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Solution-oriented responses to climate change

Climate change, predominantly the result of human activity, is real and has a major influence on weather-related natural disasters. Science provides ever clearer evidence of this fact, although to differing degrees depending on region and type of hazard. Munich Re is a pioneer in the analysis of how anthropogenic global warming and natural climatic variability impact losses caused by weather-related natural disasters. For the past four decades, we have researched risks, loss prevention measures and new risk transfer solutions. In addition, we examine long-term data on meteorology and losses to better understand changes in risk.

 

Our own climate strategy determines our action

As (re)insurers, we analyse all aspects of climate change, from the physical and regulatory consequences to the associated changes in technology.

Risk evaluation creates transparency

For us, recording and assessing the impact of climate change on the frequency and intensity of natural disasters is of key strategic importance. We can only develop and implement viable risk transfer solutions for our clients if we have a good understanding of the associated effects on our business.

As part of the risk assessment, we examine the recommendations of the international Task Force on Climate-related Financial Disclosures (TCFD). These go far beyond simply climate reporting. They also expedite the holistic integration of risks and opportunities from climate change and the low-emission economy into the corporate value chain.

In addition to risk-reducing insurance solutions geared towards loss prevention and adaptation to climate change, we believe we can best provide leverage by helping new climate-friendly technologies to break through. We have assumed the role of enabler in the fields of electricity generation, transport, energy storage and industrial production. And we see significant promise in providing energy from renewable sources such as hydrogen or methane fuel cell technology, as well as offshore wind farms.

Hurricane Elena in the Gulf of Mexico

Risk transfer solutions offer concrete assistance and promote innovative technologies

As a (re)insurer, Munich Re assumes a portion of the financial burden of those affected by natural disasters, allowing them to return to their daily lives more quickly after a loss event. We aim to play a preventive role and to improve adaptation measures for the consequences of climate change that have become unavoidable.

Spray irrigation of vegetable crops

We need a new approach worldwide to limit global warming, whether in terms of power generation based on renewable energies, in transport, energy storage, or industrial production. Munich Re seeks to aid the breakthrough of these climate-friendly and sustainable technologies. Insurance solutions protecting against specific risks, thereby enhancing the appeal of the technologies for investors and strengthening their financing viability, are one component in this context.

We underpin the approach of promoting new technologies and, wherever possible, replacing climate-damaging technologies, with our Group-wide position on coal as an energy source. We have anchored this position in our Responsible Investment Guideline as well as in our underwriting guidelines. It stipulates that, in single risk business, Munich Re will no longer insure new coal-fired power plants or new coal mines in industrialised countries, or in the majority of emerging markets. There may be a small number of exceptions in countries where a substantial portion of the population (more than 10%) has no access to electricity. In such countries, cases are analysed on the basis of clear criteria. We do not invest in either shares or bonds of companies that generate more than 30% of their revenue from coal. In 2019 we discontinued the Insurance and reinsurance of individual risks of oil sands mining projects and related infrastructure.

Asset management makes the most of climate protection potential

In support of the Paris Agreement objective to limit the global temperature increase to well below 2 °C, Munich Re has expanded its climate strategy with a recent commitment to having a GHG-neutral investment portfolio by 2050. In order to drive implementation of this strategic objective, Munich Re joined the UN-convened “Net-Zero Asset Owner Alliance” (AOA) in January 2020.

In addition, we have defined particular areas for investment in order to promote the use of low-carbon technologies and avoid GHG emissions. In particular, we focus on direct investments in renewable energies and green bonds. Expanding investments in renewable energy and infrastructure projects contributes to climate change adaptation and mitigation. The volume of capital invested in renewable energies such as solar parks and wind farms totalled €1.6bn at the end of 2019. And our long-term target is to increase this figure to €2.8bn.

Investment in renewables offshhore windpark
© Konstantin Sahnjuk / EyeEm / Getty Images
Wind turbines in the sea

Carbon neutrality in Munich Re Group´s operational businesses 

We exploit the potential of our own operational processes to ensure climate-friendly action. Operational activities throughout our Group have been carbon-neutral since 2015.

There is more detailed information on our environmental management system and further activities in the section on Environment.

Amazon
© GYRO PHOTOGRAPHY/amanaimagesRF / Getty Images
Amazon forest

Our commitment to protection against climate risks

For many years, Munich Re has played an active role in a range of national and international climate protection organisations, such as the United Nations Environmental Programme and the Global Climate Forum. We wish to contribute our expertise as a valuable partner for political decision-makers, organisations and other enterprises.

Particularly in emerging and developing countries, it is essential to promote adaptation to climate change in the form of insurance-related risk management mechanisms. Munich Re supports the InsuResilience initiative. Founded in 2015 by the G7 countries, this initiative aims to enable an additional 400 million people in developing and emerging countries to access insurance products covering weather and climate risks by 2020.
The Munich Climate Insurance Initiative (MCII) was founded back in 2005, following an initiative by Munich Re and representatives from the World Bank, NGOs and academia. Since then, MCII has participated in the global climate negotiations (COPs), providing suggestions on risk management. MCII has also provided technical support in the discussions on dealing with losses from climate change under the UNFCCC Loss and Damage programme and the Warsaw International Mechanism.
As the focus of the project Tackling Climate Change Together by Munich Re and ERGO we subsidise the work of cleantech pioneers. Our involvement here mainly relates to two projects: a start-up accelerator programme in partnership with Climate-KIC, and cooperation with the company SOLARKIOSK.
Together with our partner, Climate-KIC, the largest public-private climate initiative in the EU, we are promoting climate-friendly technologies at a very early stage. The accelerator programme is aimed at cleantech start-ups whose technologies and business models offer responses to climate change. Munich Re and ERGO select start-ups, which will be supported for six to eighteen months. The promotion takes the form of financing, but also involves consulting from experts, who support the companies as mentors. Depending on the level of development of the start-up, sponsorship can last from the initial idea through to market maturity and beyond. Further information on this is available on the project website.
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