The COVID-crisis has accelerated many of the trends within business and society, one of the most important being a commitment to ESG goals, explains Nina Arquint, chief risk officer, Swiss Re Corporate Solutions
There are striking similarities between the COVID-crisis and the sustainability challenges posed by climate change. Both are systemic risks but not Black Swan events, in the sense that we have known about the threat they post for many years.
However, the speed at which they unfold is quite different. To use an analogy, I liken the global pandemic to a tsunami in terms of how quickly it has covered the entire globe. Climate change on the other hand is more akin to rising sea levels, a threat that increases slowly over time, but which at some point will engulf us if it goes unchecked.
As a provider of risk transfer solutions to large and mid-sized corporations around the world, Swiss Re Corporate Solutions has long recognised that sustainability is critical to our long-term success. This involves managing and monitoring risks and opportunities associated with environmental, social and governance (ESG) issues. We want to provide products and solutions that help our clients manage their sustainability risks and pursue their sustainability opportunities.
Leading by example
Our aim is to lead by example, for instance by committing to net zero emissions across our whole business by 2050. This is not a philanthropic gesture. ESG is good for society, and it is also good for business and there is a growing recognition that ESG makes good economic sense. Listed and non-listed companies alike must embrace ESG criteria in their activities in order to meet the growing expectations of their stakeholders namely shareholders, customers, employees and business partners.
Doing business in a responsible and forward-looking way means that you have to manage and monitor risks and opportunities that are associated with ESG issues. As we support companies in doing exactly that, we see increasing examples of businesses and investors who want to engage with Swiss Re. An example is our Climate Risk Advisory that we provided to one of Australia’s largest energy companies. We helped to appraise their bushfire risk in the advent of climate change following the record 2019 -2020 Australian bushfire season, showed them mitigation potential and new, innovative risk transfer opportunities.
A holistic approach to sustainability
The sustainability agenda is, of course, much bigger than us and the wider insurance industry. What started in the 1970s with socially-responsible investing has become a much broader movement. Supported by the UN Sustainability Development Goals that are gaining global momentum, sustainability is evolving from a differentiator to a negative distractor if not embedded in all business activities. The pandemic is acting as a catalyst in many instances to accelerate and change trends that were already underway.
I personally believe there is an opportunity presented by the crisis we have faced with COVID-19 to build back better. We see that governments and corporates around the world are now more alert to the parallels between climate and pandemic risk. There is a recognition that prevention is a lot less costly than the cure, renewing the determination to build greater business and societal resilience while also slowing anthropogenic climate change.
It is a transition which does not happen overnight. While the 2050 ambition seems far out, we need to act now. As insurers, an important part of our role is to support our clients as they reassess their business models and undergo their own transformations, becoming organisations that are future-ready and sustainable.