factors (ESG) into the investment process. It does this along three dimensions: enhancement, inclusion and exclusion.

Enhancement consists in the application of benchmarks composed of higher ESG-rated companies for its corporate bond and listed equities portfolios. The underlying risk-return profiles are expected to improve by virtue of including ESG criteria in the investment process. Its external portfolio managers are required to adhere to responsible investing criteria and are monitored accordingly. The ESG factors for the company's government bond portfolio include political risks, human rights and environmental issues. The broadly-used traditional benchmarks are constructed primarily based on market capitalisation and neglect long-term sustainability risks.

The Inclusion dimension means that Swiss Re focuses on certain themed investments. One example is the build-up of a portfolio that supports the transition to a low carbon economy. It is guided in this by the Green Bond Principles of the International Capital Market Association. For its infrastructure loan mandates, it invests in renewable energy projects that reflect its risk appetite, provide attractive long-term returns and help build a more sustainable energy supply for the future.

Climate change is a key topic for Swiss Re. Green bond proceeds are used to finance environmentally sustainable projects that address key areas of concern, such as climate change, natural resources depletion, loss of biodiversity and/or pollution control. Improving energy efficiency and developing low-carbon technologies,

Regarding Exclusion, Swiss Re’s strong commitment to sustainability is defined in several sets of principles, one of which is its group-wide Sustainability Risk Framework. This framework is specifically designed to identify and address sustainability risks in its core business. It applies to human rights and environmental protection across sensitive industries such as defence, energy and forestry. The framework contains a number of predefined criteria that may trigger an exclusion of a company or a country from the investment scope.

As part of our commitment to a low-carbon economy, we decided to stop investing in companies that generate 30% or more of their revenues from thermal coal mining or that use at least 30% thermal coal for power generation. Furthermore, we divested from all related equity positions and the vast majority of our fixed income holdings.

Swiss Re is a signatory to the UN Global Compact. The Sustainability Risk Framework helps it identify and mitigate relevant issues by embracing the Compact's principles of respect for human rights, environmental protection and due diligence.

More information on responsible investing can be found in Swiss Re's report: "Responsible Investments: Shaping the future of investing".


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