Hanover Re, a German reinsurance business headquartered in Hannover, Germany, is the world’s third-largest reinsurance group, with total premiums of about €24 billion. According to the firm’s climate change goals, it will attain net-zero emissions in its business operations by 2030 and net-zero emissions in its reinsurance portfolio and investments by 2050. The goal is part of its commitment to support the Paris Climate Agreement.
The reinsurer intends to create techniques for calculating the greenhouse gas emissions of client portfolios in the property and casualty industry reinsured by it. The assessment of the carbon footprint in compulsory reinsurance, which includes whole portfolios, is seen as the first significant step toward achieving specific reduction goals in the insurance industry.
As part of its thermal coal exit strategy, Hannover Re began a dialogue with its clients in obligatory reinsurance last year to completely withdraw coverage for risks associated with the mining and generation of electricity from thermal coal by the year 2038, as previously announced. Hannover Re’s facultative section, which specializes in individual risks, has already said that it would no longer offer coverage for any proposed new coal-fired power stations or thermal coal mines, effective as of April 2019.
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Furthermore, since February 2020, the facultative department has prohibited any new business involving covers relating to oil sands extraction, processing thermal coal, or associated infrastructure. Projects for oil and gas exploration in the Arctic have also been barred from consideration. When compared to the base year of 2019 and the achievement of climate neutrality in this area by the year 2050, in investments, Hannover Re’s first interim goal is to reduce carbon emissions by 40 percent from energy-related activities.
As of the end of June 2021, the impacted asset classes amounted to about 39 percent of Hannover Re’s entire investment portfolio. Another step will be to highlight environmentally-friendly investments that will help combat climate change, such as investments in impact investment funds, the aim of which is to have a beneficial effect on the environment and society.
Hanover Re’s most recent commitments follow the company’s decision to join the United Nations-sponsored NetZero Insurance Alliance, the United Nations-initiated Principles for Responsible Investment and Principles for Sustainable Insurance. Hannover Re has already been operating with a net-zero carbon footprint at its Hannover site since 2016, and the company aspires to accomplish this goal for all of its business activities globally by 2030.
The reduction of energy consumption, the replacement of fossil fuels with renewable energy sources, and the offset of unavoidable greenhouse gas emissions are the goals of Hannover Re for its worldwide sites to reach its net-zero objectives.
The Intergovernmental Panel on Climate Change’s report highlighted the urgent and consistent action against climate change. The climate change conference, known as COP26, will provide an essential platform for the adoption of further tangible climate change policies. When it comes to assessing the risks associated with global warming and better adapting cities and structures to climate change, the risk knowledge of insurers and reinsurers is critical.