- Sustainability goals expanded substantially in 2021 to include net zero emissions in asset management, underwriting and operations
- Volume of sustainable investments reaches EUR 7.2 billion
- New Board of Management remuneration system includes individual ESG contributions
- Greater transparency thanks to publication of EU Taxonomy KPIs
- Exclusion of Arctic further tightens investment and underwriting strategy
“We are feeling climate change in our business activities around the world – both in primary insurance and in reinsurance. Natural disasters have never impacted us more than in financial year 2021, when net losses in this area amounted to EUR 1.3 billion. This is why we want to use our sustainability strategy to help limit natural disasters resulting from climate change, and to support the transition to a low-carbon world”, said Torsten Leue, Chairman of the Board of Management of Talanx AG. “We are helping to make a sustainable future happen by including a range of different sustainability dimensions and ESG factors in our business strategy, and are constantly enhancing these. This is driving forward our cultural transformation and helping prepare us for the new normal – which will be shaped profoundly by the consequences of climate change.”
Responsible exit from fossil fuels
In the underwriting area, Talanx’s focus is on achieving net zero in its insurance portfolios by 2050 – a goal that will be used in time as a core performance indicator. However, the methodology needed to capture the relevant data in the insurance industry is currently still under development.
Talanx’s underwriting policy in the area of fossil fuels is subject to constant review and is being adjusted in line with the risks involved: from 2038 onwards, the Group will no longer insure business models that are based on coal or oil sands. A medium- to long-term time frame has been adopted for exiting fossil fuels, to permit this to be achieved responsibly. The Group’s underwriting strategy and activities are strongly influenced by its membership of the UN’s Principles of Sustainable Insurance (PSI) initiative. By signing up to this, Talanx has committed voluntarily to continuously improving the sustainability of its insurance business in line with the PSI Principles and to creating transparency about the progress it is making in this area.
Sustainable investments reach EUR 7.2 billion
In the asset management area, an intermediate milestone has been introduced on the way to achieving net zero by 2050: the Talanx Group is aiming to cut the carbon intensity of its liquid portfolios by 30 percent compared to the 2019 baseline by 2025. In addition, the Group has increased its sustainable investment volume to EUR 7.2 billion. This included making additional investments in renewable energy sources and other sustainable infrastructure projects, underlining the Group’s pioneering role in the transition to green energy.
One milestone reached during the reporting period was the issuance of the Group’s first green bond, which is aimed at financing and refinancing sustainable projects with a particular focus on renewable energy generation and low-energy residential and commercial real estate. The subordinated bond, which has a volume of EUR 500 million, was primarily issued to institutional investors in Germany and abroad; it was successfully placed on the market following a short subscription period in which it was oversubscribed by a factor of 3.5.
The Talanx Group’s sustainability approach in the asset management area is guided by the UN Principles for Responsible Investment (PRI) initiative, a network of international investors supported by the United Nations whose members are working towards a more sustainable global financial system.
Operations and corporate governance round off activities
Talanx achieved a further reduction in its carbon emissions from operations, which decline by 18 percent year-on-year during the reporting period. In addition, the Group has already reached one core goal of its sustainability activities. The Talanx Group’s operations in Germany – where 45 percent of its employees work – are climate-neutral. Talanx has set itself the goal of achieving net zero emissions for its worldwide operations by 2030.
In addition, Talanx has expanded fundamental sustainability criteria to its supplier management, where they are being systematically implemented through data capture, measurement and monitoring. ESG factors also play a key role in corporate management and underscore how seriously Talanx takes its activities. A new remuneration system at Board of Management level defines individual goals for each Board member in the areas of good governance and the contribution made to Talanx’s sustainability strategy.
Outlook for 2022: further enhancements to the sustainability strategy
What is more, additional initiatives will play a key role in the Group’s sustainability activities in the current year: For example, cover will no longer be provided on an individual risk basis for greenfield Arctic drilling. In asset management, issuers participating in such drilling projects are also being excluded from investment activities throughout the Group. In addition, the focus in Germany this year throughout the Group will be on developing a science-based reduction pathway in line with the 1.5°C goal, so as to further reduce greenhouse gas emissions in operations. Building on this, emissions are to be cut by 25 percent compared to the 2019 baseline by 2025 (so-called „Science-Based Target“) – a major milestone on the way to achieving the net zero target in operations in 2030.