How we determine materiality
A key question for any company that seeks to advance sustainability 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 these material Sustainability 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 units such as our Public Sector Solutions global function, the Weather, Agro & MGA team in our Corporate Solutions Business Unit, the P&C Structured Solutions team in our Reinsurance Business Unit and many more 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 increase loss potential, or both. We conduct this analysis through our Sustainable Business 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 a significant impact on our business, including risks related to sustainability 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 sharpen our understanding of key risks, including sustainability issues, and to set priorities.
With regard to such issues, we consider the following groups as our principal stakeholders:
- Clients: cedents, brokers, corporate clients, government entities, multilateral organisations
- Financial community: investors/shareholders, rating agencies, shareholder associations, stock exchanges
- Political and legal entities: multilateral organisations (UN), governments, regulators, standard-setting boards
- Civil society: general public, NGOs, academia
Swiss Re Institute plays a key role in our stakeholder dialogue. It incorporates successful Swiss Re brands, such as the sigma publication series and the Centre for Global Dialogue, our in-house conference venue in Rüschlikon near Zurich. Swiss Re Institute acts as a coordination point for research output from research-focused business lines within Swiss Re and from external partners. Our renowned expertise publications form another important element of our stakeholder dialogue.
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 Sustainability Topics
When identifying our material Sustainability 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 Group Sustainability Strategy), relevant academic research and regulatory developments.
As part of our enhanced Group Sustainability Strategy, we reviewed the materiality of our Sustainability Topics (formerly Corporate Responsibility Topics). In doing so, we tapped the key sources described above and conducted the following steps:
- Benchmarking and gap analysis by the Group Sustainability Strategy project core team
- Interviews and roundtable discussions with key internal decision-makers
- Exchanges with 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)
- Revised list of material topics finalised by Group Sustainability Risk unit, based on Group Sustainability Strategy and former list of material topics