Climate risk and sustainability

Swiss Re is strongly engaged in the regulatory debate, striving to mitigate potentially negative impacts while supporting reforms that could enhance the overall health of the sector, facilitate convergence of regulatory standards or generate business opportunities.

Reflecting our commitment to enabling sustainable progress, we closely monitor regulatory developments in connection with climate change and sustainability and contribute to selected initiatives. These issues are gaining traction among policy makers, regulators and standard-setters.

At present, two main areas of activity can be identified. The first concerns a shift from voluntary to mandatory disclosure of environmental, social and governance (ESG) information, eg carbon and climate, diversity and human rights. These efforts seek to create more transparency about how ESG issues affect organisations’ businesses, strategy and financial planning.

The second area of activity revolves around efforts to reduce capital requirements for ESG and long-term investments. This is mainly promoted by the re/insurance industry as a way to facilitate its role as a long-term investor. Especially in the EU, regulators are sympathetic to these arguments as they see them as a way to meet the commitments made as part of the Paris Agreement on climate change.

Recently, we have participated in the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (FSB-TCFD, Starting from the premise that climate change creates physical, liability and transition risks, the initiative’s goal has been to develop a set of voluntary financial disclosures that allow stakeholders to properly assess the climate risks faced by companies and to take appropriate action.

The FSB-TCFD’s final recommendations report was published in December 2016 and has received broad public support, with more than 100 business leaders and their companies committing to support the recommendations. Swiss Re supports the work of the task force and has been one of its members since its launch. We started to integrate the recommended disclosures in the 2016 Financial Report and have significantly expanded our disclosures in the 2017 edition.

We also provided input to the European Commission’s High Level Panel on Decarbonisation Pathways, a group of nine renowned climate experts established in late 2016. The task of this panel is to support cost-effective climate action towards a low-carbon future by delivering science-based, policy-relevant advice, thus helping to implement the Paris Agreement in the European Union. Our input focused on such aspects as data sharing on weather extremes and variability, research on the economics of climate adaptation, transparency on contingent liabilities and facilitating viable infrastructure investments.