Investing responsibly has different aspects. Avoiding investments with excessive ESG risks is just one side of the story. Swiss Re goes beyond that. With our Responsible Investing strategy, we are actively supporting the transition to a low-carbon economy and mitigating climate related risks.
We address climate change to make our portfolio more resilient. Climate-related risks can impact the value of our investments and are therefore considered a substantial part of our Responsible Investing strategy. A key risk for asset owners is that a changing environment may result in a specific company or a particularly exposed industry becoming a stranded asset in investment portfolios, i.e. the devaluation of investments driven by unfavourable changes, such as increased taxes or new regulations. With regard to climate change, the market environment could shift to address mitigation and adaptation requirements to limit a global temperature rise to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5°C.
As part of our mitigation strategy, we have implemented pre-defined thermal coal as well as oil and gas related exclusion thresholds. Since the end of 2015, carbon intensities in both the corporate credit and the listed equities portfolios have thus decreased substantially as part of our fossil fuel divestment of more than USD 1.4 billion.
Further, we analyse the impact of climate-related risks on our real assets, such as real estate, as they could be exposed to hurricanes, tropical cyclones or floods. In addition to considering physical risks when acquiring new properties, we analyse these exposures across the portfolio based on our proprietary modelling capabilities used for our re/insurance underwriting. The results show a very low exposure to natural perils in general and to climate related perils in particular.
Please refer to our KPI tab for an overview of our climate strategy related measurements and metrics.