Carbon intensity
Climate-related portfolio ambitions of the Swiss Life Group
Paris Agreement
In the context of its PAM portfolio – securities, real estate and infrastructure – Swiss Life’s ambition is to make financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development and thus contribute to a central goal of the Paris Agreement.
In addition to other metrics, Swiss Life works with the climate indicator Carbon intensity. Carbon intensity is an indicator of greenhouse gas efficiency. For real estate, the metric reflects greenhouse gas emissions in relation to gross floor area. For government bonds, this metric reflects greenhouse gas emissions in relation to nominal gross domestic product (GDP) while for corporate bonds and equities it reflects these emissions in relation to sales.
In its directly held PAM real estate portfolio, Swiss Life is able in some cases to directly influence carbon intensity. With reference to Carbon Risk Real Estate Monitor (CRREM), greenhouse gas emissions resulting from the operation of properties within the Swiss Life PAM real estate portfolio held directly for investment purposes can be classified as emissions controllable by the lessor and emissions controllable by the tenant. In this report, Swiss Life adopts the “operational control” approach. In Swiss Life’s climate reporting, carbon intensity currently covers the total greenhouse gas emissions resulting from the operation of properties.
Real estate is a major contributor to global CO₂ emissions and is at the same time exposed to climate-related risks. As one of Europe’s leading real estate investors and the owner of one of Switzerland’s largest private real estate portfolios, Swiss Life is aware of its responsibility concerning the transition to a low-carbon and climate-resilient economy.
Swiss Life has set itself the target of reducing the carbon intensity of its directly held PAM real estate portfolio by 20% by 2030 compared to 2019. Around CHF 2 billion will be invested over this period in order to achieve this target. The measures include, among other things, the implementation of energy efficiency and CO₂ efficiency measures and the switch from fossil to non-fossil energy sources.
The period considered for the current carbon intensity calculation is the calendar year 2022. Due to the data collection process, certain consumption values are only available with a time-lag of as much as three years. Therefore, adjustments to the published carbon intensity figures may be made retrospectively. This is reflected in the development of the data coverage.
Measures have been taken to improve both data coverage and data quality. As a result, for example, properties in Germany have been included in the reporting and the relevant gross floor area of the PAM real estate portfolio held directly for investment purposes has been increased by around 10%.
Given the reference paths, the current carbon intensity figure and the target set for 2030 can be compared with an assessment – based on current knowledge – of the requirements under the Paris Agreement. The global reference path is based on global developments. The specific reference path is based on the countries, types of use and gross floor area of the relevant Swiss Life properties. In 2023, the updated CRREM methodology, resulting in adjusted reference paths, was made available.
For 2022, the carbon intensity of Swiss Life’s PAM real estate portfolio held directly for investment purposes comes to 17 kg CO₂e/m2. The change in carbon intensity compared to the previous year was due, among other things, to a mild winter and the resulting fall in energy consumption by the properties.
Carbon intensity
According to greenhouse gas accounting under the GHG Protocol Corporate Standard, greenhouse gas emissions within Swiss Life’s PAM securities portfolio correspond to a subset of Swiss Life’s Scope 3 emissions and belong to category 15 “Investments”. Given the weighted average carbon intensity of its PAM securities portfolio, Swiss Life is already well positioned today. Swiss Life wishes to maintain this position as part of the ongoing strategic programme.
100% of Swiss Life’s PAM government bond portfolio is invested in countries that have ratified the Paris Agreement. Compared to the previous year, the weighted average carbon intensity of issuers has decreased. Most of this reduction can be attributed to changes in the countries’ GDP and greenhouse gas emissions and to changes in the portfolio composition.
Weighted average carbon intensity of the Swiss Life Group’s PAM government bond portfolio1, 2 as at 31.12.2023 (attributable, as per GHG Protocol Corporate Standard, to Swiss Life’s Scope 3 emissions, category 15 “Investments”)
| Asset class | Unit | 2023 | ||
|---|---|---|---|---|
| Government bonds | t CO2e/USD million GDP nominal | 164 | ||
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1 For the purposes of the TCFD Report, government bonds only include bonds issued by nation states. Corporate bonds also include covered bonds and bonds issued by government-related entities or supranationals. This deviation from other financial publications is due to the calculation logic underlying the carbon intensity. Green, social and sustainable bonds are included in the same way as bonds without specific reference to sustainability aspects.
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2 The coverage of the weighted average carbon intensity corresponds to over 90% of the amortised costs of the PAM government bond portfolio of the Swiss Life Group. © 2023 MSCI ESG Research LLC. Reproduced with permission. The data published by MSCI ESG Research LLC as of 31.12.2023 was used.
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The weighted average carbon intensity of Swiss Life’s PAM corporate bond portfolio reflects the strong presence of service-related industry sectors1. The PAM equity portfolio partially replicates equity index strategies. Therefore, the carbon intensity of the PAM equity portfolio can only be controlled to a limited extent through targeted adjustments.
Compared to the previous year, the weighted average carbon intensity based on issuers’ Scope 1 and Scope 2 emissions has decreased. This development can be largely attributed to changes in the companies’ revenues and greenhouse gas emissions as well as to changes in the portfolio composition. The issuers’ Scope 1 and Scope 2 emissions are partly reported by the issuers themselves and partly estimated by the external data provider.
Weighted average carbon intensity of the PAM corporate bond and equity portfolio1, 2 of the Swiss Life Group as at 31.12.2023 (attributable, as per GHG Protocol Corporate Standard, to Swiss Life’s Scope 3 emissions, category 15 “Investments”)
| Asset class | Unit | 2023 (Scopes 1, 2 of issuers) | ||
|---|---|---|---|---|
| Corporate bonds | t CO2e/USD million sales | 90 | ||
| Equities | t CO2e/USD million sales | 96 | ||
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1 For the purposes of the TCFD Report, government bonds only include bonds issued by nation states. Corporate bonds also include covered bonds and bonds issued by government-related entities or supranationals. This deviation from other financial publications is due to the calculation logic underlying the carbon intensity. Green, social and sustainable bonds are included in the same way as bonds without specific reference to sustainability aspects.
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2 The coverage of the weighted average carbon intensities corresponds to over 90% of the amortised costs of the PAM corporate bond portfolio and over 90% of the market value of the PAM equity portfolio of the Swiss Life Group. © 2023 MSCI ESG Research LLC. Reproduced with permission. The data published by MSCI ESG Research LLC as of 31.12.2023 was used.
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1 On average, service industries have a lower carbon intensity from Scope 1 and Scope 2 emissions than other industry sectors.
The ratio between the weighted average carbon intensity based on the issuers’ Scope 1 and Scope 2 emissions and the weighted average carbon intensity based on the issuers’ Scope 3 emissions differs according to the industry sector in question. The issuers’ Scope 3 emissions are based on estimates by the external data provider.
Distribution of the companies in which the Swiss Life Group’s PAM securities portfolio1 is invested by industry sector of the weighted average carbon intensity of Scope 1 and Scope 2 emissions relative to Scope 3 emissions, as at 31.12.2023 (allocated to Swiss Life’s Scope 3 emissions according to the GHG Protocol Corporate Standard, category 15 “Investments”)
