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1. 1 E.g., revenues resulting from sustainable solutions, see section 4.1.1 Revenues
from sustainable solutions on pages 181 to 185.
2. 2 Climate change has been identified as one of our most material topics. For more
information, see section 1.1.2 Assessing materiality on pages 124 to 125 .
Taking action today to safeguard tomorrow.
Climate change presents a dual imperative. Global emissions need to be reduced to avoid the
most damaging impacts and simultaneously build greater resilience against the physical
hazards which will continue to grow even as we transition. We focus on enabling a positive
socio-economic and environmental transition, while at the same time building resilience to
evolving risks. A stable climate and healthy, diverse natural environment are critical to
continuing human and economic development. Environmental challenges including nature loss
and climate change can impact all sectors of the real economy which we insure and invest in,
and ultimately can have significant impacts on the company's long-term value. Understanding,
measuring and managing these impacts – while seizing the opportunities that arise from the
transition to a net-zero world – is essential to creating sustainable value for our stakeholders.
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We want to address the dual imperative of climate change – both
decarbonization of the economy and building resilience to the impacts
of climate change.
Linda Freiner
Group Chief Sustainability Officer
Linda.png
3.1  Strategy
3.2  Risk management
3.3  Targets and metrics
While environmental topics beyond climate are considered as part of our approach to
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sustainability, 1 understanding and managing climate change impacts remains a
particular focus. 2 This section presents our disclosure in line with the recommendations
of the TCFD and represents our assessment of the resilience of our strategy to climate
change risk. In order to simplify the structure, we embedded governance around climate
change in Chapter 2. Governance (see pages ## to ##).
3.1 Strategy
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The actual and potential impacts of climate-related risks and opportunities on the organization’s
businesses, strategy and financial planning
3.1.1 Our approach to climate change
Our business strategy calls on us to deliver in our various roles as an insurer:
• as a risk manager, helping customers to understand, prevent and reduce climate-
related risks.
• as a risk carrier, protecting households, companies and communities by
absorbing the financial shocks from increasingly extreme weather.
• as an institutional investor, financing the transition of companies and scaling
capital toward climate.
3.1.2 Managing climate risk
In line with TCFD recommendations, when we consider the topic of climate
change, we consider both physical and transition-related impacts . Physical
risks include increasing frequency and severity of acute events such as floods
due to heavy rain but also longer-term changes in variables such as sea
levels, temperatures etc. Transition risks can stem from policy, regulatory and
societal changes introduced to address the impacts of climate change.
Figure 8
Climate-related risk
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Risk type
Impact
channels
Economic
Impact
Impact to insurers’
balance sheet
Physical
• Acute
Physical incl.
◦ Tropical
cyclone
◦ Hail
◦ Flood
Chronic physical,
incl. sea level rise
• Variability in
temperature
Transition policy and
legal
• Increased
pricing of
greenhouse
gas (GHG)
emissions
and removal
of subsidies
• Restrictions
on products
and
technologies
Technology
• New low-
carbon and
energy
efficiency
technologie
s
Market and
sentiment
• Changing
customer
behavior
and
consumer
preferences
• Stigmatizati
on of
sectors and
technologie
s
• Changed
cost of
production
inputs
Changes to
extreme weather
events
• Changes
in frequency and severity
• Geographi
c shift of events
Changes in
productivity
• Agricultura
l and labor
productivity
Changes in
demand
• Increasing
demand
for low-
carbon
products
and
materials
• Reduced
demand
for carbon-
intense
technologi
es and
products
Changes in costs
• Direct
carbon
costs
• Changes
in
operating
costs
(supply
chain,
commodity
costs,
complianc
e, new
production
processes)
• Abatement
Competition and
pass-through
effects
• Shifts in
market
share
• Passing
costs
through to
end
customers
• Products
and
services
with low
price
elasticity
Individual
companies
• Changes
in revenues and
costs from impacts
on workforce and
production assets
and changes in
supply chain costs
and reliability
• Increased
operating costs
• Lower
product margins
• More
operational
break-
downs
• Early
write-offs
and
stranded
assets
• Changes
in
borrowing
costs
• Higher
sales
volumes
and profits
for
companies
providing
low-carbon
products
and
services
Macroeconomy
• Higher
Infrastruct
ure costs
• Changes
in GDP and growth
rates
• Changes
in
borrowing
costs
• Changes
in interest
rates
Liabilities
(insurance)
• Changes
in, and shift
of, demand
across
geographie
s/sectors/
lines of
business
• Changes in
loss
frequency
• Changes in
loss
severity
Assets
(investments)
• Valuation
changes
• Changes in
default
rates
Our view on climate risk
Physical and transition risk will play out over coming decades with pervasive
impacts to the global economy and potentially our business if they are not
adequately managed. Understanding and managing potential impacts is an
important aspect of maintaining our short- and longer-term profitability. Over
the medium to long term, physical risk is expected to increasingly impact
economic growth. The new technologies, energy generation and construction
methods expected to evolve as part of the transition to a net-zero economy
will serve to influence the size and composition of the global economy.
The long-time horizons over which climate change will play out introduces
uncertainty around the degree to which physical or transition risk shapes the future
global economy. This is something further dependent on the nature of public policy
frameworks introduced over the coming decades. As the global economy evolves in
response to the changing climate, our business will be impacted, most notably
through changing demand for our products, changes to the loss experience
associated with those products and changes to the value of our assets.
Given our ability to reprice many of our products on an annual basis, our focus
on developing customer resilience and our flexible investment approach, we
believe we are sufficiently flexible to adapt to events as they unfold and we
will remain well positioned to insure the future economy. Nonetheless,
physical- and transition-related impacts represent sources of increased risk
and require careful consideration and management.
Our approach to climate risk
Climate risk is managed in a way consistent with other risks we are exposed
to. Our risk management approach considers multiple time horizons and
approaches to manage near-term impacts and navigate highly uncertain
outcomes over the medium to long term. Assessments of the evolving
physical and transition risk landscape are integrated into our underwriting and
investment strategies.
• Over the short term, we use sophisticated natural catastrophe
modelling, with a focus on underwriting activities, to inform balance sheet
resilience against changing frequency and severity of perils, with our view of
natural catastrophe risk used to inform financial planning.
• For the medium to long term we complement our short-term
management of climate-related risks through the use of scenario-based
climate risk analysis, which allows us to assess the strategic implications of
climate change over time horizons extending beyond the financial cycle and
assess the resilience of our strategy to potential climate risks. We employ a
static balance sheet approach, fully recognizing that the analysis is a
theoretical “what if” exercise, which is useful to stretch management thinking
about the medium-to-long-term outlook, but not to inform insights from an
immediate solvency, financial or capacity management perspective.
Figure 9
Managing and understanding climate-related impacts is integral to our business
Short term
Medium and long term
Figure 8 background without text4.jpg
1 year
Today
10 years
(2035)
3 years
2050
Short-term risk management
• Natural catastrophe modeling to
inform balance sheet resilience
• Modeling exposures to climate
related natural catastrophes such
as hurricane, hail and flood to
inform capital and solvency
assessment incl. profitability
assessment and reinsurance
strategy
• Transition risk considered
qualitatively as part of our Total
Risk Profiling™ methodology
Medium and long term analysis
• Climate risk scenario analysis to inform medium and
long term strategic resilience
• ‘What-if’ analysis, performed using a fixed balance
sheet approach and considering both physical and
transition risk
• Allows to understand and informs around potential
future impacts of climate change
Figure 10
Time horizons considered
Short term
0 – 3 years
(until 2026)
This is aligned with our financial planning cycle, in which we place a particular
focus on managing the changing frequency and severity of perils, which is critical
to ensuring profitability and management of accumulation risk. Over this horizon,
insight derived from our natural catastrophe modeling (see section 3.1.3 Natural
catastrophe modeling: current exposure to physical risk on pages ## to ## )
informs our capital and solvency calculations. Our view of natural catastrophe
risk also underpins profitability assessments and strategic capacity allocation and
guides the type and quantity of reinsurance we buy. Drivers of transition risk that
could have an impact on the achievement of our short-term strategic objectives
are in scope for consideration as part of our annual process by applying our Total
Risk Profiling™ methodology (see section 3.2.1 Integration of climate risk within
the overall risk management framework on page ## ).
Medium term
3 – 10 years
(until 2035)
While we operate with a three-year financial cycle horizon, a consideration of
longer time horizons allows us to reflect potential risks and opportunities
associated with climate change in the formulation of appropriate responses. A 10-
year horizon allows us balance the need for strategic insight with the growing
uncertainty associated with longer time horizons. Our view on the resilience of
our business strategy over the medium term is informed through the use of
scenario analysis.
Long term
10 – 30 years
(until 2050)
Our net-zero commitment requires that we extend our time horizons to 2050 to
consider more fully the p otential risks and opportunities associated with aligning
our business with a net-zero future . Such time horizons are well suited to certain
long-term assets such as real estate investments and life insurance risks. Our
view on the resilience of our business strategy over the long term is informed
through the use of scenario analysis.
1. 3 Results from the Q4 2024 Group Catastrophe Model are presented in the
analysis shown below. There are timing differences in the underlying exposures
considered in this analysis (underlying exposures by peril region are generally as of
June or September 2024, and in exceptional cases as of September or December
2023). For more information, see also 3.2.2 Managing risks from climate-related
natural catastrophes on page 158.
3.1.3 Natural catastrophe modeling: current exposure to physical risk 3
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To manage our short-term climate risks more effectively, we are investing in improving
our understanding of them. Modeling the effects of physical risk on our portfolios is a
key focus. Managing the changing frequency and severity of perils is critical to ensuring
profitability and managing accumulation risk over the short term (1 – 3 years). Based on
our work so far, it has become clear that model adjustments are required in some peril
regions to reflect the impact of climate trends on physical risk today. We focus on
Property & Casualty (P&C) exposures and monitor the following:
Approach
Current exposures to physical climate risk are expressed through Annual Expected Loss (AEL)
and Probable Maximum Loss (PML). Modeled exposures comprising the peril regions are as
follows:
• Central Europe hail: Austria, Belgium, Czech, Republic, Denmark, Estonia, Finland, France,
Germany, Great Britain, Hungary, Ireland, Italy, Latvia, Lichtenstein, Lithuania, Luxembourg,
Norway, the Netherlands, Poland, Slovakia, Slovenia, Sweden and Switzerland.
• Europe wind: Austria, Belgium, Czech Republic, Denmark, France, Germany, Guernsey,
Ireland, Isle of Man, Jersey, Luxembourg, the Netherlands, Norway, Poland, Sweden,
Switzerland and the UK.
• Europe flood: Austria, Belgium, Denmark, Finland, France, Germany, Italy, Ireland,
Luxembourg, Netherlands, Norway, Poland, Portugal, Sweden, Switzerland and the UK,
including others like Guernsey, Isle of Man, Jersey, San Marino and Vatican.
• CB, MX and U.S. hurricane: Caribbean, Mexico and the U.S.
Our approach to modeling is discussed further in the section on managing risks from climate-
related natural catastrophes (see page ##). We highlight how various drivers including exposed
insurance portfolio and vulnerability changes, model updates, exposure data quality, foreign
exchange rates and reinsurance can influence natural catastrophe modeling output (e.g., AEL,
PML) over time.
Scope
The climate risk assessment is applied to our portfolios, namely the exposure of our P&C
business to natural catastrophe perils, impacted by climate change that could materially impact
us.
Quantification
AEL
AEL provides a view on the
expected loss due to natural
catastrophes per year,
averaged over many years.
PML
PML is a tail metric that looks
at severe, unexpected but still
possible outcomes of natural
catastrophes at a defined
probability of occurrence.
Monetary losses
Amount of monetary losses
attributable to insurance
payouts from natural
catastrophes.
Annual Expected Loss
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Figure 11
Annual Expected Loss for top five peril regions1
in USD millions
49
Caribbean (CB),
Mexico (MX)
and U.S. 2
hurricane
U.S. severe
convective
storm (hail
and
tornado)
EU
wind
Centra
l EU
hail3
EU
flood4
l
2023
l
2024
1. AEL excludes Farmers Re’s participation in the Farmers Exchanges’ all lines
quota share treaty of 8 percent as of December 31, 2024. This treaty contributes
to Zurich Group’s AEL for U.S. severe convective storm with USD 85 million and
for U.S. hurricane with USD 16 million.
2. The geographic scope includes correlated exposure in the CB and in MX. The
AEL for U.S. hurricane only is USD 184 million in 2024.
3. The scope of the Central EU hail model was extended to also include Czech
Republic, Denmark, Estonia, Finland, Great Britain, Hungary, Ireland, Latvia, Lithuania,
Luxembourg, Norway, Poland, Slovakia, Slovenia and Sweden.
4. The scope of the EU flood model was extended to also include Denmark,
Finland, France, Ireland, Luxembourg, Netherlands, Norway, Poland, Portugal and
Sweden.
Our modeled AEL from climate-related natural catastrophes provides an indicator of our
current exposure to perils that might be affected by climate change. The AEL analysis
above reflects our current top five peril regions, net of reinsurance, before tax and
excluding unallocated loss adjustment expenses. This analysis helps us manage risks
related to insuring these perils, such as accumulation risk. Risk appetite limits by peril
region are in place and exposure is currently within appetite.
2024 numbers generally reflect exposure, model, reinsurance and exchange rate
changes since the last reporting. The increase of Central EU hail is driven by a model
change, including geographic scope extension and increased granularity of exposure
data for Italy. The modeled geographic scope has also been extended for EU flood.
Probable Maximum Loss
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The graphs below show the materiality of natural catastrophe risk relative to other risk
types and the materiality of our climate-related perils to overall catastrophe risk. Natural
catastrophe risk accounts for only 6 percent of our Swiss Solvency Test (SST) total risk
capital. From those 6 percent only 45 percent relate to natural catastrophe risk with
North America hurricane being the largest contributor.
Figure 12
SST by risk type and climate-related perils as proportion of natural catastrophe SST risk capital
SST total risk capital contribution by risk typeClimate-related perils as a fraction of
natural
catastrophe SST total risk capital1
581
l
Market risk
54%
l
Premium & reserve risk
27%
l
Business risk
7%
l
Natural catastrophe risk
6%
l
Life insurance risk
4%
l
Other credit risk
2%
584
l
North America hurricane
28%
l
Europe wind
8%
l
Europe flood
3%
l
Other climate-related
6%
l
Non-climate-related
55%
1. The natural catastrophe SST total risk capital is defined by the 1 percent worst
annual losses. These are driven by peril regions with large potential losses
beyond 100-year return period (e.g., North America hurricane).
Figure 13
Probable Maximum Loss by top three peril regions1
in USD millions
832
202
3
202
4
202
3
202
4
202
3
202
4
Caribbean, Mexico and
U.S. hurricane
Europe wind
Europe
flood
l
50 Year
l
100
Year
1. 4 Our disclosure shows our efforts to provide additional details. However it is
acknowledged that full compliance is not envisaged e.g., due to our reporting
standards (no disclosure of gross losses), or our industry’s catastrophe modeling
standards. There are generally no catastrophe models available, for example, for
chronic diseases, droughts and extreme heat and therefore no PMLs can be provided.
Tsunami risk is correlated (and modeled) with seismic risk and therefore cannot be
reported on a stand-alone basis as part of insured products from weather-related
natural catastrophes, which are the scope of SASB.
1. PML excludes Farmers Re’s participation in the Farmers Exchanges’ all lines
quota share treaty of 8 percent as of December 31, 2024. This treaty increased Zurich
Group’s PML for US hurricane by USD 81 million for the 50-year PML and by USD 96
million for the 100-year PML.
The net annual aggregate 50- and 100-year PML are shown above for the top three
climate-related peril regions measured by SST total capital contribution. 4
P&C monetary losses from natural catastrophes
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Our loss ratio for 2024 was 65.6 percentage with 0.6 percentage points attributable to
the following natural catastrophe experienced in 2024. We follow the Group’s
Catastrophe Response Group (CRG) governance for natural catastrophe identification.
Here we report events where the total net loss is above USD 200 million. The Hurricane
Helene event and figure has been reviewed by the CRG, a cross-functional committee
which oversees and recommends to the ExCo the best-estimate ultimate loss for
material catastrophes. The term “catastrophe” in the context of the CRG covers both
man-made and natural catastrophe peril events that are relatively infrequent or are
phenomena that produce unusually large aggregate losses.
Table 2
Total amount of net losses1
Event name (by event and region)
Total net losses in
USDm (2024)
Hurricane Helene (hurricane, North America)
250
Total
250
1. Only events above USD 200 million are reported.
In estimating the total net losses of catastrophes, assumptions and models are applied.
These assumptions and models do not only have inherent variability, but can
also change over time as the catastrophe event develops. Hence the estimates
provided above can change over time as the event matures and the estimates become
more stable.
An important aspect of our proprietary view on natural catastrophe risk is the evaluation
of patterns and trends in catastrophe activity with time. Natural variability of event
activity is an integral part of our view on natural catastrophe risk, as are statistically
significant trends that may be detectable in our claims experience or credible,
conclusive modeling of past, present and future climate as a driver of loss activity. We
regularly revisit our risk views and underlying models on climate-related perils in order
to reflect trends in the hazard, whereas exposure trends are naturally captured by
exposure data updates. Natural variability is at the same time evaluated and kept up to
date as part of the regular reviews of our natural catastrophe risk view, which underpins
the structuring and purchase of reinsurance along with the profitability assessment and
strategic capacity allocation for risk assumed from customers.
We follow a gross-line underwriting strategy and focus substantial time and resources
on ensuring risk-adequate underwriting and pricing of the business we assume upfront,
including consideration of potential climate change induced trends. Reinsurance is used
as a means to maximize diversification of net retained risks and to protect shareholders
against earnings volatility. We engage with a core panel of reinsurance partners to
secure the required capacity at sustainable pricing over the medium term. Given our
financial strength, we have the option to weigh the benefits and cost of reinsurance
against other forms of risk financing and thus adapt to supply-side changes in the
reinsurance market as a potential consequence of the macroeconomic response to
climate change adaptation.
3.1.4 Portfolio level scenario-based climate risk analysis
We consider potential longer-term impacts of climate change to our business through an
annual scenario-based analysis which considers our underwriting and investment
activities as well as our own operations.
Key aspects of our analytical framework are outlined below. To ensure the medium-term
outlook is sufficiently distinct from our financial planning cycle, we extended the
medium-term timeframe from 2030 to 2035 as part of our 2024 cycle (see Figure 10 on
page ##).
Figure 14
Scope and time horizons for climate risk analysis1
Underwriting
Investments
Operations
Approach
Premium analyzed by
Line of business (LoB),
region and industry and
sector respectively to
identify areas with
potentially high exposure
to physical and transition
risk. Each such area
analyzed in depth to
understand the potential
relationship between key
climate drivers and
insurance demand and
loss experience.
Third-party model
leveraged to understand
impacts to asset
valuations through
exposures of companies
and industries to physical
and transition risk drivers.
Analysis informed by
asset-level data on
relevant risk drivers,
including CO2e
emissions, abatement
costs, exposure to
physical risks,
dependency on fossil
fuels.
Physical risk exposure
analysis performed to
understand potential
future exposures at key
locations combined with
model-based assessment
of supply chain resilience
to transition risk.
Scope
• Most material
P&C LoB / Industry
sectors (64 percent
premium)
• Life protection
products (93 percent
premium)
• Listed equities
• Corporate credit
• Real estate
• Sovereign bonds
• Owned offices
and offices with greater
than 10-year lease terms,
with more than 100
employees
• All strategic data
centers
• Suppliers
performing services with
the highest level of
criticality
• Percentage
change in demand is the
estimated impact on size
and composition of
demand for insurance
products due to the
drivers of physical and
transition climate risk,
compared with a 2035
baseline.
• Percentage
change in expected
losses is the estimated
impact on claims due to
the drivers of physical and
transition climate risk,
compared with a 2035
baseline.
Impacts to asset valuation
for listed equities,
corporate credit and real
estate, which represents
approximately 35 percent
of the assets under
management.
Sovereign bonds are
assessed qualitatively.
Changing exposure to
natural catastrophes.
Medium
Term
3 – 10 years
(until 2035)
Quantitative
Qualitative
Quantitative
Long Term
10 – 30
years (until
2050)
Qualitative
Quantitative
Quantitative
1. For details on modeling approaches, methodologies and key assumptions, see
section 3.2.3 Portfolio level, scenario-based climate risk analysis on pages 158 to 159.
Scenarios used
The scenarios underpinning the analysis of our underwriting and investment activities
are drawn from the Network for the Greening of the Financial System (NGFS) suite and
are chosen to allow us consider a broad range of risks and opportunities of varying
degrees of physical and transition risk and determine the resilience of our strategy in
both net-zero aligned and high physical risk future states. The emissions pathways of
the selected scenarios correspond broadly to representative concentration pathways
(RCP) 2.6 and 6.0.
The scenarios used to understand physical risk impacts to our own operations are
broadly aligned with those used for our underwriting and investment analysis in terms of
RCP assumed (RCP 2.6 and 8.5), meaning we consider similarly varying degrees of
physical risk.
Figure 15
NGFS scenario framework1
Current policies
This scenario assumes that only currently implemented
policies continue, leading to high physical risks.
Emissions grow until 2080 leading to about 3°C of
warming and severe physical risks. This includes
irreversible changes like higher sea level rise. The
assumed levels of physical risk impact productivity,
suppress economic activity and ultimately result in
declines in GDP. Overall levels of transition risk in this
scenario are low.
Net-zero 2050
An ambitious scenario that limits global warming to
1.5°C by 2100 through the immediate implementation
of stringent climate policies and innovation, reaching
net-zero by 2050. Some key jurisdictions reach net-
zero for all greenhouse gases by this point. CO2
removal is used to accelerate decarbonization but kept
to a minimum. Physical risks are relatively low but
transition risks owing to regulation, carbon pricing,
technological changes and climate abatement costs
are higher but still on a low level.
Figure 14 NGFS scenario framework.jpg
Disorderly
Too little, too late
Divergent
net-zero
(1.5°C)
Delayed
2°C
Net-zero
2050
(1.5°C)*
Below
2°C
NDCs2
Current
Policies*
Orderly
Hot house
world
*  Used scenarios.
1. Scenario used from NGFS: www.ngfs.net/ngfs-scenarios-portal
2. Nationally Determined Contributions.
3.1.5 Portfolio level scenario-based climate risk analysis: Underwriting
Sierra.jpg
Sierra Signorelli
CEO Commercial
Insurance
Underwriting analysis
• The results for our Property & Casualty (P&C) business show an increased impact in the
scenario year under both current policies as well as a net-zero 2050 scenario. However,
impacts are still considered to be of low materiality to the Group. No material changes in
response are, therefore, deemed necessary.
• Medium-term demand impacts to our Life Protection business are broadly stable owing
to several factors, including changes in geographic mix and the later assumed calculation date.
Loss analysis by 2035 shows low losses but with the potential for higher losses if transition risk
gives rise to high levels of unemployment.
Key analysis findings
Outcomes from our medium-to-long-term climate risk scenario analysis are
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presented below.
Medium term
Figure 16
Potential climate change-related impacts to our underwriting portfolio under current policies
and net-zero 2050 scenarios with strategically aligned responses
Demand impacts
Loss impacts
Portfolio
weight
Current
policies
Net-
zero
2050
Current
policies
Net-
zero
2050
Sector
Line of business
All sectors
Retail and commercial
motor
1
2
2
1
1
All sectors
Property
1
3
1
2
3
Construction
–
2
3
5
3
2
Financial services
–
2
3
3
3
3
Agriculture
–
2
3
4
3
2
Heavy industry
and mining
–
3
3
3
3
3
Fossil fuels
–
3
4
1
3
3
Power
–
3
3
4
3
3
All sectors
Life protection
1
2
1
3
3
Portfolio weight (% of GWP)
Impact thresholds
l
High (>10%)
l
High risk
(relevant for
consideration
Group
response)
l
Low growth
l
Medium (5–10%)
l
Medium
growth
l
Low (<5%)
l
Medium risk
l
High growth
l
Low risk
Definition of terms used:
• Sector: Industry group of the customer base except for transport, which was
considered together with the total motor book, and property, which was
considered across industry due to the overarching impact of physical risk
associated with climate change.
• Weight in underwriting portfolio: Indicates how much the sector/geography/
line of business being considered contributes to the overall underwriting
portfolio.
• Demand impacts: High, medium and low risk relate to the potential decline in
premium volume due to the various scenarios whereas high, medium and
low growth indicate that there is a potential increase in premium due to the
changing landscape driven by transition.
• Loss impacts: High, medium and low as above relate to the potential
increase in losses in each sector if no strategic or mitigating action is taken
as part of the underwriting strategy.
Overall impacts to P&C demand and losses in 2035, under the scenarios
considered as modeled and with assumptions made, are estimated to be of
low materiality in both scenarios. In general, the diversification of our P&C
business in terms of geographic footprint, industry mix and line of business
limits our potential impacts. Under both scenarios our existing portfolio
management processes allows us to flexibly respond to potential climate risks
and opportunities, mitigating modeled impacts that result from the static
balance sheet approach, that does not allow for any portfolio changes over
the scenario period. Analysis to date does not suggest material impacts to fee
income received from Farmers Group Inc. through to 2035.
Current policies: a closer look
P&C
Physical risk is assumed to dominate in the current policies scenario. In that
scenario, two main transmission channels can lead to impacts on our
insurance portfolio. Firstly, the scenario assumption that increasing physical
risk will lead to a general modest suppression of economic growth and a
reduction of retail purchasing power is expected to also reduce demand for
insurance. Secondly, climate change driven changes in severity and
frequency of severe weather events can increase losses in our property and,
to a lesser degree, motor books.
With increases in physical climate risk being a long-term trend, both impacts
remain small over the scenario timeline. Compared to previous results, the
latest analysis shows lower loss impacts for our property portfolio, reflecting
our management actions around exposure reduction and climate change-
related adjustments to expected losses in our natural catastrophe models.
A notable shift in the latest results is the prediction of increased motor losses
compared to previous assessments. This is driven by the assumption of
higher EV penetration even under a current policies scenario, which is
reflective of increased sales trends over the last few years.
Life
The scenario assumption is that increasing physical risk will lead to a general
modest suppression of economic growth and hence a fall in demand for life
protection insurance. Climate change-driven changes in temperatures are
assumed to increase claims losses based on their impact on specific causes
of death or disability claims.
Our Life protection is primarily based on retail sales but with a material
proportion relating to corporate business. For retail business, we are
assuming that demand will change in line with overall GDP impacts in each
relevant economy. The effect of risk varies by country. For corporate business
the model attributes different industry size impacts by scenario. In a steady
state this gives rise to a lowering of demand for corporate insurances.
However, this may not fully allow for opportunities related to growing sectors
and their changing need for life protection for their workforces.
Our high level assessment of loss impacts suggest low effects by 2035. We
note the potential for rising temperatures giving rise to increasing claims from
sources such as cardiovascular disease. Given our geographic footprint and
protection coverage types, we do not model major additional claims from
acute weather events.
Net-zero 2050: a closer look
P&C
Under the net-zero scenario, insurance demand can be impacted through
three categories:
• Through direct increases or decreases of insured activities, such as
construction of renewable projects.
• Through changes in economic growth directly related to the transition,
such as a growth in total electricity production.
• Through contagion of transition effects to the overall economy.
The net-zero 2050 scenario is predicated on an immediate transition over the
next 10 years, with the period of highest transition risk occurring before the
2035 scenario year. Due to the speed of scenario developments, changing the
scenario horizon to 2035 from 2030 as in previous assessments, results in a
discernible change in results.
Particularly, by 2035, the scenario moves beyond a transitory increase in
investment activity that drives insurance demand through growth opportunities
in construction insurance for renewable energy projects and retrofit projects
that upgrade buildings to net-zero standards. By 2035, the scenario
hypothesizes that a significant part of required transition investments have
been completed, particularly in the power sector, where investment activity
returns below current levels.
Outside of the construction space, industrial production and with it insurance
demand is expected to continue to grow, reflecting economic and
demographic developments both driven by and unrelated to transition efforts.
However the high carbon prices under a net-zero scenario combined with a
lower demand for industrial goods such as cement, steel and chemicals due
to improvements in material efficiency and circularity, depress industrial
growth compared to a current policy scenario. Growth in specific transition
relevant materials such as copper or cobalt will not be sufficient to
compensate the overall reduction in industrial output.
Combined with the general contagion of carbon prices on economic growth,
company net revenues and country GDP, our model output therefore provides
a more negative insurance demand outlook under the net-zero scenario
compared to our baseline scenario or the current policies scenario over the
scenario time horizon. To note is that a large part of this negative impact will
be driven by our static balance sheet approach. While this approach is useful
to isolate climate effects and simplify modeling, it overestimates negative
impacts as it disregards organic changes of our portfolio that would track
shifts in economic activity and automatically capture growth from transition
relevant activities that are not yet present at scale today.
The rapid uptake of new low-carbon technologies under the net-zero scenario
will also come with increased risk of insurance losses. This applies to new
technologies in renewables, carbon capture and storage for power and
industry, hydrogen for industry, as well as new construction materials and
techniques in the construction sector, which are difficult to price due to the
lack of historical claims data. Due to the uncertainty of technological
developments, we are not able to fully quantitatively model potential loss
developments. From qualitative workshop discussions that are part of our
scenario assessment process, the speed of change has been consistently
assessed as a driver that might exacerbate transition risk impacts, as skills
and supply chains might not keep up with the required technological change,
leading to more disruption and losses. However based on current trends, this
situation seems unlikely to unfold as companies and governments are
increasingly aware of the trade-offs and risks, and deploy mitigating actions to
control the speed and quality of deployed technologies. By maintaining our
careful approach to underwriting new technologies and working with
customers to understand their challenges and build up experience over time,
we also expect that we would be able to maintain adequate pricing and risk
selection to retain profitability through this transition period.
An area where this dynamic is already unfolding is the motor sector, with the
increasing uptake of electric or alternatively fueled vehicles. Combining the
expected EV growth of the net-zero scenario with current EV loss trends
results in a pronounced negative impact in our scenario modeling. However
as our understanding of EV specific loss drivers is already improving and
being reflected in pricing models, we can expect that the move to EVs will not
have sustained impact on our overall motor portfolio profitability.
Life
For the Life business, modeling shows transition impacts by 2035 are
sufficient to give greater overall demand falls than under the current policies
scenario. However, by that stage it is noticeable that in the LATAM region the
beneficial impacts of the net-zero policies in reducing physical risk outweigh
the additional demand suppression from transition risk. This balance of
physical risk and transition risk will vary depending on the choice of model
year.
For the loss analysis on the Life business we note that, by 2035, modeling
suggest lower levels of temperature increase under the net-zero scenario than
the current policies scenario. This in turn leads to lower expected losses on
the portfolio.
Long-term
P&C and Life
In the long term (beyond 2035 to 2050), under the current policies scenario,
the severity and frequency of acute and chronic physical risks are expected to
steadily increase, however with regional differences in speed and severity
(e.g., coastal areas, wildfire zones). Quantitative modeling over these
timelines is no longer sensible, as socioeconomic, political and technological
developments will have a material impact on insurance loss trends and those
developments are much less predictable over longer time periods. Given our
business is concentrated in developed countries with a fairly high adaptive
capacity, it is reasonable to assume that even for a 2050 time horizon,
insurability will be more or equally determined by political and market
developments rather than pure physical risk. Our existing accumulation and
portfolio management processes already enable us to monitor developments
and evolve our risk appetite as physical and political changes arise.
Under the net-zero scenario, by design, transition activities will have been
successfully concluded by 2050, thereby diminishing further transition risks.
Under the scenario parameters we can expect a peak of transition risks
around 2030 with a gradual reduction of transition risk thereafter, as more of
the economy becomes aligned with a net-zero pathway. While transition risks
will remain elevated until 2050 in many regions, depressing GDP growth, they
are not expected to increase beyond the levels modeled for 2035.
While not quantitatively modeled, we expect this outcome would be markedly
different under a delayed transition scenario, where after lower short-term
transition risk a higher peak is expected around 2040, as potentially more
change needs to happen in a shorter time period.
Responses
Under both scenarios our existing portfolio management processes allows us
to flexibly respond to potential climate trends. Relying on those processes will
allow us to respond to emerging climate-related risk drivers the same as for
other risk drivers. Generally depressed economic growth and inflationary
pressures predicted under both scenarios are risks we are equipped to deal
with in line with general market and insurance cycles.
Given this flexibility to adapt and our existing risk management processes, the
static balance sheet approach employed in scenario modelling will
overestimate longer-term impacts on our portfolio. Using this static balance
sheet approach is a conscious choice to limit model complexity, better isolate
climate trends and provide an indication on potential worst case impacts. As
we are aware of its limitations when considering strategic implications of our
model output we still consider it to be appropriate as the starting point to
discuss responses.
Life
Whilst our Life protection portfolio includes some longer-term contracts, our
corporate business is primarily short term in nature. The business is also
diverse in terms of geographic footprint and (for corporate business) industry
mix. For longer-term business, we remain vigilant to the potential for long-term
trends affecting mortality and morbidity trends. We will continue to develop our
climate-related loss analyses and use these to inform our pricing and
underwriting.
P&C
In general, the diversification of our P&C business in terms of geographic
footprint, industry mix and line business limits our potential exposure. Our
ability to annually re-underwrite and adapt our pricing and risk selection
criteria to emerging trends allows us to respond to emerging climate trends
and balance near-term market movement against mid-term strategic scenario
possibilities.
Our ongoing focus on natural catastrophe modeling and accumulation
management will continue to prepare us for future developments of physical
climate risk.
The actions outlined in our climate transition plan to deepen our
understanding of the technologies, barriers and dependencies involved in the
transition pathways of different industries, will also prepare us for the potential
risks and opportunities expected under a net-zero scenario. Where we see
profitable opportunities arising, we will continue to develop new insurance
solutions for nascent technologies which present new risks and therefore
require innovative approaches to insurance. By engaging early, we collect
crucial data to identify and mitigate technological risks.
Impact areas for
consideration
Response
Progress
Physical impact of
climate change
continues to drive
potential risk in the
property book
We continued to develop our best-
in-class catastrophe modeling and
accumulation management.
Completed our initiative on
rebalancing capacity deployment
within our North American
business.
Maintaining sound exposure
management across our key peril
regions will remain an ongoing
focus, as will further rebalancing
as part of ongoing business using
in-house climate science experts
and external advisors.
Monitor profitability
trends associated with
EV
Under all considered scenarios
the uptake of EVs will increase,
requiring continued focus on
monitoring profitability trends
associated with EVs to adjust our
propositions appropriately.
Additionally, we are seeking to
optimize claims networks for
emerging technology and
expanded focus on technological
advancements in driving and
vehicles.
Our share of EVs in the overall
motor portfolio is consistent with
our footprint and local EV market
trends, showing
that our evolving motor
propositions adequately capture
the growing EV penetration.
Potential impacts on
carbon-intensive sectors
under a net-zero
scenario and associated
sectorial shifts
Continue to balance risk across
the portfolio and understand the
risks associated with transition
trends and technologies
The actions outlined in our climate
transition plan to deepen our
understanding of the technologies,
barriers and dependencies
involved in the transition pathways
of different industries and
supplement our overall portfolio
and performance management
processes. Where we see
profitable opportunities arising
from transition trends, we will
continue to develop new
insurance solutions for nascent
technologies which present new
risks and therefore require
innovative approaches to
insurance.
Case
study
Together with Aon we have launched a pioneering clean energy insurance facility, providing
comprehensive coverage globally for blue and green hydrogen projects with capital
expenditures of up to USD 250 million. The initiative is the result of extensive research that
both parties have conducted over the past two years around the specific needs and challenges
of our customers when developing blue and green hydrogen projects. We, as the lead insurer,
and Aon, as the exclusive broker, aim to accelerate the development of clean hydrogen
projects. Clean hydrogen has immense potential as an eco-friendly alternative to fossil fuel
and we strongly believe it can play a critical role in the energy transition.
The new multi-line clean energy insurance facility offers comprehensive coverage through a
single integrated policy, encompassing construction, delay in start-up, operational cover,
business interruption, marine cargo limits, and third-party liability. It also includes coverage for
carbon capture, utilization, and storage (CCUS) technologies, providing customers with a
complete suite of solutions across the entire value chain of hydrogen production.
Green hydrogen is produced by splitting water into hydrogen and oxygen via electrolysis
powered by renewable energy. Blue hydrogen is derived from natural gas and uses carbon
capture technologies to reduce its carbon intensity. It represents a bridge technology until
green hydrogen is available in sufficient quantities and at competitive prices.
3.1.6 Portfolio level scenario-based climate risk analysis: Investments
Stephan.jpg
Stephan van Vliet
Group Chief
Investment Officer
Proprietary investment portfolio analysis
• Our analysis indicates that climate change-related risk to asset valuation would not
pose a major risk to our capital position. This conclusion considers equity, credit and
real estate, which represent approximately 35 percent of our assets under
management.
• Under the net-zero 2050 scenario, the accumulated impact for our investment portfolios
is limited. However, we observe higher transition risks, leading to a greater modeled
impact on valuations for carbon-intensive sectors. These increased climate-related
impacts can be attributed to several potential market changes, such as regulatory shifts,
carbon pricing, technological advancements, climate mitigation costs, increased
demand for low-carbon products and services, and decreased demand for fossil fuel-
related products and services.
• Under the current policies scenario, we observe low or moderately low physical risks for
our investment portfolios, as physical risks are estimated to materialize and impact the
asset valuation more profoundly further out in the future compared with the maturity
patterns of climate transition risks. The model indicates high physical exposures for a
few sectors, such as agriculture and activities in tropical regions, but where our
investment asset exposure is limited.
• Our analysis of sovereign bonds indicates mildly inflationary outcomes under both
current policies and net-zero 2050 scenarios.
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Key analysis findings
Outcomes from our medium-to-long-term climate risk scenario analysis are presented
below.
Medium term
The net-zero scenario will see the largest negative near-to-medium-term impact, due to
rapid transitioning over the next few years which will be disruptive for economic activity.
However, the economic impact is likely to turn positive over time, as large-scale
investments in new technologies generate both stronger demand and productivity gains,
as economic activity and energy systems adjust to higher carbon prices. Some
challenges are still likely to remain over the medium to long term, however, in particular
around the larger costs associated with achieving the “last mile” of emission reductions.
The current policies scenario, sees a permanent and negative impact on economic
activity that will materialize over the medium to long term, including beyond the 2050
horizon, but near-term impact is likely to be relatively limited.
Long term
Listed Equities
Overall, the impacts on our global equity portfolio are slightly smaller than those of a
broad market benchmark, especially in the current policies scenario. This can be
explained by several factors, including geographic exposure, different sector weighting
and specific security exposure.
Figure 17
RY to QA
RY to QA
Estimated impact on listed equity portfolio across net-zero 2050 and current policies scenarios in
comparison to a well-diversified global equity benchmark1
Sector weights
Net-zero 2050
Current policies
Sector
IM
portfolio
Benchmar
k
IM
portfolio
Benchmar
k
IM
portfolio
Benchmar
k
Energy
3
2
2
2
6
6
Non-energy materials
2
3
3
3
6
6
Consumer cyclicals
2
2
4
6
6
6
Consumer non-cyclicals
1
1
5
5
5
5
Business services
3
3
5
5
6
6
Consumer services
3
3
5
5
5
5
Telecommunications
3
3
6
6
6
5
Industrials
1
2
5
5
6
6
Finance
1
1
6
5
6
5
Healthcare
2
1
6
6
6
6
Technology
1
1
6
6
6
6
Utilities
3
3
7
7
6
6
Sector weight (% of listed equity portfolio)
Impact thresholds
l
High (>10%)
l
Very high risk
l
Moderately low
risk
l
Medium (5–10%)
l
High risk
l
Low risk
l
Low (<5%)
l
Moderately high risk
l
Opportunity
l
Moderate risk
1. The sector heatmap is calibrated to highlight relative impact per industry sector.
Aggregate scenario level impacts are assessed in relation to our definition of financial
materiality.
Under the net-zero 2050 scenario, we observe elevated transition risks of carbon-
intensive sectors such as energy, non-energy materials, and consumer cyclicals, where
the impact on valuation is significantly higher than for lower carbon-intense sectors.
These sectors face greater impacts compared to low-carbon sectors by, for example,
the increase of carbon pricing mechanisms and demand changes which can result in
lower profit margins. Conversely, opportunities arise for sectors that can contribute to
and benefit from the transition to a low-carbon economy, particularly utilities. Those
stand to gain from the demand creation resulting from the introduction, development
and deployment of renewable energy solutions. Compared to previous assessment
cycles, we note that some sectors both within our equity portfolio and within the
benchmark are now experiencing altered asset valuation impacts, which can mostly be
explained by model updates. The primary factors driving these changes include updates
to the marginal abatement cost curves to reflect the latest technological expectations,
revisions to the core oil and gas model, and improvements in growth models. Lower
abatement costs diminish the competitive edge of low-carbon intensity players while
reducing costs for high-carbon intensity sectors, leading to lower valuation impacts for
carbon-intensive sectors like energy and lower opportunity impacts for sectors such as
utilities. Changes in oil and gas modeling now incorporate a higher global oil price and
demand curve, replacing previous regional differences. For gas, the model now
distinguishes between three global regions with varying gas prices. Those changes are
leading to increased impacts in particular for energy. Additionally, the updated growth
model better captures the lifecycle of companies, reflecting three distinct phases:
growth, transition, and terminal. This refinement has resulted in increased impacts,
particularly for consumer cyclicals and energy.
For lower-carbon sectors, such as services, finance, and healthcare, we observe low
impacts on asset valuations. This result is sensible given their limited direct exposure to
climate-related transition risks via their emission intensity profile. However, for finance,
the indirect exposure through the financing of higher-emitting sectors is not accounted
for in the asset class valuation modelling. In scenarios involving increased carbon
pricing, stricter climate-related regulations, or advancements in low-carbon
technologies, the finance sector could encounter more significant exposure to climate
transition risks, necessitating mitigation measures. Although not shown directly in the
outcome of the analysis, all sectors, including low-carbon sectors, could potentially be
severely impacted by a rapid transition to a low-carbon economy, as it can lead to
energy scarcity, rising energy prices, and economic bottlenecks. On the other hand,
many sectors could potentially benefit from the transition to a low-carbon economy, by
taking measures to meaningfully decrease GHG emission or increase exposure to low-
carbon solutions and services offerings.
Under the current policies scenario, physical climate-related risks are estimated to have
a low to moderately low impact on asset valuations, in contrast to the higher transitional
risks observed under the net-zero 2050 scenario. This difference occurs because the
most significant physical impacts of climate change are projected to occur further in the
future, beyond the time span covered by the model, making them less immediate
compared to transitional risks. However, the 1.5°C temperature limit was breached in
2024, which is much earlier than many climate scientists have predicted, we need to be
aware that physical climate-related risks may materialize faster than previously
expected. The potential impacts on our portfolio will therefore need to be monitored
closely going forward.
Corporate Credit
The outcome of the model shows that our corporate credit portfolio has lower impact
levels than the benchmark in general.
Figure 18
Estimated impact on corporate bond portfolio across net-zero 2050 and current policies scenarios in comparison to a well-
diversified global benchmark1
Sector weights
Net-zero 2050
Current policies
Sector
IM
portfolio
Benchmar
k
IM
portfolio
Benchmar
k
IM
portfolio
Benchmar
k
Energy
3
3
4
3
6
6
Non-energy materials
3
3
5
5
6
6
Consumer cyclicals
3
3
6
6
6
6
Consumer non-cyclicals
3
2
6
6
6
6
Business services
3
3
5
5
6
6
Consumer services
3
3
6
6
6
6
Telecommunications
3
3
6
6
6
6
Industrials
2
2
5
6
6
6
Finance
1
1
6
6
6
6
Healthcare
3
2
6
6
6
6
Technology
3
2
6
6
6
6
Utilities
2
2
4
3
6
6
Sector weight (% of listed equity portfolio)
Impact thresholds
l
High (>10%)
l
Very high risk
l
Moderately low
risk
l
Medium (5–10%)
l
High risk
l
Low risk
l
Low (<5%)
l
Moderately high risk
l
Opportunity
l
Moderate risk
1. The sector heatmap is calibrated to highlight relative impact per industry sector.
Aggregate scenario level impacts are assessed in relation to our definition of financial
materiality.
We observe notably lower climate-related impacts for our global credit portfolio
compared to our listed equity portfolio. This discrepancy can be attributed to the shorter
maturity of the credit portfolio, as bonds typically mature before the most severe climate-
related risks come into effect. This may lead to an underestimation of the long term
climate-related exposure, as the climate risk from bonds bought after the maturity of the
initial portfolio is not captured. Assessed against previous year's reporting, we note only
minor changes in the asset valuation of the portfolio.
Compared to our listed equity portfolio, the 'Finance' sector has a higher weighting in
our corporate credit portfolio. The model only considers direct climate risks for the
finance sector, excluding potential material indirect impacts through portfolio-related
activities. Therefore, we will closely monitor these indirect risks to ensure that any
potential impact on valuation is adequately addressed over time. Under the net-zero
1. 5 Impacts on government bond yields are derived using the national institute
global econometric model (NiGEM*) model. NiGEM* is a global macroeconomic model
and models the effect of climate shocks on macroeconomic variables such as GDP,
inflation, debt issuance, and central bank policy rates. These macroeconomic factors
are key drivers of interest rate risk for sovereign bonds, and default risk for each
sovereign issuer. The price impact for individual sovereign debt securities in the
portfolio are then derived.
2050 scenario, our corporate credit portfolio exhibits similar patterns as our listed equity
portfolio, with carbon-intensive sectors facing higher transition risks and thus greater
modeled impacts on valuation compared to low-carbon sectors. For utilities, our
corporate credit portfolio is more weighted toward climate transition laggards, while our
listed equity portfolio has higher exposure to climate transition leaders. This discrepancy
explains the significant divergence in asset valuation impacts between the equity
portfolio, which is estimated to benefit from opportunities in a net-zero 2050 scenario,
and the credit portfolio, which is expected to face moderate detrimental impacts.
Additionally, the benchmark has a higher exposure to utilities than our credit portfolio,
which accounts for the higher impacts observed in the benchmark compared to our
credit portfolio. For business services and industrials, we anticipate slightly higher
transition risks for our corporate debt portfolios compared to the benchmark. This is
because our portfolio has relatively high exposure to entities within these sectors that
offer services associated with higher greenhouse gas emissions, and thus higher
transition risks, such as waste management and environmental services. However,
these sectors have a low overall weighting in our portfolio.
Under the current policies scenario, we observe low impact levels on asset valuation.
The bonds in our corporate credit portfolio tend to mature before the strongest climate-
related risks materialize. However, as physical risks will most likely materialize earlier
than previously anticipated, the potential impacts to our portfolio will be closely
monitored.
Sovereigns
The climate change-related risks on our sovereign debt exposure are analyzed
differently than the other asset classes 5 highlighted above.
Sovereign bond impacts reflect the macroeconomic effects of changes in energy
consumption, energy costs, physical risks of climate change, and the response of
central banks to those shocks. A significant upward move in inflation will result in higher
nominal government bond yields, implying a negative price and asset valuation impact.
The two NGFS scenarios considered differ markedly with respect to their inflationary
consequences. The current policies scenario has a relatively limited inflationary impact
over the time period considered. While labor productivity is expected to suffer in a hotter
world, which would put upward pressure on prices and inflation, this effect is only
expected to develop slowly. There are also likely to be offsetting changes in demand
and economic activity in the worst affected regions, resulting in relatively minor overall
inflation impact. By contrast, the net-zero 2050 scenario is seen as inflationary, with
inflation set to overshoot central bank inflation targets by a significant amount over the
earlier scenario period, primarily driven by the introduction of a rapidly rising price of
2. 6 ZRS provides an end-to-end analysis encompassing a portfolio-level climate risk
analysis, through to location-level climate risk assessments.
carbon, but also reflecting strong investment demand and potentially disruptive changes
to energy systems. While this will exert upward pressure on government bond yields,
the impact is seen to be transitory, as central banks retain their inflation targets,
preventing a more severe and persistent inflationary outcome from developing. This
means that the overall average impact on yields is estimated to remain relatively limited,
particularly for securities with a longer maturity. That said, periods with heightened
volatility, both in inflation and nominal government bond yields, should not be ruled out.
While not modeled under the asset only view presented here, we note that adverse
pricing impacts from rising yields on our sovereign bond portfolios will be materially
offset by a similar effect on the discounted value of our liabilities.
Real Estate
We continue to observe only minor exposure to climate change-related risks in our real
estate portfolio. Given the almost unchanged regional and sectoral portfolio
diversification between 2022 and 2023, the changes in valuation impact compared to
previous reporting are primarily driven by changes in model variables. Impacts in real
estate in Q4 2023 and Q1 2024 are mainly driven by changes in the marginal
abatement cost curves.
The impact valuation levels have slightly increased for the real estate portfolio, with the
most substantial impact occurring under the net-zero 2050 scenario. More than 80
percent of our direct real estate investments are in Europe with an overweight in
Switzerland and Germany. Under the different scenarios, our portfolio is most exposed
to rising temperatures in Southern Europe, where residents will become more reliant on
electricity to power ventilation, fans or air conditioning to stay cool under warmer
temperatures. Under the net-zero 2050 scenario this could be subject to, among others,
risks associated with carbon price introduction, if electricity consumption is relying on
carbon-intense sources. In order to mitigate climate-related risks of our real estate
portfolio, buildings in our portfolio are to be constructed with more low-carbon materials
and become more energy efficient, with both heating and cooling of buildings deriving
from low-emitting sources and technologies (such as heat pumps).
As part of its investment decision process we also rely on physical risk inputs provided
by Zurich Resilience Solutions (ZRS). 6 This location-specific analysis helps identify
potentially underperforming Real Estate assets in riskier, less resilient geographies, and
enables a more accurate view on potential future adaptation requirements and
mitigating measures.
Responses
Our strategic response to the climate change-related risks we observe in this analysis is
our long-term commitment to decarbonize our investment portfolio to net-zero GHG
emissions by 2050, consistent with a maximum temperature rise of 1.5°C above pre-
industrial levels. To support our net-zero commitment, we have set interim targets for
engagements, climate solutions investments and emission reductions and have further
strengthened our policy toward high emitting sectors.
We will continue with several key actions to remain resilient to identified risks:
1. 7 Defined as anything north of 66 degrees latitude with the exception of the
Norwegian continental shelf.
2. 8 For more information on our oil and gas policy, see 1.4 Our exclusions and
positions on page 131, and www.zurich.com/sustainability/governance-and-positions/
our-positions
• As climate change-related risks can rapidly evolve and materialize faster than
expected, we will conduct regular monitoring and active management of the risks.
• We will continue to address risks associated with carbon-intensive sectors through a
bottom-up approach with our emission reduction targets, outlined in the section 1.2
Climate transition plan (see on page ##) around our 2030 interim targets, and fossil
fuel exclusion policies, and we will continue with efforts to deliver our long-term
commitment to decarbonize our investment portfolio to net-zero GHG emissions by
2050, consistent with a maximum temperature rise of 1.5°C above pre-industrial
levels.
• The oil and gas policy implemented in 2023 for private debt investments helps us
further to mitigate exposure to climate risk. Zurich will not provide private debt
financing of projects in the Arctic 7 and in new oil and gas upstream projects. 8 We
further specified investment boundaries for mid- and downstream projects, subject to
local governance.
• As part of our ongoing commitment to impact investing and our target to help avoid the
emission of 5 million metric tons of CO2e per year, we will invest in climate solutions
across different asset classes to finance climate mitigation and adaptation.
• While increasing the resilience of our portfolio against climate transition risks, our
decarbonization strategy also contributes to limiting the physical climate risks
showcased in the current policies scenario, which may materialize in our portfolio over
the long term.
• Our structured and disciplined investment management approach is carefully crafted
to match liabilities, minimize unrewarded risks, and remain stable throughout the
macroeconomic cycle. The resulting portfolio is highly diversified across asset classes,
sectors and geographies.
• We will continue to apply our security selection process, which takes into account
good ESG practices and climate risks as part of our responsible investor approach
and our long-standing practice of ESG integration. On an issuer level, both transition
risks and opportunities are reflected through thorough ESG integration.
• We retain a focus on the rapid decarbonization of our Swiss real estate portfolio and
are continuing with our energy optimization project in Switzerland.
3.1.7 Portfolio level scenario-based climate risk analysis: Own operations and supply
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chain
Own operations and supply chain
– Based on the impacts observed, we believe that executing our sustainable operations strategy
and in-force risk management processes, which focus on building business resilience and
monitoring the supply chain, are sufficient to mitigate climate change risk.
Key analysis findings
Outcomes from our medium-to-long-term climate risk scenario analysis are presented
below.
Medium term
The findings in the medium-term analysis substantially mirror the findings in the long-
term analysis.
Long term
When considering physical and transition risk, and to test our hypothesis that we are
operationally resilient to medium- and long-term impacts of climate change, we place a
focus on the higher physical risk scenario and consider locations with high exposure
levels and above.
In 2050, for offices and strategic data centers (locations) the most prominent perils
(impacting at least 25 percent of locations) remained consistent with the medium-term
analysis: drought, precipitation, thunderstorms and wind. The number of locations with
high or very high hazard levels increased slightly for drought and precipitation. For wind
and thunderstorms, the total number of locations with at least high exposure levels
remained the same. Precipitation has the highest exposure across both time frames and
increases from medium to long term by 18 percent.
Figure 19
Our exposure by hazard level for offices and strategic data centers
2035 – exposure by hazard level
Very low
Hazard Charts circle VERY LOW.jpg
Low
Hazard Charts circle LOW.jpg
Medium
Hazard Charts circle MEDIUM.jpg
High
Hazard Charts circle HIGH.jpg
Very high
Hazard Charts circle VERY HIGH.jpg
1
2050 – exposure by hazard level
Flood
Wind
Heat
Drought
Hail
Wildfire
Precipitation
Thunderstorm
Cold
M: 4%
H: 4%
VH: 4%
Flood
Wind
Heat
Drought
Hail
Wildfire
Precipitation
Thunderstorm
Cold
117
M: 8%
H: 4%
VH: 4%
H: 4%
H: 4%
VH: 4%
H: 4%
VH: 4%
M: 4%
M: 4%
L: 4%
VH: 4%
VH: 4%
M: 4%
H: 4%
VH: 4%
Very low
Hazard Charts circle VERY LOW.jpg
Low
Hazard Charts circle LOW.jpg
Medium
Hazard Charts circle MEDIUM.jpg
High
Hazard Charts circle HIGH.jpg
Very high
Hazard Charts circle VERY HIGH.jpg
For suppliers, the results were fairly consistent with the office and strategic data center
analysis. However, additionally, heat and wildfire also represented prominent hazards.
This is largely attributed to the concentration of locations in India. While hazard levels
remained fairly consistent (i.e., changing by only a few percentage points), supplier
locations exposed to high or very high precipitation levels increased in 2050 by 45
percent.
Figure 20
Our exposure by hazard level for suppliers
2035 – exposure by hazard level
Flood
Wind
Heat
Drought
Hail
Wildfire
Precipitation
Thunderstorm
Cold
Flood
Wind
Heat
Drought
Hail
Wildfire
Precipitation
Thunderstorm
Cold
207
M: 3%
H: 7%
VH: 5%
H: 2%
VH: 1%
L 2%
VH: 2%
Very low
Hazard Charts circle VERY LOW.jpg
Low
Hazard Charts circle LOW.jpg
Medium
Hazard Charts circle MEDIUM.jpg
High
Hazard Charts circle HIGH.jpg
Very high
Hazard Charts circle VERY HIGH.jpg
Very low
Hazard Charts circle VERY LOW.jpg
Low
Hazard Charts circle LOW.jpg
Medium
Hazard Charts circle MEDIUM.jpg
High
Hazard Charts circle HIGH.jpg
Very high
Hazard Charts circle VERY HIGH.jpg
2050 – exposure by hazard level
284
M: 3%
H: 8%
H: 2%
L: 1%
M: 3%
H: 2%
VH: 1%
Critical processes performed at in-scope office locations are included in business
continuity plans, which contain appropriate recovery strategies aligned to a “loss of
premises” scenario. These plans are reviewed and updated on an annual basis to
address any changes in the threat landscape (e.g., energy crisis, pandemic, etc.),
therefore the process evolves with our understanding of climate risks.
Certain supplier locations within our supply chain are already exposed to high and very
high physical risks and there is a degree of concentration risk in certain high risk
locations due to several suppliers providing critical services in close proximity to
another. Despite this, suppliers have shown high levels of resilience and we have not
directly experienced material service outages due to the risk mitigation and business
resilience measures adopted by us and our suppliers.
An analysis of transition risk exposure for our direct operations, which included a deep
dive into the potential impacts arising from the introduction of global carbon taxes has
not revealed any likely material impacts in either time frame given the low carbon
intensity of the operations of the insurance sector and our approach to continuously
improve the way we manage operational sustainability risks and opportunities.
Our analysis showed that suppliers of critical services within our supply chain are not
exposed to significant transition risks. This finding aligns with our prior expectations, as
these suppliers do not operate in carbon-intensive sectors or industries and are not
1. 9 Large range impacts affect cities, regions or countries; distance between data
centers >500km.
significantly negatively impacted with the shift toward a lower-carbon economy,
including regulatory changes, shifts in market dynamics, or advancements in green
technologies. Consequently, their lower exposure to these risks supports the stability
and resilience of our supply chain.
Responses
– Our business resilience program is designed to ensure continuity of business services,
even under operational stress.
– Backup data centers provide resilience for all regional strategic data centers and
recovery capabilities are tested on an annual basis. 9
3.1.8 Portfolio level scenario-based climate risk analysis: Conclusions
Our annual portfolio-level scenario-based climate risk analysis considers material
business activities across underwriting, investments and our operations.
• The most impacted sectors and LoB across our P&C business remain consistent with
previous analysis – motor, property, construction and fossil fuels. We note that
analysis outcomes demonstrate a strong sensitivity to assumptions made. Model
updates and change to our medium-term quantification time horizon have the effect of
influencing demand impacts in both scenarios (e.g., decreased upside across
construction). Impacts remain non-material on aggregate, with no broad adaptations
deemed necessary to in-force responses which we can adapt to balance near-term
market movements against the mid-term strategic scenario expectations.
• Impacts within our life protection analysis remain largely consistent with previous
cycles. The use of a later model date shows differences in the level of impact of
physical and transition risk, hence showing model sensitivity. Our mix of long- and
short-term contracts remains broadly unchanged, and our approaches to risk
management for both types of business remain appropriate.
• Similar outcomes are noted across our proprietary investments where analysis of key
asset classes demonstrates a largely unchanged risk profile, with physical risk having
impact in few sectors to which we have limited exposure and where transition risk
primarily impacts carbon-intensive sectors. In line with previous assessments,
observed impacts do not suggest material risk to our capital position. We believe that
our multi-faceted responsible investment strategy is adequately flexible to adapt to
climate-related risks highlighted by this analysis and will continue to strengthen our
practices to help us remain resilient to emerging risks.
• Our analysis suggests existing business continuity planning, internal risk policies,
monitoring and supplier due diligence processes are sufficient to address observed
physical risk impacts across operating locations and supply chain. Further, analysis
suggests we are not exposed to material transition-related financial impacts or service
disruption under the scenarios considered.
In line with previous cycles, analysis outcomes suggest that our customer-focused
approach and diversified portfolios, supported by strong risk management practices,
continue to provide the resilience and flexibility necessary to be able to adapt to the
climate change impacts observed. Analysis outcomes do not suggest impacts to access
to capital over the medium term.
We caveat these conclusions by acknowledging the hypothetical nature of the
underlying scenarios, the uncertainty inherent in scenario modeling over the timeframes
considered and the somewhat conservative modeling of physical and transition risk. As
the effects of climate change gradually increase over the coming decades, adaptation
efforts at the individual, company and state level will increase and provide resilience
against expected impacts. This is likely to reduce societal and economic losses.
However, outcomes will be influenced by highly uncertain political, societal and
technological developments. On the other hand, exceeding tipping points, such as
accelerated melting of Antarctic ice sheets or permafrost thawing, could lead to large-
scale discontinuities in the global climate systems and accelerate the impacts from
physical climate risk. We believe our strategy of continually analyzing changing risk
profiles and retaining customer focus gives us the flexibility required to maintain our
resilience and continue to meet the needs of our customers as climate-related risk
profiles evolve.
3.1.9 Other climate risk assessment outcomes: litigation risk and reputational
consequences
Our management of climate risk considers both litigation risk and reputational
consequences.
Litigation risk: We closely monitor developments potentially impacting litigation-related
risks and take actions to address them proactively.
Reputational consequences: We recognize the heightened public scrutiny that
accompanies our climate-related ambitions and that any failure (real or perceived) to
deliver on our objectives and targets could have an impact on our reputation. We
believe our approach and clearly defined supporting activities, as outlined in our
transition plan, our strong internal focus on delivery, monitoring through the governance
structures described in Chapter 2. Governance (see pages ## to ##) and transparent
public disclosure on progress, mitigate this risk.
Peter.jpg
Peter Giger
Group Chief Risk
Officer
3.2 Risk management
The processes used by the organization to identify, assess and manage climate-related risks
3.2.1 Integration of climate risk within the overall risk management framework
We consider impacts from climate change to be drivers for other risks, such
as market or natural catastrophe risks, which are managed within our existing
risk management framework. Our approach to managing climate risk is
TCFD SASB E.svg
embedded in our multi-disciplinary, Group-wide risk management framework,
following the same objectives of informed and disciplined risk taking. The risk
management framework is based on a governance process starting from the
Board that sets forth clear responsibilities for taking, managing, monitoring
and reporting risks.
These responsibilities are:
• To identify, assess, manage, monitor and report risks
including (but not limited to) climate change, that can have an impact
on the achievement of our strategic objectives, we apply a proprietary
Total Risk Profiling™ methodology. This considers our planning horizon
and allows us to classify risks according to their materiality based on
the estimated severity and the likelihood of the risk materializing. This
creates a relative rating for all risks, including specific aspects of
climate risk (e.g., physical and transition risks), and, by definition, the
prioritization of risk mitigation. Further, it supports the definition and
implementation of mitigating actions. At Group level, this is an annual
process involving the ExCo and the direct reports to the CEO, followed
by regular reviews and updates by management.
• To take the longer-term nature of climate change into account, we
complement our Total Risk Profiling™ methodology with portfolio-level
scenario-based climate risk analysis. This provides an outlook on long-
term risk developments relevant to our underwriting and investment
portfolios as well as to our operations, as outlined in the strategy
section (see pages ## to ##). The details of our risk management
framework and analysis by risk type are outlined in the risk review (see
pages 222 to 254).
1. 10 This refers to time periods up to 10 years and even out to 30 years, as
mentioned in section 3.1.4 Portfolio level scenario-based climate risk analysis on
pages 142 to 144 .
3.2.2 Managing risks from climate-related natural catastrophes
As outlined in the strategy section (see pages ## to ##), changes in physical risks
related to long-term 10 climate change could, over time, impact us through the property-
related business via affected severity and probability of climate-related natural
catastrophes and weather-related events. The risk is in most parts mitigated by the
flexible nature of our underwriting portfolio, with contracts that are typically renewed
annually. We recognize that the climate has been changing already in the past decades
with impacts such as land-ice melt and rise in sea levels, that need to be considered in
our assessment of physical risk. It is, however, clear that climate science indicates the
greatest changes in physical risks related to climate change will occur over the longer
term. We have established sophisticated natural catastrophe modeling capabilities to
manage our underwriting selection, so that accumulations stay within intended exposure
limits. The resulting view of natural catastrophe risk also underpins profitability
assessments and strategic capacity allocation and guides the type and quantity of
reinsurance we buy. To be globally consistent, natural catastrophe exposures are
modeled centrally.
Third-party models provide a starting point for the assessment of natural catastrophe
risk. However, they are generally built for the market average and need validation and
adjustment by specialized teams to reflect the best view of risk. We have been a leader
in natural catastrophe model validation since 2005 when we developed our proprietary
‘Zurich View’ of risk. This gives us nearly two decades of experience in applying a
structured and quantitative approach to optimize our risk view. To arrive at the ‘Zurich
View’, which also aims to reflect the impact of climate change that happened until today
already, models are adjusted in terms of frequency, severity and event uncertainty.
Adjustment factors address potential losses from non-modeled, property-related exposures or
secondary perils to the extent not covered by the third-party models. Every catastrophe event
provides an opportunity to learn from our own claims experience and the modeling framework
provides a place to capture the new insights. We constantly review and expand the scope and
sophistication of our modeling and strive to improve data quality by leveraging technology.
We supplement internal know-how with external knowledge (e.g., the Advisory Council
for Catastrophes). We are a shareholder in PERILS AG, Switzerland, a catastrophe
exposure and loss data aggregation and estimation firm. We are also a member of the
open-source initiative Oasis Loss Modeling Framework and rejoined the Global
Earthquake Model Foundation as a governor sponsor in 2023.
Catastrophe models based on historical data do not capture potential, much longer-term
shifts of extreme weather events related to climate change. However, when combined
with general circulation models (GCMs), which build representations of the Earth’s
physical climate systems, catastrophe models can help us understand the risk of future
climate conditions. The quality of GCMs continues to evolve as scientific understanding
of the Earth’s climate systems increases and as progress is made in computing power
and artificial intelligence. This science is evolving, and we have strengthened our
2. 11 The risk assessment of our own operations and supply chain excludes certain
businesses such as Farmers Group, Inc., Cover-More, Joint Ventures and other small
subsidiaries.
catastrophe modeling team with dedicated resources to create methodologies to
integrate forward-looking aspects into our modeling approach.
3.2.3 Portfolio level, scenario-based climate risk analysis
Assessments of the resilience of our business model to potential climate risks over time
periods extending beyond the financial cycle are performed using scenario analysis.
Assessment granularity and time frames can be tailored to the specific requirements of
the assessment.
An integrated modeling approach , leveraging a third-party model, is adopted for the
analysis of our underwriting and proprietary investment portfolios to ensure, as much as
possible, the consistent use of assumptions. To quantify impacts on our assets, the
model adopts a bottom-up approach to coherently analyze the exposures of businesses,
industries and corporate sectors to physical and transition risk. To provide a map of
vulnerabilities, it uses asset-level data on relevant risk drivers, including carbon
emissions, abatement options, exposure to physical risks (including location-based
exposure to acute physical risks), exposure to the greening of the economy,
dependency on fossil fuels and competitiveness. Data underpinning the assessment of
impacts on our assets are used in conjunction with premium and loss data to model
impacts on our insurance business in a bespoke process.
To complete our analysis, we consider potential impacts to our own offices, strategic
data centers, and supply chain. 11 Our quantitative physical risk analysis focuses on
changing exposure levels at key locations over the medium to long term in an effort to
determine robustness of our resilience program to the impacts observed. Transition risk
is assessed both qualitatively and quantitatively. Risk drivers are qualitatively evaluated
for relevance, materiality and likelihood, with a focus on potential mitigation or
adaptation costs impacting operating budgets. Our quantitative analysis adopts a
bottom-up approach consistent with that adopted for our investment analysis and
assumes significant negative impacts to supplier valuations as an indicator of additional
operating cost and/or critical service disruption risk.
Given the flexibility of our business model, in both our underwriting and asset portfolios
and the static balance sheet approach adopted, scenario-based climate risk analysis is
performed in the full recognition that it represents a theoretical “what if” analysis. It is a
useful approach which can serve to stretch management thinking about the much
longer-term outlook and consider the resilience of our strategy, but it does not provide
insights from an immediate solvency, financial or capacity management perspective
Data sources, assumptions and limitations
• We adopt a static, balance-sheet approach to better isolate potential medium- and
long-term impacts of climate change. This implies quantified impacts assume no
strategic reaction from us to the risks identified, and no movements in pricing to adapt
to changing conditions.
• The analysis of our investments considers overall financial impacts by 2050, by
discounting the cash-flow estimates from the asset modeling component to net
present value terms, and in that way brings forward all future impact. This is a suitable
way to assess and compare impact, both across scenarios and time horizons, but it is
important to stress that the actual impact on economic activity and cash flows will be
realized in the future, and that the timing will differ markedly depending on the
scenario. Moreover, if realized impacts are not appropriately reflected in asset prices,
when they occur, this can lead to volatility in both economic activity and asset prices
over time.
• Scenario analysis leverages a third-party model which utilizes third-party data,
including the latest available emissions data. This is supplemented with internal data,
including year-end financial data.
• Modeled impacts of acute physical risks on expected losses are, to every extent
possible, based on our own natural catastrophe modeling. We work with a third-party
model which enables us to search publicly available hazard data by type of hazard.
We will expand our in-house modeling to cover a wider range of physical risks and this
will be included in our own catastrophe modeling results.
• While the bottom-up approach adopted by the underlying model facilitates granular
analysis of climate change-related risk, the model depends on certain assumptions,
namely:
• The assumption of smooth transitioning, as capital moves from carbon-intensive
to low-carbon activities without bottlenecks or frictions (e.g., costs are passed to
consumers), leads to a muted ‘cost of transition’, despite the carbon prices
assumed in the underlying scenarios.
• The assumption of perfect information, where action is only taken once new
policies are in place, omits an important uncertainty effect.
• Complex hazards such as inland floods, severe convective storms, tropical and
extra-tropical storms including coastal flooding are assessed by catastrophe models that
rely on simplified assumptions.
For further details on our risk management process and supporting committees:
u See the risk review on pages 222 to 254.
3.3 Targets and metrics
TCFD E.svg
We use numerous indicators across our underwriting and investment activities, as well
as our own operations, to monitor, assess and manage climate-related impacts to, and
of, our business. This section outlines the main targets underpinning our climate
strategy and lists the key performance indicators (KPIs) we track.
The metrics and targets used to assess and manage relevant climate-related risks and opportunities
3.3.1 Our targets
Our commitment to net-zero focuses primarily on supporting emissions reduction in the
real economy. We believe we can best achieve this by focusing our approach on
engagement with customers and investee companies, and accompanying their
transition. This reflects our principle, which holds that the financial service industry’s
most effective contribution to fighting climate change derives from assisting,
1. 12 Please note that target 2025 and target 2030 is always defined as using year-
end 2024 and 2029 values, respectively (e.g., reduction of financed emissions). By
2030 target (e.g., for reduction of IAE intensity) is defined as using year-end 2030
value, similar by 2025 target (e.g., for operational carbon emissions) is defined as
using year-end 2025 value.
incentivizing, and asking our investee companies, customers, suppliers and other
stakeholders to embark on their own decarbonization pathways. We hold ourselves
accountable to the same expectations through leading by example with our own
operations.
Outlined below are the principal targets we have set to align our business activities with
the net-zero commitment. Those targets are also described in our climate transition plan
(see section 1.2 Climate transition plan on pages ## to ##) and our targets and
ambitions (see section 1.3 Our targets and ambitions on pages ## to ##), which provide
a transparent picture of our progress toward set targets and positions. 12
Table 3
Our targets to net-zero commitment
Area
Definition
Targets &
ambitions
Reduction of
financed
emissions
Reduce the intensity of emissions (scope 1 & 2) of listed
equity and corporate bond investments , in terms of metric
tons of CO2e per USD million invested (base year 2019).1
2025: 25%
2030: 55%
Reduce the intensity of emissions of direct real estate
investments, in terms of kilograms of CO2e per square meter
(base year 2019).
2025: 30%
2030: 45%
Reduction
of insurance-
associated
emissions
intensity
Reduce the intensity of insurance-associated emissions
(IAE)2 in our large corporate customer portfolio by 20
percent (base year 2022)
By 2030: 20%
Reduction in
operational
carbon
emissions 3
Total emissions: absolute reduction in all operational
emissions (base year 2019)
Scope 1 & 2: reduction in emissions from the fleet and
onsite heating as well as from purchased electricity, heat
and steam (e.g., district heating), base year 2019).
Scope 3: reduction in operational emissions, resulting
from air, rental and rail business travel, employee
commuting, strategic data centers, printed paper, waste,
as well as indirect energy impacts (base year 2019)
Total emissions:
• By 2025:
60%
• By 2029:
70%
Scope 1 & 2:
• By 2025:
62%
• By 2029:
80%
Scope 3:
• By 2025:
60%
• By 2029:
67%
Investment
engagement
Engage with top 65 percent emitters of financed emissions that
have not set science-based targets (base year 2019).
2025: 65%
Engage directly with high-emitting companies which
currently do not have credible science-based targets.
2030: 20
Insurance
engagement
Engage with our large insurance customers who
contribute most heavily to our portfolio emissions 4 on their
transition-related objectives, opportunities and
challenges.
Sept 24 - Sept
25:5 65
By 2030: 450
Climate solutions
Allocation to climate solutions investments
2025: increase
2030: 6% of AuM6
Avoid 5 million metric tons of CO2e emissions per year
through impact investments.
Ongoing
(ambition)
1. Attributed with enterprise value methodology and matched based on most
recently available emission data.
2. IAE is determined by scope 1 & 2 for our customers’ emissions using the
Partnership for Carbon Accounting Financials (PCAF) insurance-associated emissions
methodology for commercial lines, covering customers with revenues greater than USD
1 billion.
3. Cover-More, Farmers Group, Inc. and its subsidiaries, our joint ventures with
Banco Sabadell and Banco Santander, smaller businesses like Real Garant and Orion,
third party vendors as well as our new acquisitions Zurich Kotak and Travel Guard are
excluded since they were not reflected in the CO2e emissions baseline in 2019.
4. As determined by scope 1& 2 for our customers’ emissions using the PCAF
insurance-associated emissions methodology for commercial lines, covering insurance
customers with revenues greater than USD 1 billion.
5. In the 12 months following the publication of our climate transition plan in
September 2024.
6. Estimated based on AuM 2023, equivalent to approximately USD 10 billion. Any
portfolio activity will be subject to market conditions and potential other constraints.
3.3.2 Our performance metrics
This section highlights the key metrics we use to measure and manage climate-related
risks and opportunities. They represent a combination of metrics derived from the SASB
and WEF IBC standards expanded with further metrics of our own, in line with guidance
from the TCFD.
Underwriting
Insurance-associated emissions (IAE)
Z E.svg
To provide transparency on our Commercial Insurance portfolio carbon footprint, we are
leveraging the accounting method for IAE, published by the Partnership for Carbon
Accounting Financials (PCAF) in November 2022. We also report portfolio IAE intensity,
which aligns with the Weighted Average Carbon Intensity (WACI) metric proposed by
the CRO Forum.
In scope for reporting is our portfolio of large corporate customers, defined as
customers with revenues greater than USD 1 billion. Lines of Business not covered by
the current PCAF standard are excluded from the calculation. Excluded per PCAF
attribution factor for commercial lines are agricultural government schemes, structured
trade credit, CAR/EAR engineering lines, surety, and insurance contracts purchased by
public entities.
With this reporting scope we cover our large commercial customers, representing USD
7.4bn of gross written premium and equating to 25 percent of our total Commercial
Insurance gross written premium in the baseline year of 2022.
To provide a measure for the quality of emission data used for our IAE reporting, we
provide a weighted average quality score aligned with PCAF methodology. Our score of
2.9 (1 being best, 5 being worst) is driven on the one hand by the inclusion of large non-
listed companies in our reporting scope, where the availability of reported emissions is
lower and industry emission factors have been used (predominantly quality score 4). On
the other hand we have not assigned quality score 1 to any of our data, as our currently
available data sets do not yet include information if customer emissions have gone
through external verification as required by PCAF for score 1. In practice, many
externally reported emission figures will likely have been verified. Capturing this
additional data requires further analysis and would be included in future updates if
appropriate data sets become available.
Figure 21
Insurance-associated emissions
IAE.jpg
WACI.jpg
• Insured’s premium: For the purpose of IAE calculation, premium is defined as gross
written premium (the total amount to be paid by the insured to the re/insurer for the
policy written in the period). For multi-year contracts, an annualized premium value shall
be used. Gross premium shall also be used for Fronting Policies.
• Insured’s revenue : Total amount of income generated by the insured customer through the
sale of goods or services.
• Insured’s emissions: Total scope 1 & 2 emissions1 of the customer either based on
company-specific reported emissions or sector-specific estimations.
• Portfolio premium: Sum of all insurance premiums within the scope of the calculation.
Also while we aim to align the reporting years of premium and customer emissions, there is a
systematic lag in emission reporting and to calculate the full IAE for our in-scope portfolio, we
need to rely on previous year emission data for some customers.
1. We do not deem the quality and availability of customer scope 3 emissions to be
sufficient to allow for stable reporting and therefore do not include them in our
calculation.
We are using S&P Global to source the emission data required. For customers where
publicly reported emissions data is not available, estimates have been taken based on
average industry carbon intensities, also provided by S&P Global, multiplied by the
customer’s revenues. Customer revenues are also provided by S&P Global and
supplemented by internal data where no match with S&P data could be found.
Interpretation of the IAE figures and progress over time needs to be mindful of the
limitations in data quality and availability. Company-reported emissions are currently
only available for around 30 percent by premium of our in-scope portfolio, with the
remainder relying on emission estimates. While we consider average industry intensities
scaled by customer revenue a reasonable proxy for customer emissions, over time we
aim to continually replace estimations with actual emissions as more customers start
their own reporting. This might however lead to year-over-year volatility in our reporting,
as actual reported emissions differ from previously applied estimations.
Commercial Insurance IAE intensity target
Z E.svg
Supporting our commitment to align our insurance portfolio to net-zero by 2050 we have
set an interim target to reduce the IAE intensity of our portfolio of large corporate
customers, defined as customers with more than USD 1 billion in revenues, by 20
percent by 2030 from a 2022 baseline.
This scope has been chosen as our focus is on creating real-world impact, so we
prioritize engagement with customers who can make the greatest contribution to
emission reductions and where our direct relationship means we have a greater degree
of influence. Despite still being low overall, the availability of reported emissions also
1. 13 Determined by scope 1& 2 for our customers’ emissions using the PCAF
(Partnership for Carbon Accounting Financials) insurance-associated emissions
methodology for commercial lines, covering customers with revenues greater than
USD 1 billion.
tends to be higher for larger companies, allowing for greater certainty in target reporting
and achievement.
To arrive at our target value, we have modeled the expected carbon intensity of our
portfolio, taking into account various business growth scenarios and existing customer
decarbonization targets and, in the absence of explicit targets, the nationally determined
emission reduction pathways of our customers’ countries of residence, where available.
The baseline for our intensity target is based on 2022 premium data and the latest
available emission data at the time of determining the target. While largely based on
2022 emission data, the use of some 2021 emission data was required given the time
lag in reporting and updates by data providers.
Table 4
Insurance-associated emissions: Baseline and target
Insurance-associated emissions from
large corporate customers (revenues
greater than USD 1 billion)
Unit
2022
(baseline)
Target (if applicable)
Absolute IAE (scope 1 & 2)
million
metric tons
CO2e
1.7
IAE Intensity (scope 1 & 2)
t CO2e /
USDm
234
20% reduction by 2030
PCAF weighted average data quality
score
1 - 5
2.9
Engagement
Z E.svg
We engage our insurance customers to better understand where they are in their
transition, their needs and priorities, and to deepen our understanding of the
technologies, barriers and dependencies involved in their industries’ transitions. The
insights we gather help inform how we support our customers, our approach to
investments, and our understanding of likely decarbonization pathways. Our focus is on
creating real-world impact, so we prioritize engagement with customers who can make
the greatest contribution to emission reductions and where our direct relationship means
we have a greater degree of influence.
Starting in September 2024, we are engaging with 65 insurance customers within 12
months on their transition-related objectives, opportunities and challenges. We will
continue to expand our engagement efforts, so that by 2030 we will have engaged with
450 of our large insurance customers who contribute most heavily to our portfolio
emissions. 13 For the purpose of progress reporting against our target, we consider an
engagement to have started after the first content discussion with the customer has
taken place.
As we engage with our customers on an ongoing basis, we look at their transition plans
along four criteria (ACDC framework):
1. Alignment with the Paris Agreement and net-zero targets.
2. Commitment, including what near-term plans and significant investments are in place.
2. 14 Revenues capture gross written premiums and other fee services.
1. 15 Please note that target 2025 and target 2030 is always defined as using year-
end 2024 and 2029 values, respectively (e.g., for reduction of financed emissions).
2. 16 https://edge.sitecorecloud.io/zurichinsur6934-zwpcorp-prod-ae5e/media/project/
zurich/dotcom/sustainability/docs/responsible-investment-at-zurich.pdf
3. Delivery, including what progress has been made so far against targets.
4. Communication, in particular transparent and regular disclosures.
As we build our understanding of and evaluate our customers’ plans, we will prioritize
our support and capacity for those customers who are actively transitioning.
Table 5
Engagement: Baseline and target
Engagement
Unit
2024
Target (target year)
Engagements
conducted
Number of customers
N/A1
450 of our large insurance
customers who contribute most
heavily to our portfolio emissions
(2030)
Engagements
conducted
Number of customers
N/A1
65 of our large insurance
customers who contribute most
heavily to our portfolio
emissions: Sept 24 - Sept 25
1. First reporting in 2025.
Revenues from energy efficiency and low-carbon technologies 14
SASB E.svg
Our products related to energy efficiency and low-carbon technology, separately priced,
amounted to USD 644.2 million for the year 2024 (USD 424 million in 2023). The
increase in revenue was mainly driven by our repair vs replace solutions in North
America (USD 243.8 million), reporting sustainable revenues on electronics and home
warranty, where repair is the priority. Our total EV solutions contribute USD 271.2
million, mainly coming from the EMEA region with solutions in 2024 on mid-market EV’s.
Renewable energy solutions from North America and EMEA contribute USD 108.3
million.
For more information on our sustainable solutions, please see section 4.1.1 Revenues
from sustainable solutions on pages ## to ##.
Z E.svg
Investment Management
In 2024 we successfully met all of our 2025 interim climate targets, 15 aligning with our
net-zero commitment in engagement, climate solutions investments, and portfolio
decarbonization. This marks a major milestone as it is the first time we have set and
achieved a five-year climate target, showcasing our capability to contribute to the 30-
year journey toward net-zero. Our recently updated Responsible Investment White
Paper 16 highlights the interlinkage of our targets in a new chapter on climate action,
illustrating how our engagements and financing of climate solutions drive
decarbonization.
Engagement for the transition
Company engagement
Engagement is a key mechanism for investors seeking to mitigate systemic climate risks
and work toward net-zero. As asset owners, we are uniquely placed to encourage
company behavior and the decarbonization of the real economy.
In our 2019 - 2025 engagement we saw multilateral engagement, through initiatives
such as Climate Action 100+, as a key way to amplify our positive impact, especially on
climate change issues as we work to decarbonize our portfolio without simply divesting
from high-emitting sectors.
Figure 22
Our engagement approach
Financed corporate emissions in 2019 (baseline)
ScienceBasedTargets.png
14% of which had
set SBT 1 then
86% of which had not
set SBT 1 then
Monitor to ensure
meaningful
progress
Top 65% of financed emissions
without targets in 2019
Monitoring is part
of the bottom-up
management
of investments
toward
a net-zero future
1
Is the investee
already on target
list of an investor-led
initiative?
(e.g., CA100+)
Engage
through initiative
ClimateAction100.png
Ä
}
Joint engagement
with underwriting;
Lead allocated
to either investment
management or
underwriting
2
Yes
Is the
investee
also
a
customer
?
}
No
Engagement
led by investment
management
1. Science-based targets.
Table 6
Engagement progress
2024
2023
Engagement started
65%
60%
Engagement not started
0%
5%
=Target
65%
65%
Started engagements undertaken…
Collectively
25%
25%
Bilaterally
40%
34%
… with outcome
Failed¹
16%
16%
Ongoing²
31%
24%
Succeeded³
18%
20%
Note: All percentages correspond to percent of financed emissions in 2019 (baseline)
without net-zero targets, cumulative progress since December 31, 2019.
1. Engagement considered as failed under the thermal coal, oil sands and oil shale
policy if it became clear the company would neither move under the 30 percent
threshold nor set net-zero targets and was hence excluded; or that a company
approached under the net-zero program refuses to set science-based net-zero
targets.
2. Engagement considered as ongoing includes when a first contact is established
with the company to engage in a meaningful conversation.
3. Engagement considered as succeeded if a company has publicly committed to
science-based net-zero targets (under SBTi) or an equivalent scientific verification body,
referring to Zurich only as a contributor to the outcome.
In 2024, we closed our bilateral net-zero engagement campaign having reached the
2025 target to have engaged with top 65 percent emitters of financed emissions that
have not set science-based targets (as shown in Table 6). We focused on companies
with heavy emissions to understand the company’s current emission intensity and their
transition plans. In cases where the company had not yet established such a plan, we
urged the company to set up a transition plan with preferably externally validated
targets. In 2024, we successfully kicked off a number of engagements. This in close
collaboration with our local investment management teams. In 2024, some companies
were not able to submit validated science-based targets within 24 months of committing
to do so under the Science Based Targets initiative (SBTi). This resulted in a lower ratio
of successful engagements for 2024.
Figure 23
Engagement progress for top 10 emitters without science-based targets (SBT)1
Financed emissions %
l
Succeeded – target set
l
Succeeded – target committed
l
Failed – excluded (thermal coal)2
l
Ongoing – collective
l
Ongoing – bilateral
2949
1. Company grouping according to our proprietary methodology, which considers
ownership and operational control structures (corresponding to financed
emissions using 2019 baseline data).
2. Failed engagement under thermal coal program means the company was added
to the restricted list and hence equity exposure was divested and credit exposure
put in run-off.
Figure 24
Top 10 emitters without science-based targets (SBT) by sector and region1
Top 10 emitters by sectorTop 10 emitters by region
3377
l
Utility
67.9%
l
Government owned, no guarantee
13.8%
l
Metal and mining
12%
l
Energy
6.3%
1. Corresponding to financed
emissions in 2019 (baseline
data).
3444
l
EMEA
49.2%
l
APAC
45.6%
l
Americas
5.3%
Case
study
Our objective for our bilateral engagements is to encourage emissions-reduction-target
disclosure beyond 2030, and external verification. A Latin American metal mining company is
part of our top 65 percent financed emissions and therefore a company to engage with as part
of our 2025 engagement target. The following case study provides details on that specific
engagement on climate transition.
The company currently focuses on integrating its near-term 2030 targets to reduce operational
greenhouse gas emissions by 70 percent. The methods include, among others, implementing
100 percent clean energy matrix and electrifying its various transportation vehicles. Within the
next year, the company is planning to develop and publish targets for beyond 2030. The target
scope will expand to further operational emission activities, such as refinery activities. Via the
engagement letters and during the engagement call, we encouraged the company to develop
ambitious targets and to seek external verification of both their existing and future targets, e.g.,
by SBTi. We further encouraged the company to set targets for their scope 3 emissions.
We agreed to have a conversation again next year on the progress of their target setting
process, including external verification of targets, in particular for the targets beyond 2030.
We will continue monitoring and engaging with the company on climate transition. We
appreciated the company’s openness and willingness to exchange during the engagement
call.
Asset manager engagement and policy advocacy
Z E.svg
While bilateral corporate engagement – the most common form of investor engagement
to date – is an important tool for addressing the financial risks of climate change, we aim
to complement this approach with other, more systematic forms of engagement like
asset manager engagement and policy advocacy.
As an asset owner, one of the most important and impactful engagement opportunities
we have is to engage with our asset managers to support greater climate action and
1.5°C alignment. This engagement impacts the wider set of stakeholders and hence can
have a wide market impact. In 2024, we supported the Net-Zero Asset Owner Alliance
(NZAOA) efforts on asset managers' engagement. We seek for asset managers to
better align their investment strategies with net-zero targets, focusing on achieving more
impactful climate outcomes through effective stewardship. During several meetings
between asset managers and the NZAOA, we had active discussions around the
specifics of fossil fuel engagement approaches and strategies, and engagement
reporting expectations. We confirmed that the ‘Alliance's engagement expectations’ is
being used to shape an asset manager’s new stewardship approach.
Achieving a net-zero investment portfolio and real-world change requires close
collaboration with our own asset managers. Besides our continued efforts on
engagement, we also focused on our asset managers that manage private assets or
execute voting rights on listed equity on our behalf. For private asset managers, we
defined the requirements in delivering net-zero strategies and developed a tailored
approach focusing on specific climate-related expectations.
We further strengthened our asset manager engagement process to systematically
address climate-related stewardship to now also include and analyze how our asset
managers have exercised their voting rights regarding climate-related proposals. For
managers falling short of our expectations, we initiated engagements to ensure they
align with the standards outlined in the NZAOA proxy voting guidance document.
In 2024, we made significant strides in policy advocacy, contributing to a global investor
statement and participating in key consultations on sector and national regulations. By
signing the ‘2024 Global Investor Statement’, we aimed to underscore the urgency of
aligning financial flows with the Paris Agreement goals and to advocate for stronger
climate policies. As part of the NZAOA, we engaged in policy dialogues with the U.S.
State Department and the UK government. Additionally, as members of the Investment
Leaders Group, we were invited to collaborate with climate finance negotiators from
Canada, Australia, and New Zealand, influencing the climate finance discussions at the
29th UN Climate Change Conference (COP29).
Financed emissions
Z E.svg
We calculate three types of financed GHG emissions defined by the underlying
investment: Corporates, which includes listed equity and corporate bonds, direct real
estate and sovereign debt.
In 2021, we set interim targets for 2025 following the guidance of the NZAOA for the
asset classes of listed equity, corporate bonds and direct real estate. Since the
announcement, we have been working on local objective setting, implementation and
data improvements. We have translated the global portfolio target into regional and local
implementation. This allows us to capture factors such as local market considerations,
sector diversification, and past and projected pathways of emissions.
We strongly believe that simply divesting from companies with carbon-intense footprints
is less effective than engaging with them to support the shift to sustainable practices.
The findings from our engagement efforts, as described above, will guide us through
portfolio construction and rebalancing actions, benchmark changes and, where relevant
and as a last resort, divestments.
Table 7
Assets under Management: corporate portfolio1
In scope AuM
(USDbn)
2024
2019
Difference
Zurich Corporate portfolio2
46.6
58.5
(20)%
By investment asset class
Listed equity
6.9
10.6
(35)%
Corporate bonds
39.7
47.9
(17)%
By region
APAC
5.5
4.5
23%
EMEA
30
38.2
(22)%
Americas
11.1
15.9
(30)%
By sector
Utilities
3.2
4.4
(27)%
Government-owned company
1.5
2.7
(44)%
Energy
1.5
2.1
(29)%
1. AuM covers companies listed equity and corporate bonds.
2. in scope AuM decreased in line with total AuM.
13
1
Table 8
Absolute and relative emissions of the corporate portfolio1
Absolute financed emission
(million metric tons CO2e) 2
Relative emission intensity
(metric tons CO2e/1 million market
value)
2024
2019
(baselin
e)
Differenc
e
2024
2019
(baselin
e)
Differenc
e
Target
Zurich Corporate
portfolio
2.9
7.9
(63)%
62
136
(54)%
(25)%
By investment asset
class 3
Listed equity
0.4
1.0
(62)%
52
90
(41)%
Corporate bonds3
2.5
7.0
(64)%
64
146
(56)%
By region
APAC
0.7
1.8
(63)%
120
400
(70)%
EMEA
1.7
4.5
(63)%
56
118
(53)%
Americas
0.6
1.7
(66)%
52
105
(51)%
By sector
Utilities3
0.9
2.7
(66)%
288
616
(53)%
Government-owned
company
0.3
1.4
(79)%
200
529
(62)%
Energy3
0.5
0.7
(27)%
311
305
2%
1. In order to provide a comprehensive overview, details incl. prior year data are
shown in appendix 6.4 Emissions profile on pages 210 to ##.
2. Financed emissions cover scope 1 and 2 of underlying companies (listed equity
and listed corporate credit) attributed with enterprise value methodology and
matched based on most recently available emission data.
3. Emission reporting for Zurich-validated green bonds in the utility and energy
sectors was refined in 2022 to reflect the nature of the financed projects. Please
see the green bond validation methodology in our white paper: www.zurich.com/-/
media/project/zurich/dotcom/sustainability/docs/responsible-investment-at-
zurich.pdf
In 2024, we reached our interim 2025 decarbonization target for corporate bonds and
listed equity as we reduced our financed CO2e emissions by 54 percent against the
target of a 25 percent reduction. Our absolute financed emissions declined over the
same period by 63 percent.
Figure 25
Breakdown of reduction in financed emissions
Intensity change attribution (in metric tons CO2e/1 million metric value)
160
140
120
100
80
60
40
20
0
8537
2019
Portfolio
action
Emission
reduction
Other
effects
2024
intensity
This reduction in financed emissions was mainly driven by changes in portfolio
composition and structural emission reductions of our portfolio companies.
Portfolio activities are estimated to contribute half of the intensity reduction over the past
five years. Portfolio activities are changes in our portfolio composition, when we allowed
high-emitting positions to mature without reinvesting in the same issuer or by actively
divesting from high-emitting positions and reinvested capital in new positions of lower-
emitting companies. We also observe an expected further meaningful drop in emissions
from companies in run-off under the thermal coal/oil sands policy due to maturing assets
in 2024.
Real world emission reduction reported by our portfolio companies are estimated to
contribute one-third of our emission intensity reductions. Our analysis suggests that a
notable 15 percent of these reductions are achieved by just 10 issuers. While most of
these companies are in the utility sector, others operate in energy, metals and mining,
and building materials.
Other effects mainly refer to currency effects and timing lags but can also include data
updates.
Uncertainties and dependencies
Our experience demonstrated the need to consider both absolute and relative indicators when
measuring the emission performance of portfolios. Relative indicators are sensitive to changes
in company valuation, whereas absolute emissions are sensitive to strategic shifts in asset
allocation. It is important to reiterate that capital market price changes have a significant impact
on reported financed emissions based on the formula applied, resulting in the sensitivity of
reported targets. In the long run, it remains our view that alignment with the NZAOA
methodology will provide us with a stable and robust metric describing the trajectory of our
emission reduction pathway, but we expect a high level of volatility of intensity and financed
emissions numbers driven by the current political sentiment and potential for financial market
volatility.
Further, it is important to note that the real economy is not moving at the pace at which we have
reduced our financed emissions. In fact, the current nationally determined contributions under
the Paris Agreement would still put the world at 2.1ºC-2.4ºC above pre-industrial levels, which is
far above the ambition of the Paris agreement of 1.5°C. This means that the financial markets’
emissions reductions are largely a result of portfolio reallocation, shifting capital to more
sustainable investments and hence divesting from heavy-emitting companies. While we can
regard the reductions as a testament to portfolio reallocation and as an important demonstration
to the rest of the investment ecosystem that decarbonization is possible, the actions must be
pursued with urgency in the real economy. Moreover, we should also be cautious about
projecting achievements to the future.
Furthermore, more of our financed emissions of listed equity and corporate bonds have
committed or set targets under SBTi compared to our baseline. The % of financed
emissions in run-off under our coal / oil sands policy remains stable.
Table 9
Corporate portfolio emissions with commitments or in run-off1
1. 17 Sovereign bonds: disciplined ALM practices and, in some cases, insurance
regulation requires us to hold substantial amounts of minimum-risk assets
denominated in local currency to back local liabilities. We do not generally manage any
multi-currency sovereign bond portfolios that would allow ESG factors to influence
issuer selection.
% of financed
emissions with SBTi¹
% of
financed
emissions
in
run-off
under
coal/oil
sands
policy
2024
2019
(baseline)
Differen
ce
2024
Zurich Corporate portfolio
24.8
14.3
73%
4.4
By investment asset class
Listed equity
21.2
22.6
(6)%
Corporate bonds
25.3
13.2
92%
By region
APAC
5.6
1.2
384%
17.1
EMEA
35.3
22.9
54%
0.3
Americas
16.7
5.3
218%
1.7
By sector
Utilities
17
14.4
18%
12.3
Government-owned company
40.3
5.4
641%
3.9
Energy
0
0
0%
0.5
1. Committed or set targets under SBTi.
Table 10
Absolute and relative emissions of the sovereign bond portfolio
In Scope AuM
2024
(USD bn)
Absolute financed
emissions 2024
(million metric tons CO2e)1
Relative emission
intensity 2024
(tons Co2e /
mUSD) 2
Zurich Sovereign
Portfolio
43.9
7.6
159
1. Scope 1 (production-based approach) excluding Land Use, Land-Use Change
and Forestry (LULUCF) – USD GDP-PPP.
2. Based on Nominal Value.
In 2024, we expanded our emissions measurement of our proprietary portfolio, now
covering also our sovereign bond portfolio. For 2024, the CO2e emissions financed by
our global sovereign debt portfolio amounted to 7.6 million metric tons CO2e. This
corresponds to a carbon intensity of 159 tCO2e / mUSD.
We use a methodology aligned with the accounting methodology recommended by
NZAOA, which is based on the current version of the PCAF’s Global GHG Accounting
and Reporting Standard. While we measure the financed emissions for sovereign
bonds, these assets are not covered by an emission reduction target. 17
2. 18 Scope 1 emissions, also known as direct emissions, are defined as emissions
from sources that exist “on site” of an asset. These include primarily emissions from
onsite heating systems. A common example of scope 1 emissions for real estate is
natural gas and oil burned onsite. Scope 2 emissions are defined as emissions that are
related to purchased electricity, heat, steam or cooling. This energy is consumed by the
assets but generated offsite.
We measure and report absolute emissions for our proprietary portfolio for listed equity,
corporate bonds, direct real estate and sovereign bonds, covering approximately 60
percent of the total portfolio.
For our direct real estate portfolio, we successfully reduced our relative emission
Z E.svg
intensity by 30 percent in accordance, i.e., meeting our 2025 interim target one year
early. Our target includes scope 1 and 2 emissions, the so called ‘operational
emissions’. 18
Table 11
Assets under Management: real estate portfolio
In scope AuM
(USDbn)
2023¹
2019
(baseline)
Difference
Zurich global real estate portfolio
10.0
11.7
(14)%
By region2
APAC
0.1
NA
NA
EMEA
8.1
10.0
(19)%
Americas
1.8
1.7
6%
1. Real estate emissions are only available with a four-quarter lag. Emissions in
2024 will be reported in the 2025 sustainability report. Includes investment
portfolio buildings only, as own-use buildings are part of our operational
emissions target.
2. Direct real estate holdings form the base for the emission reduction targets.
Table 12
Absolute and relative emissions of the real estate portfolio
Absolute emissions1,2
(metric tons CO2e)
Relative emissions
intensity3
(kg CO2e/sqm)
Target
2023
2019
(baseline
)
Differenc
e
2023
2019
(baseline
)
Differenc
e
Zurich global real estate
portfolio4
34,491
53,181
(35%)
15.2
21.6
(30%)
(30%)
By region5
APAC
589
NA
NA
59.5
NA
NA
EMEA
24,761
41,153
(40%)
17.1
22.9
(25%)
Americas
9,141
12,028
(24%)
11.3
18.0
(37%)
1. The CO2e emissions are calculated according to the location-based method. In
cases where the data is available or properties use onsite/offsite renewable
energies, the market-based methodology is applied.
2. The emission factors are retrieved from the International Energy Agency (IEA,
2020) with the exception of Switzerland for local calculation references (Intep,
REIDA 2022 and local authorities) which are aligned with IEA.
3. The relative emissions intensity is calculated based on gross floor area (GFA) of
the buildings.
4. Real estate emissions are only available with a four-quarter lag. Emissions in
2024 will be reported in the 2025 sustainability report. Includes investment
portfolio buildings only, as own-use buildings are part of our operational
emissions target.
5. Direct real estate holdings form the base for the emission reduction targets.
At year-end 2023, we achieved a 30 percent reduction, meeting our reduction target
one year ahead of target year. This marks an improvement compared to the 25 percent
reduction achieved in the prior year. The incremental reduction in 2023 compared to
2022 is 6.2 percent resulting in a decrease to 15.2kg CO2e per square meter. This is
primarily driven by further decreases in the relative emissions in Switzerland (8.6
percent) and Germany (0.6 percent). In terms of absolute emissions, Switzerland and
Germany achieved reductions of 1,160 metric tons CO2e and 601 metric tons CO2e,
compared to 2022. These positive results are attributed to the ongoing capital
expenditure program in Switzerland and additional energy optimization measures in
Germany. Additionally a number of buildings were sold in 2023.
Figure 26
Relative emissions compared to assets under management from 2019 to 2023
1
20.4
21.6
17.2
2020
16.2
15.2
2019
Baseline
2021
2022
2023
Target achieved
one year ahead
of target year
Relative
emissions
reduced
by 30%
1. 19 The coverage ratio is the GFA in square meters (m2) of completed properties
for which data is collected as a percentage of the total GFA area in m2 of all completed
properties in the portfolio.
The above graph illustrates the decline in relative emission intensity and AuM from 2019
to 2023. The 14 percent reduction in AuM relative to the baseline year of 2019 can be
attributed to strategic asset allocation, particularly over the past two years, as well as
devaluations resulting from challenging market conditions. Additionally, relative
emissions have decreased to 15.2 kg CO2e per square meter, a change facilitated by
the aforementioned initiatives.
The completeness of our emission data – measured by the coverage ratio 19 – increased
slightly from 82 percent for 2022 to 83 percent for 2023.
Figure 27
Emission reduction target-setting methodology and scope: Listed equity and corporate bonds
Absolute emissions1
Relative emissions (intensity)
Key
Equation_AbsoluteEmissions.png
Equation_RelativeEmissions.png
I: Current value of investment on
issuer i
EV: Enterprise value of issuer i
C: Carbon emissions* of issuer i
* Carbon emissions = scope 1 and
scope 2 emissions
In 2021, we announced our initial set of interim
targets (2025). The targets cover the following:
• Listed equity, listed corporate debt and direct
real estate.
We chose to calculate corporate-financed
emissions and the resulting relative emissions
intensity using the protocol’s preferred approach,
which is based on enterprise value, not revenue.
While a revenue-based carbon intensity
measure is a good way to compare companies
based on their size and underlying technology, in
line with the NZAOA methodology, we believe
the enterprise value approach is a better way to
convert a corporation’s operational emissions
(scope 1+2) into the “financed emissions.” This
can be attributed to a company’s underlying
equity and/or debt investors, who are ready to
take additional responsibility for the emissions.
To calculate corporate financed emissions, we
use the following methodology:
– Scope 1+2 emissions in line with the GHG
protocol, which are provided by S&P Trucost.
– Enterprise value is defined as the sum of
market capitalization of common stock at
fiscal year end, the market capitalization of
preferred equity at fiscal year end, and the
book values of debt and minorities’ interests
minus the cash and cash equivalents held by
the enterprise. When enterprise value is not
available (for example for financial
companies), it is substituted with market
capitalization. Enterprise value data is
provided by S&P Trucost.
Market value is defined as the market value of
listed equity and listed corporate debt at fiscal
year end. While all financial data (enterprise
value and market value) is calculated as of
December 31 of the reporting year, we use
the latest available corporate emission data
available as of January each year, when
portfolio level financed emissions are
calculated on an annual basis. This means
that emissions data is systematically lagging.
For example, financed emissions for 2024 will
be largely based on full-year 2023 emissions
data, as full-year 2024 emissions data will
only be made available by investees in the
first half year of 2026, and tends to flow to
data providers via CDP submissions in the
fourth quarter of a given year.
1. In line with PCAF Global GHG Standard, see: carbonaccountingfinancials.com/
files/downloads/PCAF-Global-GHG-Standard.pdf
Figure 28
Emission reduction target-setting methodology and scope: Sovereign bonds
We follow the NZAOA-provided approach to measure the financed emissions of our sovereign
bond portfolio: Financed emissions cover production (scope 1) emissions (excluding land use,
land-use change and forestry (LULUCF)) of sovereign bonds of all maturities issued in domestic
or foreign.
Absolute approach:
tCO2e.jpg
Where exposure to sovereign bonds is in Nominal Value.
Intensity approach:
For production emissions:
Wi.jpg
WI : weighted exposure of sovereign bonds for sovereign “i”in a portfolio consisting of
“n”securities based on Marked Value
PPP: Purchasing Power Parity
Green certified buildings
We successfully reached our ambition of increasing the proportion of green-certified
buildings to 30 percent within our global real estate portfolio by the end of 2025 one
year early.
Table 13
% green certified buildings in total real estate1
% green certified buildings
Target
2024
2023
2022
2021
2020
2019
2025
Zurich Global Real Estate
Portfolio
35%
23%
22%
19%
22%
25%
30%
APAC
17%
0%
0%
0%
0%
0%
EMEA
34%
21%
23%
20%
23%
28%
Americas
48%
34%
17%
19%
18%
17%
1. Market-value weighted and based on balance sheet investments, incl. buildings
used by Zurich.
Investments in green-certified buildings rose to 35 percent in 2024 (USD 4.5 billion, see
Table 14), up from 23 percent in 2023, thereby achieving our ambition of 30 percent one
year ahead of schedule. This increase is mainly driven by more certified buildings in
Germany, where the number of certified buildings rose from 17 to 32. The intention is to
sustain this elevated standard of certified buildings in the forthcoming years.
Climate solutions
TCFD E.svg
As a large asset owner, we will leverage our investments to help mitigate climate
change and adapt to it. We define climate solutions as investments in economic
activities, technologies, or projects that contribute to the mitigation (including enabling
activities) of climate change by reducing greenhouse gas emissions, facilitate the
transition to a low-carbon, climate-resilient economy or enhance the resilience of people
and assets against the effects of climate change.
We leverage our knowledge and proven investment process from impact investing and
real estate investments and count environmental impact investments and green certified
buildings toward our climate solutions investments. For further information on our impact
investment approach, see pages ## to ##.
Our ability to invest in climate solutions varies annually based on market conditions,
available opportunities, and balance sheet capacity.
Table 14
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Climate solutions
2024
2023
2022
2021
2020
2019
(baseli
ne)
Differe
nce
(to
baselin
e)
Target
/
Ambiti
on
Climate solution investments
(USDm)
10,44
2
9,272
8,192
8,203
8,054
7,408
41%
upwar
d trend
of which environmental impact
investments1
5,936
5,792
4,640
5,115
4,424
3,662
62%
of which green certified
buildings2, 3
4,506
3,480
3,552⁵
3,088
3,631
3,747
20%
Million metric tons CO2e
avoided through climate-related
impact investments 4 (ambition)
3.9
4.5
3.2
4.6
2.9
2.8
5
1. Values refer to the environmental share of our impact investments displayed in
Table 16: Impact investing portfolio on page ##.
2. Green certified buildings based on balance sheet investments, incl. buildings
used by Zurich.
3. Values refer to the share of green certified buildings of our global real estate
portfolio displayed in Table 13: % green certified buildings in total real estate on page ##.
4. Impact numbers for 2021 and following include methodology upgrade, as
explained in our impact measurement methodology paper: www.zurich.com/-/
media/project/zurich/dotcom/sustainability/docs/zurich-impact-measurement-
framework.pdf
5. The reevaluation in Austria affected the 2022 year and the value has dropped
from USD 4,035m to USD 3,552m.
Case
study
Private infrastructure debt investments are particularly suited for impact investing: By investing
in infrastructure, impact investors can achieve a dual objective of generating financial returns
while contributing to positive social and environmental outcomes. An example is the transition
to a low-carbon economy, which requires large investments in new infrastructure. Specific
renewable energy or energy efficiency projects can play a vital role and be easily evaluated
against specific impact objectives, such as avoiding CO2e being emitted to the atmosphere.
One example is Zurich's debt investment in a portfolio of solar parks in Spain. The portfolio of
23 ground-mounted solar parks can produce 180,000 megawatt hours annually,1 which is
enough energy to power around 9,000 homes supporting the growth of Spain’s renewable
energy sector and the contribution toward clean energy generation. The solar parks are owned
by a developer with extensive expertise in the renewable energy market in Spain.
The rationale for investment in the transaction includes the attractive risk–return profile, the
geographically diversified nature of the portfolio of the underlying solar energy generation
assets, and the favorable regulatory environment that ensured stability of cash flows and
limited exposure to electricity market price fluctuations. Moreover, Zurich’s investment in a
well-established, long-term solar energy asset that facilitates the avoidance of 1,300 metric
tons CO2e emissions annually, shows our commitment to the transition of the economy to a
low-carbon energy model and therefore climate change mitigation.
Other Responsible Investment KPIs
Z E.svg
We aim to create value for both our company and for society as a whole. As part of this
approach, we expect our asset managers to integrate sustainability factors and monitor
accordingly i.e., to reflect the risks and opportunities associated with it when choosing
assets for our portfolios. We have implemented a global set of policies and investment
processes across our entities to provide a consistent approach. Through ESG
integration, we price and manage financially material sustainability risks and
opportunities. Investments may also enable economic activities that can have positive
impacts on our environment and society. We use various third-party data providers that
supply information on the most material ESG risks and opportunities, as well as adverse
impacts and ongoing controversies per company in the context of the sector they
operate in. We have integrated sustainability information, including climate data, into our
systems and have information about the performance of our portfolios.
The following section shows the progress we have made with our responsible
investment strategy in 2024 and in the past. Our responsible investment strategy is
aimed at successfully managing our proprietary investment assets, while mitigating
costs to the environment and delivering benefits to society. Our strategy is based on
three pillars:
– ESG integration: into the investment process across asset classes and alongside
traditional financial metrics while generating superior risk-adjusted, long-term financial
returns.
– Impact investing: build an impact investing portfolio that makes a positive contribution
to the environment and society, to improve the lives of 5 million people and to help avoid
the emission of 5 million metric tons of CO2e per year. Additionally, we target to allocate
5 percent of invested assets to impact investments by 2025.
– Advancing together: make responsible investment mainstream through interaction with
other industry participants and engaging with policy makers to build markets in which
sustainability risk is priced efficiently and decarbonization is incentivized.
Summary ESG integration and impact investment portfolio
Table 15
Investment portfolio managed by responsible investors
2024
2023
Chang
e
(2024
to
2023)
2022
2021
2020
2019
Assets managed by responsible
investors1
99.8%
99.8%
0 pts
99.6%
99.6%
99.6%
98.2%
Total amount of impact investments
(USD millions)
8,460
7,882
7%
6,328
7,037
5,770
4,555
% of Investment portfolio
5.3%
4.6%
0.7 pts
3.8%
3.3%
2.5%
2.2%
Investment portfolio (USD
millions)2
160,64
5
171,20
0
(6)%
168,47
8
211,33
4
226,38
9
204,80
3
1. A United Nations supported PRI signatory or asset manager that fulfills our
minimum requirements for ESG integration. See our responsible investment
white paper: www.zurich.com/-/media/project/zurich/dotcom/sustainability/docs/
responsible-investment-at-zurich.pdf
2. Investment portfolio is calculated on a market basis, and is different from the total
Group investments reported in the consolidated financial statements, which is
calculated on an accounting basis and doesn’t include cash and cash
equivalents.
1. Corresponding to 127 megawatt (MW) of generation capacity.
ESG integration – Proxy voting
Z E.svg
As part of our active ownership strategy, we require all our managers for listed equities
to exercise their voting rights on directly held equities. For our in-house asset
management, we seek that outcomes of engagements are linked to the proxy voting
process to form a consistent active-ownership approach. This means that where
engagement as part of our net-zero ambition fails and companies refuse to set targets
after due dialogue, we will vote against board members at shareholder meetings.
Figure 29
Proxy voting
Our voting activities
Our voting behavior
1. 20 For further details, see our proxy voting policy: www.zurich.com/-/media/project/
zurich/dotcom/sustainability/docs/zurich-proxy-voting-policy-and-guidelines.pdf
4930
l
Votes cast1
72%
l
No votes cast
28%
4934
l
Voted with management1
63%
l
Voted against management1
8%
1. Not all votes cast can be allocated to “with” or “against” management. Those
explain the difference between our votes cast of 72% and our voting behavior of
71%.
In 2024, we voted on 72 percent of our in-scope equity (externally and internally
managed). Approximately 70 percent of our equity investments are in scope for proxy
voting. 20 The share of voted equity dropped due to changes in the investment style,
moving direct active equity management into equity fund investments. We measure the
votes we cast based on assets under management. Reasons for not casting a vote are
a combination of portfolio turnover, cost/benefit considerations and voting restrictions
(such as demands to vote in person, share blocking or requirements that increase the
cost of voting).
Case
study
Companies issuing climate transition plans often seek investor validation through ‘Say on
Climate’ proposals. At the beginning of this year, a major European energy and petrochemical
company of which we are a shareholder scaled back its emissions reduction commitment, now
targeting a lower figure than originally stated. This reversal raised concerns about the
company’s progress on transitioning to a net-zero economy. At its 2024 Annual General
Meeting (AGM), we, along with an important portion of shareholders, voted against the "Say
on Climate" proposal, which sought approval for the company's progress and updated plans.
We opposed the proposal in order to convey to the company that they have not made enough
progress toward meaningful climate action. Our opposition is meant as a message on the
urgent need for tangible action from high-emitting companies.
As shareholders we can also communicate our dissatisfaction with the company’s climate
actions by voting against board members at its AGM. In 2024, we voted against the Directors
or members of the ESG board of several companies with whom we have been engaging for
several years but who still do not show strong and credible commitments toward net-zero. For
example, we voted against the Board of Director of a European steel company who has been
involved in severe environmental controversies and does not show strong commitment to
CO2e emission reduction. We expect the company to set and execute a tangible
decarbonization plan in line with the Paris agreement.
Impact investing
Z E.svg
1. 21 www.insdevforum.org/press-release-insurance-development-forum-announces-
plans-to-facilitate-investments-in-resilient-infrastructure-in-developing-emerging-
markets/
Build an impact investing portfolio that makes a positive contribution to the environment
and society, with the ambition to help avoid the emission of 5 million metric tons of
CO2e per year, and to improve the lives of 5 million people. The latter we have reached
for the first time in 2024.
We further achieved our commitment to investing 5 percent of our proprietary
investment portfolio to impact investments, one year ahead of target year. In 2024, our
impact investment portfolio grew to a total of USD 8.5bn, equivalent to 5.3 percent of
our proprietary investment portfolio (see Table 15). The increase was driven by a strong
momentum in issuances of Sustainability bonds by supranational and non-financials.
Achieving our target further demonstrates our ability to grow our allocation to climate
solutions and investments benefiting society. Going forward, we are focussing our
efforts on climate solutions investments and the environmental angle of impact
investing.
We are proud that our impact investment approach won two awards in 2024 recognizing our
thought leadership
as an institutional investor in this area.
EFIA24-LOGO-WIN-RIOTY.svg
IARAW24-LOGO-WIN-RIOTY-RI.svg
In 2024, as part of the Insurance Development Forum, we helped create a blueprint 21 to
guide insurance sector investments in resilient infrastructure, as part of our impact
investing efforts. This blueprint aims to develop a pipeline of infrastructure projects that
meet the insurance sector's investment needs. This initiative reflects our commitment to
enhancing the resilience of at-risk communities in emerging and developing economies
against climate change and natural disasters.
Figure 30
Impact metrics
3.9 million metric tons CO2e emissions
avoided
1511
2. 22 Please see: www.zurich.com/investment-management/responsible-investment/
impact-investment for more details on impact investing approach. Impact numbers for
2021 and following include methodology upgrade, as explained in our impact
measurement methodology paper: www.zurich.com/-/media/project/zurich/dotcom/
sustainability/docs/zurich-impact-measurement-framework.pdf
l
Green, Social and Sustainability
bonds
94.9%
l
Impact infrastructure private debt
3%
l
Impact private equity
2.1%
5.3 million people benefited by positive
contribution to their lives and livelihoods
76
l
Green, Social and Sustainability
bonds
61.8%
l
Impact infrastructure private debt
37.8%
l
Impact private equity
0.4%
In 2024, our impact investing portfolio of USD 8.5 billion helped avoid a total of 3.9
million metric tons of CO2e emissions and benefited 5.3 million people. 22 The above
mentioned increase of issuance of Sustainability bonds supported us in achieving our
target as it resulted in a higher exposure toward social impact intense issuers such as
supranational.
As in the previous year, we see the majority of ‘avoided emission’ coming from our
Green, Social and Sustainability bond portfolio, while private equity is also a large
contributor to ‘people benefited’. The decrease in avoided emissions, particularly in
Renewable Energy projects, is linked to grids operating at lower carbon intensities,
resulting in a reduced impact when replacing traditional energy sources. Additionally,
there has been a decrease in funding for nature-based solution projects, such as
forestation, which usually have significant carbon sequestration potential. Recent years
have also experienced volatility in this area.
We further see a lower allocated amount to nature-based solution projects (e.g.,
forestation projects), which typically have high carbon sequestration potential.
In recent years we have seen volatility in the impact metrics. This is driven by reported
impact numbers but also the underlying portfolio constructions.
After engaging in impact reporting for several consecutive years, we have witnessed
positive changes in the landscape, including a notable increase in standardization and
clarity. The dedication to precision in both reported and actual impact measures reflects
heightened efforts by impact managers, particularly in measuring the real impact post-
1. 23 www.unpri.org/
2. 24 www.unepfi.org/net-zero-alliance/
3. 25 www.icmagroup.org/sustainable-finance/
4. 26 www.cisl.cam.ac.uk/business-action/sustainable-finance/investment-leaders-
group
project development. Additionally, we have noticed a growing trend where impact asset
managers exercise conservatism in defining the scope of reported projects.
Furthermore, our own impact portfolio has undergone transformations due to bond
maturities and exits in portfolio companies. These shifts have contributed to the
fluctuation in impact numbers on a portfolio level from year to year. Despite this volatility,
we view these developments as positive news for the industry, recognizing that
enhanced measurement practices lead to more effective impact management.
Table 16
Impact investing portfolio
2024
2023
Chan
ge
(2024
to
2023)
2022
2021
2020
2019
Total amount of impact investments (USD
millions)
8,460
7,882
7%
6,328
7,037
5,770
4,555
Total amount of impact investments -
environmental share
70%
73%
73%
73%
77%
80%
Total amount of impact investments - social
share
30%
27%
27%
27%
23%
20%
Green, Social & Sustainability bonds (USD
millions)
7,502
6,857
9%
5,247
5,846
4,677
3,645
Impact private equity (USD millions)
210
216
(3)%
213
211
189
163
Impact infrastructure private debt (USD
millions)
748
808
(7)%
867
980
904
747
Advancing together
Z E.svg
Responsible investment will only have an impact if this approach becomes mainstream.
Supporting sector initiatives and joining member-led organizations to advance
responsible investment practices forms an integral part of our approach.
We have signed the UN-backed Principles for Responsible Investment (PRI) 23 as
well as the Principles for Sustainable Insurance (PSI) and collaborate with several
industry initiatives and research bodies. For instance, we are a founding member of the
UN-convened Net-Zero Asset Owner Alliance (NZAOA), 24 co-chairing its Policy and
Transition Finance work tracks the past two years, demonstrating leadership in
addressing climate change by committing to ambitious targets but also benefiting from
having access to resources, tools and expertise provided by the UN and other partners.
Our long-standing commitment to the Green and Social Bond Principles 25 underscores
our dedication to the Green, Social and Sustainability bond market. Our leadership role
was reaffirmed with our reelection in 2024 to the Executive Committee of the Green and
Social Bond Principles, ensuring continued alignment to foster a Green, Social and
Sustainability bond market that enables capital raising and investments for new and
existing projects with environmental benefits.
We are also a founding member of the Investment Leaders Group (ILG), 26 facilitated by
the Cambridge Institute for Sustainability Leadership (CISL), working on developing and
5. 27 www.impactprinciples.org/
6. 28 Cover-More, Farmers Group, Inc. and its subsidiaries, our joint ventures with
Banco Sabadell and Banco Santander, smaller businesses like Real Garant and Orion,
third party vendors as well as our new acquisitions Zurich Kotak and Travel Guard are
excluded since they were not reflected in the CO2e emissions baseline in 2019.
1. 29 For more details on our governance framework, see chapter 2. Governance on
pages 134 to 136.
2. 30 For further details about our approach to net-zero in our operations, visit our
website: www.zurich.com/sustainability/planet/sustainable-operations
promoting best practices for responsible investing. The latest efforts were around nature
where ILG’s research aims to empower investors to understand how shifts in market
sentiment, induced by awareness of present and future environmental and specific
nature risks, could affect global financial markets in the short term.
In 2024, Zurich also became the Convener of the Advisory Board of the Operating
Principles for Impact Management (OPIM). 27 As a leading institutional asset owner in
impact investing, we can play an important role to help and grow the market by being
inspirational to fellow asset owners.
TCFD GRI E.svg
Own operations and supply chain
We are actively managing our operational emissions 28 in alignment with four core
principles:
Transparency
We report on the carbon dioxide equivalents (CO2e) of the following sources of
emissions to track progress toward our science-based targets for reducing emissions, in
line with efforts to limit global temperature rise:
• Scope 1 emissions from fleet and onsite heating in our workplaces.
◦ Scope 2 emissions from purchased electricity, heat and steam in our workplaces.
◦ Scope 3 emissions from air, rental and rail business travel, employee commuting,
strategic data centers, printed paper, waste, as well as indirect energy impact.
Accountability
We set clear targets on our operational emissions (see Table 17 on page ##), including
a target in our LTIP. 29
We have been carbon neutral since 2014 through the use of high quality offsets, which
we apply only after prioritizing emissions reductions. In 2021 we launched our path to
net-zero operations with our first carbon removal purchases. 30
We also set an internal price on carbon. In 2024, the price was USD 55 per metric ton
which we aim to progressively increase through to 2030. The price is applied to actual
emissions to determine the value of our carbon fund which supports our carbon
3. 31 Our environmental reporting methodology follows the GRI Standard, which is
based on the requirements of the Greenhouse Gas Protocol Corporate Accounting and
Reporting Standard. For more details on methodology, visit our website:
www.zurich.com/sustainability/planet/sustainable-operations
neutrality and net-zero carbon commitments, and other innovative solutions to drive
down emissions from operations, as well as those from other sources related to our
business.
Collaboration
We can only be successful if we address sustainability risks and opportunities together.
In addition to cross-functional collaboration, which is required internally to deliver our
operational sustainability agenda, we focus on: employee engagement, engagement
with our supply chain, and other external stakeholders such as universities, and NGOs
to share knowledge, promote research and improve our understanding of evolving
operational sustainability risks and opportunities.
Continuous improvement
Our operational sustainability is based on a model of continuous improvement of
processes which is essential as best practices in sustainability are regularly advancing.
Our efforts are heavily focused on improving data quality through opportunities such as
data automation and improving control processes. We are also working to align with the
financial reporting boundary (see Table 18 on page ##).
Please see the table below for progress on our targets for our own operations against a
2019 baseline. 31
Sustainable operations
Table 17
Absolute carbon emissions coming from our own operations1
2024
2024
Progre
ss
against
baselin
e in %
2023²
2023
Progre
ss
against
baselin
e in %
2019
(baseli
ne)
Target
reduct
ion by
2025
Target
reduct
ion by
2029
Target
reduct
ion by
2030
Absolute carbon
emissions
Total
56,79
5
(69)
60,06
6
(67)
180,80
5
(60)
(70)
Net-
zero
Absolute
reduction in all
operational
emissions
Final
52,09
0
Initial
estimate3
4,705
Scope 1 + 2
emissions
Total
18,37
4
(62)
19,80
7
(59)
48,290
(62)
(80)
Net-
zero
Fleet emissions
Final
14,47
0
15,52
4
20,285
Onsite heating
emissions
Initial
estimate3
2,000
2,341
3,794
Electricity
emissions
Initial
estimate3
25
62
20,630
District heating
emissions
Initial
estimate3
1,880
1,880
3,581
Scope 3
emissions
Total
38,42
0
(71)
40,25
9
(70)
132,51
5
(60)
(67)
Net-
zero
Printed paper
Final
2,117
1,384
2,435
Strategic data
center emissions
Initial
estimate3
0
6,847
Energy and fuel-
related emissions
Initial
estimate3
4,383
4,697
11,731
Waste
Initial
estimate3
100
192
808
Business travel
emissions
Final
15,17
4
14,86
1
41,018
Air travel
emissions4
Final
14,09
1
13,59
9
39,435
Rental car
emissions
Final
618
841
1,241
Rail emissions
Final
465
422
342
Employee
commuting
emissions
Final
16,64
7
19,12
5
69,676
1. 32 Cover-More, Farmers Group, Inc. and its subsidiaries, our joint ventures with
Banco Sabadell and Banco Santander, smaller businesses like Real Garant and Orion,
as well as third party vendors are excluded as well as our new acquisitions Zurich
Kotak and Travel Guard.
2. 33 Final figures will be presented upon conclusion of the reasonable assurance
audit in Q2 2025.
3. 34 Including battery electric vehicle and plug-in hybrid.
1. Cover-More, Farmers Group, Inc. and its subsidiaries, our joint ventures with
Banco Sabadell and Banco Santander, smaller businesses like Real Garant and Orion,
third party vendors as well as our new acquisitions Zurich Kotak and Travel Guard are
excluded since they were not reflected in the CO2e emissions baseline in 2019 which
was used to set the LTIP target. Data in the table shown as metric tons of CO2e.
2. https://edge.sitecorecloud.io/zurichinsur6934-zwpcorp-prod-ae5e/media/project/
zurich/dotcom/sustainability/docs/zurich-environmental-performance-data-2023.xlsx
3. Initial estimate only refers to the year 2024. Emissions related to facilities data
(electricity, heating and waste) and data centers are impacted by a time lag and are
therefore estimated. Final data will be published by Q2 2025 on our website.
4. DEFRA emissions factors for air travel are held flat to the 2022 factor set given
subsequent updates incorporated load factors which were impacted by the pandemic.
This would have inflated air emissions by an estimated 20 percent and would not
reflect an accurate view of our travel activity.
We have included estimated emissions for the purpose of presenting a total operational
footprint for 2024, 32 comparable to previous years’ performance. 33
In 2024, we achieved a reduction in total operational emissions over the previous year
following two years of rebound since the COVID-19 pandemic-induced decline. Against our
2019 baseline, the reduction was 69 percent. The strongest reduction was in our employee
commuting emissions which was primarily due to data quality improvements. We are
continuously improving the calculation approach, reducing dependencies on assumptions,
and expanding automation. For example, we are able to capture actual commutes taken
and link them to the commuting profile of the individual (if that commuter chose to provide
the details of their commute). We also continued to progress on our transition to electric
vehicles, 34 adding more than 900 electric vehicles during 2024, totaling 49 percent of the
global car fleet. If we add the count of hybrids, this covers 61 percent of the car fleet. Air
travel emissions increased by 4 percent compared to 2023, as we continue to prioritize the
needs of our customers and partners.
While print has increased slightly since 2023, emissions have disproportionately
increased due to a change in the calculation methodology for the underlying DEFRA
emissions factors.
1. 35 Those include Cover-More, our joint ventures with Banco Sabadell and Banco
Santander, smaller businesses like Real Garant and Orion, as well as third party
vendors and our new acquisition, Zurich Kotak. The acquisition of Travel Guard is not
included due to the late closing in December 2024.
In 2024, we expanded our emissions measurement for entities which were not included
in the baseline in 2019. Estimations have been prepared for those. 35 Scope 3
emissions, in particular employee commuting and business travel, represent the highest
emissions sources in our estimates.
Table 18
Absolute carbon emissions estimated for entities not included in the baseline
In metric tons CO2e
2024
Absolute carbon emissions
9,482
Scope 1 emissions
1,034
Scope 2 emissions
2,628
Scope 3 emissions
5,821