Insurance is per se a business model designed for sustainability. Protecting people and their property is a core task of the insurance industry. As risk carriers, insurers therefore make a concrete and direct contribution to global sustainable development on many different levels. The range of measures extends from protecting the individual against the consequences of sickness and accidents as well as the impacts of natural disasters on crops and property to supporting the global energy transition.
As an insurance undertaking, we too have a whole range of possibilities to actively support these developments. In our role as risk carrier, we enable the necessary technical advances and thereby facilitate the ongoing refinement of processes and products at companies, for example in connection with the reinsurance of renewable energy sources. As an investor, we provide capital for innovative businesses and technologies that actively contribute to the achievement of climate and sustainability targets. As a solution provider, we develop innovative insurance products that deliver protection – especially for people in emerging and developing countries – against the now avoidable economic and social consequences of climate change. And as a centre of competence for the management of risks, we are able to play an active part in the social and political discussions around how to fight the causes and impacts of climate change.
Hannover Re is committing to achieve net zero emissions in business operations by 2030 and in its reinsurance portfolio and investments by 2050. In setting these targets Hannover Re supports the Paris Agreement on climate change aimed at limiting global warming to 1.5 degrees Celsius.
ESG in insurance business
With our core business, we support the global transformation of the economy and society towards a climate-friendly, resource-saving and social future. Key points of reference here are the ten principles of the UN Global Compact as well as the 17 Sustainable Development Goals of the United Nations.
A focus of our efforts is on providing insurance solutions for population groups that previously had too little insurance protection or could only obtain it with difficulty, on delivering insurance offerings that mitigate the impacts of natural disasters or climate change and on commitments to sustainable technologies. This also includes an intensive dialogue and knowledge transfer with primary insurance companies, partners and insurtechs or participation in initiatives or research projects that support fulfilment of these goals. This applies to both, our P&C and our L&H area.
Accelerator network to foster innovation
In late 2019 and early 2020, some months before the Covid-19 crisis dramatically accelerated the pace of the digital transformation, Hannover Re embarked on the development of its Innovation and Digital Strategy (I&D). The Innovation & Digital Solutions Committee (IDSC) as well as the Accelerator Network were therefore set up with the goal of identifying, evaluating and developing innovative digital solutions and services for and with our customers and expanding local business opportunities to other markets.
The Accelerator Network is a team made up of five accelerator units:
- Property & Casualty Digital Business Accelerator (P&C DBA)
- Life & Health Digital Business Accelerator (L&H DBA)
- Digital Technology Accelerator (DTA)
- Parametrics Business Accelerator (PBA)
- Innovation & Digital Network Accelerator (IDNA)
The Lemonade Crypto Climate Coalition is just one of our examples that has come about in the context of our Accelerator Network. On the Life & Health side, too, we are highly active with LifeQ.
Consideration of ESG criteria in insurance business
A second focus is on the consideration of ESG criteria in insurance business. A reduction in insurance availability, for example, results in the scaling back of controversial technologies such as coal-fired power generation. At the same time, the inclusion of ESG risks in underwriting practice is a key component in identifying and managing sustainability-based risks, which can affect the claims frequency and amount.
Back in 2019 Hannover Re had already set itself the goal of no longer covering any risks connected with the mining of and power generation from thermal coal in its entire property and casualty reinsurance portfolio by the year 2038. In 2020, the Property & Casualty Executive Committee approved and implemented a phased plan for a step-by-step withdrawal from thermal coal. Moreover, from February 2020 onwards our facultative division has excluded any new business connected with thermal coal or the associated infrastructure. In addition, an exit plan was adopted in 2021 for existing facultative business in thermal coal. The phased plan provides for exclusions based on thresholds.
In our exclusions we cover the following topics. For detailed information, we would refer to our sustainability report.
In 2021 we joined Net-Zero Insurance Alliance and committed to net zero target by 2050 in reinsurance business. In the context of the Net-Zero Insurance Alliance Hannover Re will take a proactive role in developing methods to determine the greenhouse gas emissions of reinsured customer portfolios in property and casualty business.
Hannover Re has been a signatory to the Principles for Sustainable Insurance (UNEP FI PSI) since 2021. As part of our sustainability report, we publish the mandatory annual public disclosure of progress. You can find more information here.
ESG in asset management
Aside from the direct impacts on society, we are able to play a positive part in sustainable development through our investing activities by pursuing an investment policy that avoids companies, which do not satisfy our ethical expectations or environmental and social standards. In this way, we live up to our aspiration to be a responsible investor and at the same time make our contribution to sustainability in the financial industry. Investors, analysts and clients are also increasingly interested to see how we respect social sustainability concerns in the management of our investments.
In our investments, we’ve been applying ESG criteria since 2012 through our Responsible Investment Policy. Issuers that are involved in activities which may cause severe environmental damage are not only excluded from our investment activities but also subject to divestment. In our exclusions we cover the following topics. For further information, we would refer to our sustainability report.
Hannover Re has been a signatory to the Principles for Responsible Insurance (UN PRI) since 2020. For further information please refer to our frameworks and initiatives.
Our new climate strategy
Our strategy is founded on three pillars:
- Decarbonisation of our liquid investment portfolio by 30% by the year 2025 compared to the base year of 2019 and climate neutrality by 2050
- Investment in sustainable investments
- Engagement activities