Swiss Re says ignore climate-driven hype on investment exclusions; real climate gains lie elsewhere

Re/insurers will make greater progress towards climate goals over the coming year in boring back-room calculations of ESG scores for underwriting than in any of the headline investment exclusions sought by the activist community, suggests Christian Mumenthaler (pictured), the chief executive officer (CEO) of global reinsurer  Swiss Re.

“I think the last few years the biggest moves have been on the asset side, but now it’s on the underwriting side,” Mumenthaler said in an interview during the Reuters Next online conference on Wednesday (December 1).

“The newest of the new developments … is trying to quantify the carbon footprint of a reinsurance treaty which I can tell you is not that easy,” he said.

Firms united in the Net Zero Insurance Alliance are hashing out the ratings and methodologies that will allow insurers to eventually get picky in their underwriting, Mumenthaler noted of the plodding process.

“That, for me, is the biggest, most important development which you can expect from us this year and next year,” Mumenthaler said.

When it comes time to turn those measurements into underwriting decisions, Swiss Re may apply new rules and incentives to a broad swath of industry beyond just hydrocarbons, while disavowing absolutist exclusions, its CEO indicated.

“The basic philosophy behind everything we do is to accompany the world on this net zero path,” said Mumenthaler. Swiss Re will focus its underwriting on best performers to nudge each sector’s center of gravity towards climate goals.

Even the group’s first exclusion policy came with exceptions. Policies for new coal-fired generation units have already been scratched by Swiss Re in principle, but only where alternatives are not available.

Mumenthaler deflects all questions about target dates for fuller exclusions of coal or oil and gas with reference to the broader climate task ahead.

“People focus on just one element, like coal or oil and gas, but in reality we need to completely change everything in how we do things,” Mumenthaler said under questioning. “It is going to be a massive, massive transformation.”

“We built a world of everything we have, all the progress we achieved came on pumping CO2 into the atmosphere; it is not just oil and gas companies.”

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