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
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.
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.
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.
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.
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.