Our business is the assumption and diversification of risks in primary insurance and reinsurance. We possess strong leverage for sustainable action by linking economic success with added value for society. In our insurance business, we principally achieve this through a strong client focus, by offering responsible products and services, and through the integration of relevant ESG criteria into our insurance and reinsurance products as well as our services. In addition to implementing ESG criteria in underwriting, we support the achievement of the Paris climate targets by insuring new, climate-friendly technologies and make those technologies more attractive and financially viable for investors.
ESG criteria integrated into processes and products
We systematically take ESG aspects into account in our insurance business. The systematic integration of ESG aspects enables us to identify these risks and to minimise them in cooperation with our clients. We also make use of collaboration with other partners, institutions and non-governmental organisations (NGOs).
This approach is relevant for our business in three different ways:
We can identify ESG-related risks faster, thereby adding an additional dimension to our risk management. This also helps us to avoid any reputational risks for the Group.
We enhance our business partners’ risk awareness on sustainability issues.
By uncovering ESG risks, we develop new business opportunities and coverage concepts, which we then translate into sustainable solutions.
Ambition 2025 – underwriting with high and credible ESG standards
As part of our Ambition 2025 programme, Munich Re’s Board of Management re-enforced its commitment to integrate high and credible ESG Standards into its underwriting processes. This included ambitious climate protection targets for (re)insurance transactions. The new climate strategy aims to reduce net carbon emissions from primary, direct and facultative insurance for oil and gas production to net-zero by 2050. At the same time, Munich Re will reduce its coal-related exposure in its direct and facultative insurance business by 35% worldwide, before eliminating this exposure altogether by 2040.
Commitment to the PSI initiative on ESG integraton
Our ambition to comprehensively manage ESG risks in our business is also mirrored in our commitment to the PSI initiative on ESG integration. Munich Re played an active role in shaping an initiative by PSI, which published a compilation of best practices for assessing sustainability risks in non-life insurance for the first time in June 2020. The proposed ESG standards are the result of several years of collaboration among leading insurers and key stakeholders at the global level. They illustrate to insurers, as well as brokers, the systematic approach to ESG issues. We are continuously developing our own benchmarks for assessing ESG risks, also taking into account the standards developed by the PSI initiative. We report annually on our progress with the integration of the PSI principles.
Developing marketable solutions from ESG risks
Our core business constantly faces new kinds of risks and global challenges. We develop innovative solution concepts for ESG risks, while opening up new business opportunities. In keeping with our shared-value approach, we generate benefits for our Group and for society as a whole. In our materiality analysis, we have identified climate change, digitalisation and customer satisfaction as focus topics.