The Sustainable Business Risk process
The Sustainable Business Risk process is one of the key means to implement the policies and guidelines of our Sustainable Business Risk Framework. Comprising two due-diligence mechanisms, it enables us to assess the potential environmental and human rights risks of our business transactions. These assessments result in binding recommendations.
The two umbrella policies and eight sector guidelines of our Sustainable Business Risk Framework contain criteria and qualitative standards which define precisely when a transaction may present a "sustainability risk". We assess such transactions through our Sustainable Business Risk (SBR) process, which consists of two due diligence mechanisms – the online SBR assessment tool and the SBR referral tool.
Assessment of low to medium sustainability risks
The online assessment tool stores the relevant sustainability risk information for these sectors and is regularly updated to reflect new risk developments. It thus provides our underwriters with an efficient means to check the potential impact of their transactions on human rights, labour rights and the environment. For transactions that reveal low to medium risks, they need to carry out additional due diligence based on industry and country advice provided by the tool.
Assessment of higher sustainability risks
If the potential human rights or environmental risks of a transaction are assessed as high but the responsible underwriter wants to pursue it, it is automatically transferred through the SBR referral tool to Swiss Re's in-house team of sustainability experts. These specialists then conduct targeted research to decide whether the transaction at hand is acceptable on ethical grounds.
This decision takes the form of a binding recommendation either to go ahead with the transaction, to go ahead with certain conditions attached, or to abstain. If there is disagreement about the recommendation, the case can be escalated to the next management level and, ultimately, to the Group Chief Risk Officer and the Group Executive Committee.
Complying with the UN Global Compact
As the Sustainability Risk Framework is based on the principles of respecting human rights and protecting the environment, the SBR process with its two due diligence tools, company exclusions and country exclusions are our principal means to ensure compliance with the UN Global Compact in our core business.
Since we introduced the SBR assessment tool in 2015, we have continually fine-tuned it, thus strengthening our underwriters' ability to integrate sustainability risk assessment into their decision-making. Between 2015 and 2017, this led to a marked, and steady, decrease of SBR referrals to our in-house sustainability experts.
Introduction of our thermal coal policy
In 2018, however, the number of SBR referrals rose, from 178 in the previous year to 247. This increase was mainly driven by the introduction of our thermal coal policy. Many of the coal-related referrals were submitted by our underwriters to have the thermal coal exposures of specific transactions clarified. In 2019, the number of referrals fell again, to 238 transactions. Of those, we issued negative recommendations in 37 cases and positive recommendations with conditions attached in 42 cases.
Learn more about our company and country exclusions.