How can we work together towards net zero?
The transition to a low-carbon economy is essential in order to mitigate the effects of climate change.
In 2015, Swiss Re signed the Paris Pledge for Action, an initiative that aims to strengthen the global response to the threat of climate change. Since then, we have taken decisive actions to align our investments, underwriting and operations with our commitment to cutting carbon emissions.
In this section, we look at what it means to work towards a net-zero future.
A net-zero future is achievable. We are taking action to reduce our impact. And we will support others as they commit to reducing CO2 emissions.
Christian Mumenathaler
Group Chief Executive Officer and Co-Chair of WEF’s Alliance of CEO Climate Leaders
We believe that the private sector plays a huge role in reducing carbon emissions and therefore combatting climate change. We are taking action to lead the change.
In 2020, we took several important steps on our journey. We committed to cut business support in underwriting and asset management for the world’s 10% most carbon-intensive oil and gas by 2023. We announced a triple-digit carbon levy across our operations, which will incentivise green decision-making as we conduct our business and help us strengthen our investment into high-quality carbon removal.
These actions are only the next steps on a long road to a net-zero future. They send a strong signal that the time has come to turn knowledge into action.
As we lead the change, we will use our knowledge and our investments to help our partners build a more sustainable future.
Decarbonising our business model
Swiss Re is supporting global efforts to limit greenhouse gas emissions, including signing the Paris Pledge for Action in 2015. Find out how we are decarbonising our business model:
We have made three interlinked commitments to strive for net-zero emissions across the whole company:
- For our underwriting, we were an early signatory to the UN Global Compact Business Ambition for 1.5°C;
- For our investments, we are a founding member of the UN-convened Net-Zero Asset Owner Alliance;
- For our own operations, we created a thought-leading CO2NetZero Programme.
This is only the beginning of our journey to decarbonise our business and we are already taking the next steps. These include developing risk transfer solutions to spur on the transition to a low-carbon economy, implementing our responsible investing strategy and actively reducing and removing our operational carbon footprint.
Timeline for net-zero emissions
by2030
in our own operations
by2050
in our underwriting portfolio
by2050
in our investment portfolio
How carbon removal helps us reach net zero
To reach net zero, itʼs not enough to simply reduce emissions nor to offset emissions through carbon avoidance certificates. We need to do our best to reduce emissions and then remove the rest from the atmosphere. We will balance any unavoidable emissions by focusing on carbon removal via our insurance and investment activities, as well as by compensating for our operational emissions.
Putting net zero into action
We are delivering on our net-zero ambition across our underwriting, investments and operations. We provide a few highlights here:
Since 2018, our underwriters have restricted business related to thermal coal. From July 2023, we will no longer provide individual insurance cover for those oil and gas companies that are responsible for the world’s 10% most carbon-intensive oil and gas production. These restrictions are in place for underwriting single risks, and we are the industry leader in implementing restrictions across the more complex treaty business.
In 2020, we set a 2025 carbon intensity reduction target of 35% for our corporate bond and listed equity portfolio. As the transition of the real economy is essential to achieve a 1.5°C world, we have introduced an aspirational Engagement Framework that encourages our investee companies to develop a corresponding climate strategy. In addition, we have for the first time set a target to increase investments in renewable and social infrastructure loans by USD 750 million by the end of 2024.
Further details are available in the Climate-related Financial Disclosures section of Swiss Re’s Financial Report.
In 2020, we sourced 100% of our power needs from renewable sources. In 2021, we will curb flight emissions by 30%, relative to the 2018 level.
On top of that, we have stepped up to a real internal carbon levy of USD 100 per tonne of CO2. The levy gives a good incentive to further reduce our operational emissions and provides the necessary funding to compensate for our residual emissions via carbon removal. By 2030, the levy will increase to USD 200 per tonne of CO2, the market price we expect for high-quality removal certificates at that point in time.
Swiss Re supports Green River windfarm development in US
Swiss Re is committed to reaching net-zero carbon emissions by 2050. One way of doing this is to get involved in projects that support clean energy progress. We look at one such example:
equivalent of
~65 000
Illinois homes powered by the project so far
~USD55m
expected economic benefit to local communities over 20 years
In our mission to help make the world more resilient, we proudly teamed up with several leading technology companies to collaborate on a project that supports clean energy progress in the United States.
Located in Illinois, the Green River Wind Farm became operational in November 2019 and has since generated an impressive 591 910 MWh – which is the equivalent electrical usage of approximately 65 000 Illinois homes. According to the United States Environmental Protection Agency’s Greenhouse Gas Equivalencies Calculator, Green River has already offset CO2 emissions by approximately 418 000 metric tonnes.
This collaboration brings Swiss Re closer to its ambition of net-zero carbon emissions by 2050. “Swiss Re has long been an avid supporter of sustainable business practices, both as an insurer and as a global corporate citizen,” said Brian Beebe, Head of Origination North America, Weather and Energy, Swiss Re Corporate Solutions. “To our employees in those areas, we provide access to 100% impactful green power by entering a long-term contract with the Green River Wind Farm.”
As an operating project, Green River has begun to provide positive long-term economic impacts to the local and state communities. The project is estimated to contribute approximately USD 35 million in new tax revenue and USD 20 million in landowner payments throughout the first 20 years of operations.
Swiss Re insurance product helps refinance US solar projects
Insurance has an important role to play in de-risking the clean energy investments. We look at how Swiss Re Corporate Solutions developed an innovative Solar Revenue Put to help de-risk US solar projects and support the global efforts to reduce CO2 emissions.
In September 2020, Swiss Re Corporate Solutions and its data partner, kWh Analytics, successfully developed a ten-year Solar Revenue Put for an investor in large, utility-scale solar projects. The client was familiar with this Business Unit’s power-generation expertise and it claims experience from previous insurance transactions.
The Solar Revenue Put is an insurance product that guarantees up to 95% of a solar farm’s expected output, helping to mitigate a central risk of generating solar power – lack of sunshine. The client pays a premium for the product and, if the plant does not generate enough power, Swiss Re covers the lost revenue.
USD300m
secured financing
Revenue Put guarantees
~95%
of expected solar output
The product helped the client to refinance their portfolio of projects in Utah. By driving down the investment risk, the client successfully issued around USD 300 million in senior-secured private placement debt.
This was a landmark deal on two counts. Firstly, a leading renewable project ratings agency gave the solar project an investment grade rating of BBB–, citing the Swiss Re Solar Revenue Put as a contributing factor. This opens the door to additional solar deals for Swiss Re. Secondly, it was the first time that this product was used in the financing or refinancing of solar projects within the US private-placement debt market.
