Sustainability highlights 2022

The land and future property was acquired on behalf of Zurich Deutscher Herold in 2021 and construction will be completed in January 2023. The De Baak building is a highly sustainable, energy-efficient residential tower boasting 127 apartments in Amsterdam’s mid-market segment, which is part of the affordable housing sector in the Netherlands.

 

Ports are among the most exposed sites in the world to climate risks. Typically located along open coasts or in low-lying estuaries and deltas, ports are vulnerable to windstorms, flooding and storm surge, while operations can be interrupted by fog, snow and heatwaves. This can cause physical damage to port equipment and business interruption as the terminal may not be able to operate at maximum capacity or may even be forced to close.

Ports will also be on the frontline when one of climate change’s most worrying long-term impacts – sea level rise – begins to engulf the world.

It’s no wonder that A.P. Moller-Maersk (‘Maersk’) – with more than 67 port terminals, 300 inland facilities and 600 container ships – identified climate change, both physical and transition risks, as one of its biggest threats to its business in a recent study.

This is why Maersk has enlisted Zurich’s global risk consulting unit Zurich Resilience Solutions (ZRS) to undertake on-site climate assessments at five of its most critical ports and to provide actionable recommendations to mitigate risks and improve climate resilience. Henneberg believes ZRS has the right skillset to provide these insights.

“ZRS has the necessary scientific and technical risk engineering capabilities, combined with risk assessment and impact analysis expertise. This will ensure we have recommendations that are both practical and operational and will help us mitigate vulnerabilities and increase climate resiliency on our port terminals.”

 

With one in seven adolescents aged 10-19 living with a mental health condition globally, bringing more focus and investment in youth mental well-being has never been more urgent. In 2022, the Z Zurich Foundation co-designed and launched, together with UNICEF, the Global Coalition for Youth Mental Well-being (the Coalition). The first action of the Coalition was an appeal to support young refugees from Ukraine. The Coalition is also calling public and private sectors to increase their investments in mental well-being prevention and promotion. As of November, three global leading organizations have already joined the Coalition alongside UNICEF and the Foundation, including Zurich Insurance Group.

The Coalition is one of the key milestones of the strategic partnership between UNICEF and the Foundation. Interventions in seven program countries also started in 2022, alongside the support of a global prevention campaign equipping youth and their caregivers with the tools they need to proactively look after their mental wellbeing.

 

Zurich’s private debt investment with MetLife Investment Management has a significant effect on New Jersey’s transition to clean energy generation.

Zurich Insurance Group (Zurich) invested USD 24 million in a USD 200 million financing by MetLife Investment Management (MIM) to support the phase-out of the last two coal-fired power plants in New Jersey, USA. The decommissioning is expected to result in the reduction of 3.9 million metric tons of CO2 in the atmosphere, the equivalent of eliminating over 750,000 passenger cars a year and an estimated USD 30 million cost savings to Atlantic City Electric customers.

 

With an increasing number of Zurich North America (ZNA) employees eligible to retire, there is a growing business continuity risk as the workforce considers retirement. This has seen the HR team and the business in North America jointly develop an innovative phased approach to retirement that benefits both employees and the organization. It’s a great example of Zurich’s commitment to sustainability in action.

Seeking a simple solution that could be scaled across the whole organization, without requiring new policies or terms and conditions to be re-written, the ZNA team came up with Encore. Many of us are familiar with the concept of an ‘encore’ at the end of a concert often used to say goodbye, and this program is somewhat similar.

“Three key insights came from the research we did with our workforce regarding retirement needs,” Harvey continues. “Our people are eager to transfer valuable knowledge and leave a legacy but have little systematic guidance on how to do so. They also want more flexible options as part of the retirement pathway to negotiate individual win/win arrangements. And they’re concerned that knowledge transfer will be an additional challenge on their already full-time roles.,” he adds.

The Encore: Phased Retirement@Zurich program that the ZNA team devised enables flexible modifications to current roles for up to 24 months to support the employee’s changing needs as they plan to enter retirement. This might be going from full-time to part-time, working virtually from a different state where they ultimately plan to move in retirement, changing from a manager role to an individual contributor role or something else.

Harvey believes it empowers a smooth transition for both sides, where employees can be more at ease asking questions and exploring options, while also being more engaged and supported throughout the knowledge transfer process. Retirement conversations are always initiated by the employee, however, once raised, Encore is on the table for discussion by either party.

Although it is early days for this new initiative, the feedback from employees in ZNA has been overwhelmingly positive. ‘This is a Win-Win!’ ‘An innovative benefit and certainly a value add for the organization and employees,’ and ‘great recognition by Zurich that there is much to be gained by working with this segment of our workforce,’ are just some of the comments from employees when the program was announced.

“It’s another great example of how our new ways of working can meet both employee and business needs,” Harvey concludes.

 

Zurich Group’ Technology and Operations (GTO) team operates in a fast-paced environment, where building a brighter future means continually evolving knowledge and skills to keep pace with global developments.

One initiative launched by GTO in 2022 to meet this ongoing need was a reskilling program, which provides opportunities for colleagues to develop their careers in Technology. It’s aligned with Zurich’s People Sustainability ambition to prioritize employee development over external hires, providing opportunities for career ambitions to be met whilst fulfilling business needs.

The reskilling journey starts when a role considered suitable for re-skilling is advertised. Candidates apply and discuss the role with the hiring manager, who also discusses its suitability with the existing line manager. If everyone agrees, the reskilling journey begins, with specific guided learning and on the job training for each open position, culminating in the employee starting their new role within GTO.

Luis Marquez, an employee from the Zurich Capability Center in Mexico, is one of 14 participants to have enjoyed the benefits offered through reskilling. Luis applied to reskill into the ServiceNow team as a Business Analyst, a role that requires strong stakeholder management skills, the ability to problem solve and a willingness to grow. With the full support of both his existing and new line managers and colleagues, he is due to complete the journey by the end of 2022. Moving across functions and developing new skills, Luis is one example of many we hope to see of people sustainability in action via the GTO Reskilling Program.

 

Zurich’s solar power system on the Isle of Man is likely the largest on the island in terms of the kilowatts it can generate. It went live in July 2022 and has the potential to generate approximately 70 percent of the annual electrical power needs at Zurich’s local headquarters. The project highlights how Zurich is taking action on a local level to help the Group meet its ambitious target of net-zero operations by 2030.

The collection of solar panels is a bespoke car port system that has been built on the roof of an existing car park. Zurich worked with Isle of Man business Ardern & Druggan which designed and installed the solar panel system. It has the capacity to generate up to 206 kilowatts (206,000 watts) – enough to power more than 2,000 100-watt lightbulbs.

The design has several advantages, including:

• Scalability, which means more solar panels can be added to increase power generation.
• A modular and lightweight structure.
• Gutters that harvest rainwater.

The solar panels are also generating power for existing electric vehicle charging points. Further charging points are expected to be installed in early 2023.

The project was jointly funded by Zurich on the Isle of Man and Zurich’s carbon fund, which is part of Zurich’s sustainability commitment. Zurich is a UNESCO Biosphere Isle of Man partner. Making a significant investment in a direct renewable solar energy source exemplifies Zurich’s commitment to support sustainability in the communities in which it operates.

 

Q&A Rob Wyse

What impact does Zurich have on the global climate? How might climate change affect our business? How will we mitigate the risks and avail of the opportunities climate change presents? These are the issues Climate and Nature Manager Rob Wyse has grappled with in recent years. He is responsible for the Group level scenario-based climate risk assessment process, central to Zurich’s implementation of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Why was Zurich keen to align with TCFD as quickly as possible?

We see climate change as one of the most complex and urgent risks facing society. It is also a driver for many of the other risks that we as a global insurer need to manage so it is vital that we have a strong understanding of potential future impacts. Equally, the transition to a low-carbon economy is a 'once in a lifetime' event. We need to ensure we are well positioned to benefit from the opportunities it presents.

Transparent, comprehensive and accurate external disclosure is essential to facilitate the low-carbon transition. It is important to us as a responsible company that we demonstrate the behaviors we expect of our customers, peers and other economic actors.

How has the reporting evolved over the past five years?

We have reported in line with the TCFD since it first published its recommendations in 2017. Over the years our disclosures have become increasingly more granular and detailed as our understanding of this risk strengthens. In 2021 and in line with TCFD recommendations, we performed our first scenario-based climate risk assessment of both underwriting and investment portfolios as well as our operations.

What were the biggest challenges?

There have been many, but perhaps the forward-looking scenario-based analysis was the biggest challenge. The relative immaturity of assessment methodologies and modelling capabilities for underwriting activities was a particular difficulty to overcome.

The quality of forward-looking analysis relies on the availability of comprehensive, consistent high-quality data relating not only to emissions but also to private sector climate commitments.

Finally, implementing these recommendations demands co-ordinated action across all areas of the business, something that can be resource and time intense.

How has Zurich benefited from TCFD reporting?

As a report preparer, implementing the recommendations of the TCFD has proved immensely valuable in increasing our understanding of how climate change could impact our business over time. Through dialogue with subject matter experts, the nuances of scenario analysis model outputs can be explored, leading to a more accurate and consistent understanding of potential impacts. Scenario analysis also helps to contextualise actions our first line business functions can take in the short term to address potential long-term impacts.

As a report user, clear and comprehensive disclosures can serve as a useful tool for engaging with customers to understand their strategies for decarbonization.

What personal lessons have you learnt from TCFD?

I would encourage against viewing TCFD as a burdensome exercise. Embrace the inherent value in understanding the climate related risks and opportunities your organization faces. But equally so, don’t underestimate the effort that may be required to achieve a good level of insight. I’ve also learned that it’s more important to ensure that your forward-looking assessment is accurate than get distracted with precision. Don’t let the uncertainty inhibit your efforts.