Responsible investing in practice
“We make the world more resilient” is Swiss Re’s vision. More than ten years ago, our Asset Management unit embarked on a journey to not only generate risk-adjusted, stable long-term returns, but to also consider environmental, social and governance (ESG) aspects in our investment decisions.
As an early adopter of responsible investing, we formalised our commitment to this practice in 2007 by signing the UN-supported Principles for Responsible Investment (PRI), an initiative in partnership with UNEP Finance Initiative (FI) and the UN Global Compact. In 2012 Swiss Re became a signatory to the UNEP FI Principles for Sustainable Insurance.
In 2017 we reached a key milestone on our journey: as one of the first re/insurance companies, we integrated ESG benchmarks into our investment portfolio. This was a significant step forward from considering ESG as an "add-on" approach only. After a couple years of experience with the new benchmarks, we are even more convinced that taking ESG criteria into account has a positive impact on the performance of our investment portfolio in the long term. Including ESG criteria along the investment process makes economic sense as it improves risk-adjusted return profiles and reduces downside risks, especially for long-term investors.
As a founding member of the UN-convened Net-Zero Asset Owner Alliance (AOA) launched in 2019, we committed to transition Swiss Re's investment portfolio to net-zero greenhouse gas (GHG) emissions by 2050, while setting intermediate targets for every five-year period until then.
Asset-liability management (ALM) continues to be the foundation of our investment philosophy. To meet future claims and benefits, we invest the premiums generated by our underwriting activities in assets whose cash flows match the durations and currencies of our re/insurance liabilities. Therefore, we generally invest the majority of our portfolio in higher-quality fixed income securities with stable long-term returns.
Our Responsible Investing strategy relies on the three cornerstones Enhancement, Inclusion and Exclusion, of which Enhancement is the most meaningful for Swiss Re. Managing risks arising from climate change is another important part of our Responsible Investing approach, and comprises setting targets, taking actions, measuring, and reporting.