Combating climate change

Urs Baertschi, Chief Executive Officer Reinsurance EMEA / Regional President EMEA, Swiss Re

Disruptions following the war in Ukraine are rippling across the globe. Many countries are reacting by scrambling to secure alternative fossil fuel supplies amid turbulence in international relations.

But as nations seek near-term solutions for immediate energy challenges, it’s important that they don’t lose sight of the crucial long-term goal of transitioning the global economy to net-zero.

The supply chain disruptions that started with the pandemic have been worsened by the war in Ukraine with food and gasoline prices skyrocketing. The conflict is hitting energy markets, too, with officials from Europe and elsewhere shuttling between countries and making new friends to strike deals for alternative fossil fuel sources. An inflationary recession is now a distinct possibility.

Despite the obvious need for some short-term fixes, it does not change our generational challenge, combating climate change. The re/insurance industry must continue to play its role in helping facilitate the long-term shift to non-emitting energy sources, even as countries adjust their near- and medium-term tactics to address their most pressing economic priorities. 

The re/insurance industry must continue to play its role in helping facilitate the long-term shift to non-emitting energy sources, even as countries adjust their near- and medium-term tactics to address their most pressing economic priorities.

More than climate mitigation

The benefits of renewable, locally sourced, sustainable power go beyond mitigating climate change. A shift to renewables offers opportunities for countries to take their energy destinies into their own hands and potentially boost their ability to navigate accelerating geopolitical complexity. Renewable energy, often “near-shored,” can be the basis of stronger economies, creating jobs and underpinning growth for nations and companies that embrace it.

Swiss Re has committed itself to this sustainable trajectory. We have established ambitious climate targets, with commitments to reduce the carbon intensity of our investments, phase out thermal coal from our re/insurance activities and work with clients in the oil and gas sectors to help them, and ourselves, on the shared journey to net-zero carbon emissions.

Last year, we signed the world’s first long-term purchase agreement for direct air capture and storage of carbon dioxide, worth USD 10 million over ten years, with the Switzerland-based company Climeworks. Additionally, at the most recent World Economic Forum in Davos, Switzerland, we announced our participation in the NextGen CDR facility that will purchase more than one million tonnes of verified carbon dioxide removals by 2025. 

We’re working with clients to identify their climate-related exposures and providing underwriting risk insights via proprietary re/insurance solutions, like our Climate Risk Score Framework and CatNet geo risk tool. 

We also provide risk transfer solutions for green and clean energy investments, such as wind and solar projects, which are projected to grow 30% over the next decade. Our aim is to enable an orderly transition to a low-carbon society capable of withstanding future shocks. Through 2021, Swiss Re has written re/insurance for nearly 9,000 wind and solar farms that are expected to help avoid over 29 million tonnes of carbon-dioxide emissions that would otherwise come from conventional energy production.

Urgent messages 

This is a start, but we must do more. Our climate is sending us urgent messages about the perils of not acting. 

This July marks the sombre anniversary of the 2021 flooding in Europe, where an unprecedented deluge on already saturated soils developed floods that wiped out entire neighbourhoods in German and Belgian towns. 

Scientists have said climate change may have contributed to the severity of winter storms this February in Northwestern Europe, by intensifying rainfall and storm surges. May’s heavy rains and flooding in South Africa, which also killed hundreds of people, are also being attributed, at least in part, to climate change. Italy is coming off one of its driest winters in decades, while Spain and France have experienced record high temperatures in May and June. 

Despite these warning signs, the Paris Climate Agreement’s goal of limiting global warming to around 1.5 degrees Celsius is in jeopardy as greenhouse gas concentrations rise to record levels. We must change course. As Swiss Re’s Economics of Climate Change report showed, the world stands to lose at least 11% of global GDP from climate change if 2050 net-zero carbon emission goals aren’t met. 

Insurance for immediate and long-term threats

The time is now – this is why the short- and medium-term push by nations to secure new fossil fuel resources must remain merely a bridge to a more sustainable future where we rely on renewable power like solar, wind and hydroelectricity. International organisations, including the United Nations, have recognised this, as it warns against losing sight of climate-change goals as we hunt for short-term fixes. 

Despite these worries, I remain optimistic. With our risk knowledge and risk transfer solutions, we are well placed to support clients, and society, in managing not only immediate risks but also the longer-term, existential ones like global warming. We all must keep this in focus, even when the urgent crises of the day compete for our attention. 

I believe re/insurers, including Swiss Re, are uniquely placed to act as a shock absorber in times of crisis. With our ability to collect data about our changing planet, analyse it and translate our conclusions into actionable intelligence, we have the capacity to look beyond the threats of the moment to contribute to the shaping of not only our own destinies, but those of generations to come.