Swiss Re's Customer story

Challenge

Climate change has far-reaching consequences: Swiss Re Institute estimates that the impacts of rising temperatures could reduce global GDP by as much as 18% by 2050, compared with a world without climate change.

As re-insurer and ultimate risk-taker, Swiss Re's vision is to make the world more resilient.

CDR solutions must grow into an industry the size of today's oil & gas industry, which presents an opportunity for the insurance industry to step in and mitigate business risks.

"To mitigate the risks of climate change, the world needs to scale up carbon removal on top of, not instead of, emission reductions. By partnering with Climeworks, we can play to our strengths in this endeavor as risk takers, investors, and forward-looking buyers of climate solutions."

Christian Mumenthaler, Group CEO at Swiss Re

Solution

To grow the CDR industry, insurance companies have a particularly key role to play. As risk-takers, they can buy, finance, and de-risk CDR solutions. Climeworks has been enabling Swiss Re to step into this role on several fronts:

• Buy - As a reinsurer, Swiss Re is an expert in assessing and managing risk. Following extensive due diligence, Swiss Re chose Climeworks in 2021 for the world's first multi-year purchase agreement for CDR via DAC+S: 10m USD worth of permanent (10,000+ years) CDR over a 10-year period.

• Finance - As an institutional investor, Swiss Re participated in Climeworks' equity round in April 2022, when Climeworks raised 650m USD.

• De-risk - The nascent CDR industry opens opportunities for new product development and risk transfer solutions, which Swiss Re will explore and test with Climeworks.

This multi-faceted commitment from Swiss Re not only contributed directly to building the market but also had a ripple effect, inspiring other companies to follow their climate leadership. The following year, 19 other companies purchased high-quality CDR through multi-year agreements with Climeworks.

Key success factors

Define the budget and set internal carbon pricing

To be consistent with their commitment to shift from offsets to technical CDR solutions, Swiss Re followed UN Global Compact's guidance and introduced an internal carbon steering levy in January 2021, pushing the previous carbon tax up from 8 USD to 100/tCO2 USD. The levy will then gradually increase to reach 200/tCO2 USD by 2030. This levy is instrumental on two levels: while it's a strong incentive to reduce emissions, it also secures funds to compensate their remaining emissions with high-quality, durable, and scalable CDR solutions.

Onboard internal stakeholders

Finding internal sponsors across the company is key to implementing climate action of this scale and relevance for the whole company. Swiss Re's sustainability team engaged with several internal stakeholders during different stages of discussion and organized a visit to Climeworks' plants to onboard management. This helped to ensure that priorities and goals were aligned across the relevant decision-makers. Swiss Re also joined initiatives, such as the WEF Alliance of CEO Climate Leaders Carbon Removal, to proactively engage and shape the development of the CDR market.

Communicate and share broadly

Signing this first-of-its-kind DAC+S multi-year purchase agreement positioned Swiss Re as a pioneering CDR leader. The agreement between Climeworks and Swiss Re benefited from press coverage of over 500+ articles in 60 countries. This drove a lot of attention to the nascent CDR industry, showing how a single company can have a major communication impact and drive further corporate climate actions.

"A carbon levy allows long-term planning. It's one thing to ask for a one-off climate budget and spend it, and it's another thing to commit over 10 years."

Mischa Repmann, Senior Environmental Management Specialist at Swiss Re