‘Systematic climate approach’: Swiss Re plots global coal phase-out by 2040

Swiss Re's UK headquarters are located within the Gherkin (pictured)

Tuesday (16 March) saw the Group announcing a new ambition to reduce the carbon intensity off financed emissions by 35% by 2025 – a target it claims is aligned with the Paris Agreement’s 1.5C portfolio. The target covers corporate bonds and Swiss Re’s listed equity portfolio, as well as its direct real estate portfolio. For all other activities, climate strategies will be developed in the coming months.

Swiss Re said in a statement that it has already decreased the carbon intensity of projects supported by its corporate bond and listed equity portfolio by around 30% since 2015.

As well as engaging companies and projects already supported, Swiss Re will decrease financing for certain fossil fuels while increasing green, social and sustainability bond exposure and financing for renewable energy infrastructure. It is targeting $4bn of green bond exposure by the end of 2024; a complete exit from thermal coal in OECD nations by 2030 and a complete global exit from thermal coal by 2040. The firm claims that it has already begun work to exit the most carbon-intensive fossil fuel sub-sectors this year and will work with the Powering Past Coal Alliance to deliver the new targets.

The new commitments build on Swiss Re’s existing participation in programmes like the UN’s Net-Zero Asset Owner Alliance, the World Economic Forum’s Alliance of CEO Climate Leaders and the UN Global Compact’s Business Ambition for 1.5C.

“We believe that by engaging with the real economy and supporting the companies we invest in to develop a climate strategy and to manage related risks, we will improve our risk-adjusted returns, while also propelling the transition to a net-zero emissions economy,” Swiss Re Group’s chief investment officer Guido Fürer said.

“While we have already made considerable progress by substantially cutting CO2 emissions of our portfolio, this announcement is another important step in the race to net-zero. As asset owners, we can play a meaningful role, and I’m pleased to see momentum building amongst the investor community. “

Is sector-wide action enough?

To Fürer’s latter point, businesses including Citi, Goldman Sachs, Aviva and the Bank of America have recently set net-zero financed emissions targets.

Elsewhere,  the Institutional Investors Group on Climate Change’s (IIGCC) framework for aligning investment portfolios with net-zero is now being applied to more than $8trn of assets by a coalition of dozens of major fund managers, following successful real-world trials.

There are numerous drivers of this trend towards increased climate action from finance firms – chief among them the adoption of net-zero targets by national governments and by the businesses in which they invest.

However, there is debate around whether targets being developed today are ambitious enough. Many net-zero financed emissions targets are deadlined at 2050, which is the latest date by which net-zero should be delivered to maximise the world’s chance of 1.5C alignment, according to the IPCC. Moreover, when HSBC filed a resolution earlier this month that will see it exit coal globally by 2040, campaigners including Greta Thunberg argued that the date should be far sooner.

Sarah George

Comments (1)

  1. Richard Phillips says:

    All very well, but no word upon how this grand decarbonisation is to be achieved.
    Just how, please somebody!
    Energy generators, equal in capacity to the energy dissipated by carbon fuels will be needed.
    Renewables will not do it, Nature has the all controlling hand here.
    Does the green lobby still oppose nuclear energy, or is there a new sense of reality here?
    Richard Phillips

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