The Financial Stability Board’s Task force on Climate Change-related Financial Disclosure (FSB-TCFD)

Climate change-related information supporting TCFD disclosure recommendations

Climate change is perhaps the most complex risk facing society today: it is inter-generational, international and interdependent. As a global insurer, Zurich faces risks from climate change and provides this disclosure per its commitment to adopt the recommendations of the Financial Stability Board’s Task force on Climate Change-related Financial Disclosure (FSB-TCFD).


Disclosure requirement; Describe the board’s oversight of climate related risks and opportunities.
Describe management’s role in assessing and managing climate related risks and opportunities.

The Governance, Nominations and Sustainability Committee’s (GNSC's) responsibilities and authorities include to review and propose to the Board for approval targets on environmental, social and governance (ESG) matters which have a material impact on business strategy, underwriting or business performance. Clear roles and responsibilities, both at the level of the Zurich Board of Directors and Zurich management, ensure effective oversight and action with respect to climate change-related risks.

Relevant key accountabilities of Executive Management include:

The Group Chief Risk Officer (CRO) is responsible for the Group’s sustainable business framework with responsibility for overseeing its implementation and integrating sustainability risk into the overall risk management framework. Climate change is a central pillar of the Group's sustainable business framework.

The Group CRO sponsors an annual Climate Risk assessment during which climate related risks are assessed and appropriate mitigating actions defined. The Group CRO is also responsible for Zurich’s annual Task force on Climate Change-related Financial Disclosure (TCFD) disclosure.

The Group Chief Investment Officer is responsible for execution of Zurich’s responsible investment approach and climate change investment strategy. The Head of Macroeconomics annually assesses high-level climate change scenario narratives.

Responsibility for reviewing relevant external trends and driving Zurich’s retail underwriting strategy rests with Chief Underwriting Officers at country level to ensure strategy is reflective of local need, while this responsibility is centrally managed for Commercial Insurance.


Disclosure requirement; Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. Zurich’s assessment of climate change focusses on understanding both the risks posed and opportunities presented by climate change to the company and our stakeholders.


Zurich has considerable expertise in providing insurance solutions for green assets and takes advantage of ‘green’ opportunities through products and services for electric vehicles, renewable energy, etc. around the world. However, not all types of ‘green’ assets represent, to date, profitable business opportunities for insurance. As an investor, Zurich’s established responsible investment and climate change investment strategies take into account both risks and opportunities, for instance through allocations to impact investments, including green bonds, and through a comprehensive approach of ESG integration.

We have a direct interest in sustainable global economic growth and supporting communities in becoming more resilient to environmental and social challenges. Impact investments can help address these issues through their targeted, positive impact, and also offer a financial return commensurate with risks. Zurich will consider impact investments that help increase energy efficiency, generate renewable energy or mitigate climate change and/or protect the environment in other ways. Through its commitment to the green bonds market, Zurich is seeking to capture opportunities across the universe of green, social and sustainable bonds. Impact objectives for green bonds:

  • Helping communities to protect the environment and mitigate or adapt to climate change.
  • Supporting the development and spread of environmentally-friendly technologies.
  • Helping communities to become more resilient in the face of environmental challenges.

While many green bonds are focused on issues around climate change, Zurich will also consider investing in green bonds that provide financing to other projects that offer benefits to the environment, such as sustainable water use, waste management, biodiversity, etc., as well as social and sustainability bonds.


Zurich performed a climate risk assessment in 2018. Given the assessment findings, the Group considers its near-term (3 - 5 years) climate risk profile to be manageable and foreseeable. The longer term risk profile (5 – 10 years) is deemed more relevant to the long-term sustainability of the organisation, and here risks are highly uncertain.

In line with the TCFD framework, the risks comprising the long term risk profile can be broadly categorised as physical (risks associated with physical manifestations of excessive warming) or transition (risks associated with the transition to a low-carbon economy). The relative position of a sample of such risks, scored according to probability and severity over a 5 – 10 year time horizon, is presented below.

TCFD Illustrative Grid

Physical risks: Generally, annual policy renewals provide a degree of insulation against increasing physical risks for short-tail business, however the ability to isolate gradual changes to the risk (e.g. a change in frequency, severity or correlations) and therefore capture the impacts of a changing climate becomes more pressing over a longer time frame, especially for long tail lines of business. Our assessment also considers the risk that physical impacts reduce the profitability of investments across all asset classes (e.g. equities, real estate, sovereign or corporate bonds), though analysis suggests that very significant impairments would be required for the Zurich portfolio to be materially impacted. Physical impacts to our people and operations are not deemed material at this time, given the strong local disaster and recovery planning in place for all facilities.

Sample actions to mitigate physical related climate risks include further embedding advanced natural catastrophe analytics into key processes, developing scenarios for new perils and changing trends arising due to climate change, developing a heat map of portfolio risk and investigating the interconnectivity between liability and asset impacts for both physical and transition risks.

Transition risks: Risks that are predominantly transition related are considered somewhat more uncertain than physical risks. The risk that we fail to manage changing market conditions and customer needs as part of the transition to a low carbon economy is considered, with two facets to this risk identified; firstly, we mis-time our exit from carbon intensive markets and entry to low carbon ones, resulting in opportunity cost and lost market share and secondly, we fail to deliver the products and services our customers need to enable them implement their sustainability objectives and enhance their resilience to climate change. Reputational impacts, both internal and external, resulting from a failure to deliver on publically stated commitments are also considered. Challenges posed by the increasing scrutiny from regulators and other supervisory bodies feature, and are deemed well managed. Although not considered material in the near term, the increasing frequency of climate-related legal action suggests climate-related litigation represents a significant potential risk in the long term.

Strategic responses to these risks, including the definition of an overall differentiated market position on climate change that is linked with our purpose and values statement, and the development of an underpinning suite of products and services are complemented by our existing responsible investment strategy.

Disclosure requirement; Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.


Being a responsible and sustainable company is at the foundation of our business. Addressing climate risk, both our own and our customer’s, and driving the transition to a low carbon economy, are core elements of our sustainable business strategy.

We express our strategic response to climate change through different lenses;

As an innovative insurer, we strive to make a positive impact through our climate change related products and services which enable existing and prospective clients better understand and manage their exposure to climate risks and enhance their resilience. We support positive change by applying a risk lens to controversial issues like thermal coal. In November 2017, Zurich developed a thermal coal policy, aligned with our position on climate change, that stopped the provision of insurance, investment or risk management services for new thermal coal mines or for potential new clients that derive more than half their revenue from mining thermal coal, and also for utility companies that generate more than half of their energy from coal.

As a sustainable employer, we are focussed on reducing the environmental footprint of our operations and supporting our employees to reduce their carbon footprint.

As a community supporter, we educate businesses, policymakers, communities and individuals about the implications of severe weather, drought and flooding related to climate extremes, and offer guidance on how to manage the risks. We are a positive force in helping others to lessen risk through our award-winning, collaborative approach to increasing flood resilience. We advocate for policies supportive of the transition to a low carbon economy, including a global price on carbon and the phasing out of fossil fuels.

As a responsible investor, we are aiming to double our impact investment portfolio to USD 5 billion, to avoid 5 million tons of CO2-equivalent emissions and improve 5 million people’s lives on an annual basis.


From an underwriting perspective, initial analysis suggests that property, motor and crop lines of business are potentially most at risk from climate change, with rainfall, cyclone and hail as the driving perils. From an investment perspective, and as noted above, the risk that physical impacts reduce the profitability of investments across all asset classes has been identified, though analysis suggests that very significant impairments would be required for the Zurich portfolio to be materially impacted.

Risk Management

Disclosure requirement; Describe the organization’s processes for identifying and assessing climate related risks.

Zurich’s cross functional Current Risk Group (CRG) and Emerging Risk Group (ERG) maintain a focus on climate related risks.

The ERG is tasked with identifying risks and trends with both near and long term potential impacts on Zurich’s underwriting results and ensures business owners are provided with knowledge across the range of emerging risks within the identified time horizon. Emerging risk threats and opportunities are identified, prioritized, researched, monitored and strategies developed to support profitable underwriting results. To provide a holistic view of these emerging risks, the ERG maintains and monitors the Zurich Risk Radar, with 4 categories (Science & technology, Legal & Regulatory, Environment and Social trends) according to the respective time horizon and potential impact.

More immediate climate related threats are evaluated by the CRG, which is tasked with identifying newly emerged or emerging underwriting risks, which have a current or very near term potential (within the next 12 months) and may unexpectedly impact the performance of the Group’s underwriting result not already considered in plan.

Zurich assesses risks, including climate risk, systematically and from a strategic perspective through its proprietary Total Risk Profiling™ (TRP) process, which allows Zurich to identify and evaluate the frequency and severity of a risk scenario. The CRG then develops, implements and monitors improvements. In addition to this, Zurich uses internal and external information to evaluate specific climate risk impacts. External sources include the Advisory Council for Catastrophes and 3rd party, industry standard natural catastrophe models. While Zurich recognise such models are regularly updated and designed to reflect today’s risk, including climate change, potential gaps are addressed as part of Zurich’s model validation process and the ‘Zurich View’ approach, leveraging both internal and external expertise.

Under the sponsorship of the Group CRO, Zurich conducts an annual Group-wide assessment of climate change-related risks using the TRP approach. This assessment, involving subject matter experts from relevant business areas, includes the identification of management actions appropriate to the risks identified. Internal scenarios representing an archetypical transition pathway and a physical risk pathway provide the assumptions underlying the assessment. These scenarios are not mutually exclusive, as transition risks and physical risks coexist, with Zurich’s assessment showing that a physical risk pathway currently is significantly more likely than a transition pathway.

To accommodate the unfolding nature of climate risk, the most recent assessment, performed in 2018, considered both near term (3 – 5 year) and long term (5-10 year) time horizons, with the long term view used as a basis to develop mitigating actions. A sample of the risks identified, along with sample mitigating actions, is described in the Strategy section above.

Describe the organization’s processes for managing climate related risks.

Zurich’s approach to managing climate risk is embedded within its multi-disciplinary Group-wide risk management processes. As such, climate risk is managed in a consistent fashion to other risks the Group is exposed to.

Metrics and targets

Disclosure requirement: Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.

To ensure continuous improvement in our performance on responsible business practices, we have defined key performance indicators (KPIs) for our sustainability focus areas. The metrics in place are designed to track the mitigation of operational and investment related risks. Latest data for these metrics, along with historical data to facilitate trend analysis, can be found here.