Metrics and Targets
Swiss Life works with metrics to assess climate-related risks and opportunities as well as progress towards corresponding targets to ensure the future resilience of its business model. Key figures communicated externally contribute to greater transparency in the financial industry.
As a life insurance company and based on the markets in which it operates, Swiss Life considers the climate-related risks on the liabilities side of the balance sheet to be low. Swiss Life also sees opportunities for the investment of customers’ assets. That is why the assets side of Swiss Life’s balance sheet is the focus of quantitative analyses of climate risks. Swiss Life’s diversified PAM portfolio also contains investments in companies in the energy and utilities sector and in the materials industry as well as manufacturers and companies that supply consumer staples. These companies have, on average, higher potential transition risks than companies in other industries. Swiss Life wishes to contribute to the transition to a low-carbon and climate-resilient economy in line with the Paris Agreement. Transparency in this regard is made possible on the one hand by the publication of backward-looking key figures such as greenhouse gas emissions in the PAM portfolio and the own operations and, on the other hand, by the publication of forward-looking indicators from scenario analyses. These instruments enable Swiss Life to identify and manage the transition and physical risks in the portfolio at an early stage and to define appropriate risk measures.
Climate-related metrics and underlying methodologies belong to a relatively young – and hence still evolving – field of research, are often complex and offer only limited comparability. Moreover, climate indicators are based on assumptions and are thus inherently subject to model risk. An additional challenge is that there is currently no broad consensus on the methodology of climate indicators. The quality and availability of the underlying data are limited, which ultimately makes the climate-related metrics less meaningful.
In order to incorporate different perspectives on climate-related matters and gain experience with the metrics and measurement methods, Swiss Life has decided to track and use a selection of metrics internally. All relevant areas of the company can thus develop their knowledge around climate-related metrics and measurement methods. In its external reporting, Swiss Life is currently focusing on climate indicators that have sufficiently reliable data.