©Vladimir Melnikov - stock.adobe.com

Solution-oriented responses to climate change

Anthropogenic climate change is already a reality today, this is an established fact. In global terms, 2018 was one of the four warmest years ever. The mean temperature of land and sea surfaces was almost 1°C above the level for the pre-industrial period. Nine of the ten warmest years have occurred since 2005.

The consequences of climate change directly affect the insurance industry. Extreme weather events result in substantial damage to buildings and infrastructure, as well as causing significant crop losses in agriculture. People are killed and injured, particularly in regions where risk prevention is still in its infancy.

Already today, decisive action is an absolute necessity to limit global warming to less than 2°C. Munich Re is also committed to achieving this goal set by the Conference of the Parties (COP) on Climate Change in Paris, and undertakes to make its own, independent contribution to combating climate change.

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.

Thunderstrom in the south of Germany

Active climate protection by promoting climate-friendly technologies

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.

Solar panel
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. Since September 2018, Munich Re does not invest in either shares or bonds of companies that generate more than 30% of their revenue from coal.

Asset management makes the most of climate protection potential

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 2018. 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) business operation 

We exploit the potential of our own business processes to ensure climate-friendly action. Business operations 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
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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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