Sustainability – positioning the insurance industry as a progressive economic force
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There is no doubt that sustainability is currently on-trend. Given its global significance and its importance when it comes to our "today" and, in particular, our "tomorrow", for future generations it is more than just a temporary phenomenon. It will remain the determining factor for both economic life and personal behaviour in the future.
While currently just one in four Germans view sustainable action as being extremely important, the trend is clearly on the up. With its recently published policy document, the German insurance sector has taken a stand when it comes to sustainability. The issue has also already been taken up through the mechanisms of supervision and regulation, with insurers now required to report regularly on their strategies and activities. In the fight to attract customers, sustainability is set to become a key factor in people's decisions about which insurer to put their trust in and who will provide their new policy.
Insurance companies can embrace sustainability in a variety of ways – from their own office buildings and the vehicle fleet made available to executives and employees, through to their investments, their underwriting decisions and how their insurance products are structured.
A 2020 study by market research and consultancy business HEUTE UND MORGEN highlights what customers expect from insurers and financial services providers when it comes to sustainability. It reveals that around 80% of Germans believe insurers have a responsibility in this area and would like to see them communicate more strongly about sustainability. The insurance industry needs to take a clear position on these developments.
Sustainable business processes and investments
In the majority of cases, insurers embed their sustainability strategy in their governance structures. For some time now, the "sustainability" issue has formed part of risk management activities, which are based on target variables and existing data on sustainability. This topic has now become an integral part of the relevant corporate strategies. With the exception of investment strategies and guidelines, however, the process of actually implementing these strategies in a tangible way is still at a very early stage for many companies. What's more, it is not yet completely standard for companies to promote and support the sustainable activities of their employees.
As an industry, we must be under no illusions about the fact that although the COVID-19 lockdowns temporarily reduced CO2 emissions, they will neither stop global warming nor reverse the harm that greenhouse gas emissions have already done to our planet and its ecosystems. This industry can and must support low-carbon technologies and CO2 removal processes that will contribute to achieving climate neutrality.
Swiss Re has been at the forefront of this trend for many years. As one of the first advocates of sustainable investment, we were among the pioneers when it came to introducing strict environmental, social and governance criteria (ESG criteria) for our own investment portfolio. Our business processes are designed to allow us to achieve our goal of reducing Swiss Re's CO2 emissions on the assets and liabilities sides of our balance sheet to "net zero" by 2050. We expect to achieve this goal by as early as 2030 as a result of our own activities. We have also had sustainability targets in place for our underwriting business for several years now, and are already implementing them with our customers.
Developing sustainable solutions
It goes without saying that Swiss Re is also on hand to support our customers with sustainability. We develop solutions that help our partners and their customers to tackle environmental and social issues. The focus here is on areas such as climate change, renewable energy, agriculture, health and infrastructure.
The insurance sector urgently needs to drive forward the expansion of digital solutions that have potential to improve access to insurance products as well as their availability and the benefits they offer. These endeavours are intrinsically linked to our traditional re/insurance coverage offerings. Combining coverage for natural catastrophes with helping society to manage climate-related events is just one illustration of this point.
The value of insurance in people's lives must go beyond the simple transfer of financial risks. Following a strategy of prevention and precaution to limit and prevent future damage is an essential component of sustainable economic activity.