The Sensitive Business Risk process
Sensitive business transactions referred to our team of sustainability experts
(178 in 2017)
Each of the two umbrella policies and eight sector guidelines of our Sustainability Risk Framework contains criteria and qualitative standards which define precisely when a transaction may present a “sustainability risk”. We assess such transactions through our Sensitive Business Risk (SBR) process, which consists of two due diligence mechanisms – the SBR online assessment tool and the SBR referral tool.
The online tool stores the relevant sustainability risk information for these sectors and 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.
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 in-depth 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.
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.
In 2018, however, the number of referrals rose, from 178 in the previous year to 247. This increase was mainly driven by the introduction of our thermal coal policy (see Focus: 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. Of the 247 transactions in total, we issued negative recommendations in 40 cases and positive recommendations with conditions attached in 27 cases.
* In 2015, we launched our online assessment tool which has resulted in a steady decrease in SBR referrals. In 2018, we introduced our thermal coal policy, which contributed to a rise in referrals.