Sustainability report (SR) and Key performance indicators

Task Force on Climate-related Financial Disclosures (TCFD)

While environmental topics beyond climate are considered as part of Zurich’s approach to sustainability, understanding and managing climate change impacts remains a particular focus.

Our climate risk related disclosure is in line with the recommendations of the Financial Stability Boards Task Force on Climate-related Financial Disclosures (TCFD), and is embedded in the SR section of our Annual Report. Our TCFD disclosure can be found in the planet section of our SR and represents our assessment of the resilience of our strategy to climate change risk.

Outcomes of 2024 assessment

Our annual portfolio-level scenario-based climate risk analysis considers material business activities across underwriting, investments and our operations.

• Our P&C portfolio showed relatively little movement compared with 2022, with no material shifts observed in industry or line of business mix. Modelled medium-term impacts are contained to the property and fossil fuel lines of business, with aggregate impacts across in-scope line of business considered to remain low. With our portfolio mix remaining stable, no broad adaptations are required to in-force responses which we can adapt to balance near-term market movements against the mid-term strategic scenario expectations.
• 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.