Hannover Re to assess carbon footprint of cedants as it targets net zero emissions
Hannover Re has committed to achieve net zero emissions in its business operations by 2030 and in its reinsurance portfolio and investments by 2050.
In setting these targets Hannover Re said it supports the Paris Agreement on climate change aimed at limiting global warming to 1.5 degrees Celsius.
Hannover Re added that its recent move to join the United Nations-convened Net-Zero Insurance Alliance underscores its sustainability engagement. By committing to achieve the net zero targets Hannover Re is taking a major step towards advancing the transition to a climate-friendly economy. Hannover Re will report on its progress on a regular basis.
" Hannover Re's clear Group-wide commitment to net zero targets and our membership of the Net-Zero Insurance Alliance are the next concrete steps in the progressive expansion of our sustainability engagement," said Jean-Jacques Henchoz (pictured), CEO of Hannover Re, said. "The insurance industry is undergoing a transformation towards greater sustainability and we want to shape this transition in a dialogue with our customers and peers. We are aware of our responsibility as a global reinsurer and we shall support industry-wide solutions to manage the consequences of climate change."
In the context of the Net-Zero Insurance Alliance Hannover Re will take a proactive role in developing methods to determine the greenhouse gas emissions of reinsured customer portfolios in property/casualty business. Only in this way will it be possible to actively steer the often large-volume portfolios with sometimes heterogeneous risks towards a net zero target.
In obligatory reinsurance, which covers entire portfolios, the calculation of the carbon footprint is a first major step towards achieving concrete reduction targets. This is considerably more complex here than in facultative reinsurance with its focus on individual risks, the reinsurer said.
As part of its exit plan for thermal coal, Hannover Re already began to open a dialogue with its clients last year in obligatory reinsurance. This will be pivotal to accomplishing the complete withdrawal from coverage of risks connected with the mining of and power generation from thermal coal by the year 2038 in the entire property and casualty reinsurance portfolio - a move that was decided on in 2019.
In its facultative department specialising in individual risks, it has already been the case since April 2019 that Hannover Re no longer provides coverage for any planned new coal-fired power plants or thermal coal mines. Moreover, since February 2020 the facultative department has ruled out any new business connected with thermal coal or the associated infrastructure as well as covers relating to oil sands extraction and processing. Project covers for oil and gas exploration in the Arctic are similarly excluded.
In support of the global energy transformation Hannover Re also encourages the growth of renewable energy sources such as onshore and offshore wind power as well as photovoltaic and geothermal energy through expansion of the associated reinsurance business.
Net zero target in the investment portfolio by 2050
In the context of its annually published sustainability report Hannover Re will provide transparent information about progress made towards the more sustainable orientation of its entire business model. Furthermore, since 2012 Hannover Re has set itself sustainability targets in its own sustainability strategy which are reviewed and refined every three years.
"We must all play our part in fighting climate change. For us, this means that moving forward we shall put Hannover Re on an even more sustainable footing," Henchoz said. "The latest report by the Intergovernmental Panel on Climate Change (IPCC) has once again made clear the need to take urgent and consistent action. The forum provided by the COP26 climate change conference offers an important opportunity to take further concrete decisions. The risk expertise of insurers and reinsurers has a key role to play when it comes to quantifying the risks of global warming and better adapting cities and buildings to climate change."
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