Swiss Re: 'Unfeasible' to set net-zero targets for commercial lines based on emissions data

By Rebecca Delaney

March 20 - (The Insurer) - Swiss Re has said it is not feasible to steer commercial lines portfolios to net zero based solely on insurance-associated emissions due to a lack of data transparency and relevant methodologies.

In its latest annual sustainability report, released earlier this month, the group said these limitations are most pronounced in treaty reinsurance because reinsurers have little information on a portfolio's original insureds.

In addition, there is currently no generally accepted standards for carbon accounting or climate target-setting for treaty reinsurance business.

As such, Swiss Re said it has not yet set decarbonisation targets for its treaty business, although the Andreas Berger-led group did engage with the Partnership for Carbon Accounting Financials last year in an attempt to address these barriers.

"These limitations in calculating IAE make it unfeasible at present to steer commercial lines portfolios towards net zero based on IAE. This is also one of the reasons that Swiss Re has adopted a portfolio coverage approach for its net-zero underwriting target," said the sustainability report.

For the 2024 financial year, the insurance-associated emissions for Swiss Re’s portfolios in scope of the PCAF standard are estimated at 1.6 million tonnes of CO2 equivalent. The emission intensity for the same portfolio is 299 tonnes of CO2e per $1 million revenue, down slightly from 307 tonnes in 2023.

SINGLE-RISK PORTFOLIO TARGETS

Swiss Re's portfolio coverage approach prioritises mitigation efforts for its most material (re)insurance portfolios according to the size of business and emissions materiality.

Interim targets currently cover 23% of the single-risk P&C (re)insurance portfolio, where Swiss Re has direct access to the original insureds, as well as available data and accounting standards.

The company has pledged that, by 2030, 60% of gross written premium from listed companies in the single-risk property, general liability and commercial motor portfolios (excluding fossil fuels) will come from corporates with science-based targets validated by a third party.

This stood at 43% of GWP in 2024, up from 37% in 2023.

Swiss Re is also aiming to generate 50% of GWP from oil and gas producers in single-risk property and general liability portfolios from companies aligned to a 2050 net-zero pathway. This will be extended to 100% by 2030.

The firm has exceeded this target, reaching 59% of GWP in 2024.

Swiss Re has previously said it aims to achieve complete phase-out of thermal coal-related (re)insurance business in OECD countries by 2030, and in the rest of the world by 2040.

“While working to transition jointly, Swiss Re recognises that some clients, investees and vendors may be unwilling or unable to transition over the medium to long term," said the report.

"In such cases, actions to restrict exposures may be necessary to meet the company’s net-zero ambition, such as sector-specific policies or thresholds, and portfolio reallocations."