How we determine materiality
A key question for any company that understands corporate responsibility as taking a long-term view and enabling sustainable progress is what this means in the context of its own business and industry: which topics are “material” to achieving this goal?
In order to identify our most relevant “Corporate Responsibility Topics”, we use both our internal risk expertise and ongoing dialogue with our stakeholders.
Insights from our internal risk expertise
As a leading re/insurer, we act as ultimate risk taker in society, which requires us to have a very sound understanding of the risk landscape. This risk expertise embedded in our company and the deep understanding of re/insurance markets also give us a solid foundation to identify material sustainability issues. In many areas of our business, we have special teams, functions and processes to identify and address issues relevant to sustainable development.
In our core re/insurance business there are special units, such as our Global Partnerships function in the Group or the Environmental & Commodity Markets department in our Corporate Solutions Business Unit, that identify underinsured markets and risks, and seek to expand re/insurance protection through commercially viable solutions.
In our risk management, meanwhile, we have a process and the capabilities to identify risks we feel we should not re/insure, be it for ethical reasons, because they might lead to losses, or both. We conduct this analysis through our Sustainability Risk Framework and other tailor-made risk management tools.
We also maintain a formal process to identify emerging risks called SONAR (“Systematic observation of notions associated with risk”). This enables us to spot, at an early stage, newly developing or changing risks that may have an impact on our business, including risks related to environmental, social and governance (ESG) issues.
Insights from dialogue with our stakeholders
Our role as ultimate risk taker in society means that we have an intrinsic interest in maintaining active and ongoing dialogue with our key stakeholders. Generally speaking, this dialogue works in both directions: our partners expect us to share our risk expertise, thus helping them – and society at large – to form effective responses. In turn, we also benefit from this exchange, because it helps us to sharpen our understanding of key risks, including ESG issues, and to set priorities.
With regard to such issues, we consider the following groups as our principal stakeholders:
- Financial community: investors/shareholders, rating agencies, shareholder associations and stock exchanges in addressing sustainability concerns;
- Clients: cedents, brokers and corporate clients;
- Political and legal entities: multilateral organisations (UN), governments, regulators, standard-setting boards;
- Civil society: general public, NGOs, media, academia.
With the Centre for Global Dialogue near Zurich, we have our own in-house conference centre. Part of the Swiss Re Institute as from 1 March 2017, it allows us to actively manage and encourage collaboration with our stakeholders. In 2016, we held or hosted more than 100 stakeholder events at the Centre. Our publications form a second important element of our stakeholder dialogue: in 2016, we published 15 new expertise publications and 25 new fact sheets.
Complementing the insights we gain directly through dialogue with our stakeholders, we also evaluate and use data provided by specialised third-party organisations such as RepRisk, Sigwatch, MSCI and Sustainalytics as well as the results of academic research.
Our process to identify Corporate Responsibility Topics
When identifying material Corporate Responsibility Topics, we draw both on our internal, embedded risk expertise and the insights we gain from our stakeholder dialogue. In addition, we take into account the views of various standard setters on materiality, eg: reporting requirements, materiality definitions by sustainability rating agencies, multilateral discussions such as the UN Sustainable Development Goals (see Review of our Corporate Responsibility Topics), relevant academic research and regulatory developments.
To process the information from these three key sources, we use the following steps:
- Expert analysis by our Group Sustainability Risk unit;
- Interviews with key internal decision makers, our sustainability risk stakeholders (eg investor meetings, events at the Centre for Global Dialogue, project and business related interactions) and external experts (academia, NGOs, consulting firms);
- Validation of final topics by the Group Sustainability Risk unit;
- Approval and endorsement by the Risk Management Executive Team, Group Executive Committee, Board of Directors;
- List of material topics finalised by Group Sustainability Risk unit;
- Development/adjustment of sustainability strategy based on final Corporate Responsibility Map.