"Nature is the answer to a number of issues, for example improving health and combatting climate change"


Swiss Re’s efforts to help insure a nature-centric future

Biodiversity and Ecosystem Services (BES) Index assesses which economic sectors are most reliant on nature and evaluates the exposure each country has. Visit the BES index

Swiss Re is a company renowned for its long-term perspective and — as you might hope of a major reinsurance company — data-driven decision-making. So when the world’s largest reinsurer by premium gives such high priority to a topic like biodiversity, people take notice. Oliver Schelske is Director of Natural Assets & ESG Research Lead at Swiss Re Institute and led the development of the Biodiversity and Ecosystems Services (BES) Index.

Developing something as complex and scientifically robust as the BES Index is not something every reinsurer would embark on, but Oliver gives three main reasons why Swiss Re did. First, the company has a long track record on environmental issues. As early as 1979, it published a paper on whether ecological damage is insurable; by the start of the century, Oliver was organizing expert hearings on environmental liability; and in 2012, Swiss Re was a participant in TEEB (The Economics of Ecosystems and Biodiversity), a large global project on the economics of biodiversity. Swiss Re has also been following the UN Principles of Responsible Investment (PRI) since 2007 and UN Principles for Sustainable Insurance (PSI) since 2012.

Irrefutable evidence Secondly, Swiss Re is a data-driven company, and the data on biodiversity is pretty irrefutable. Oliver reels off a list of alarming facts and findings from public scientific sources: current extinction rates are 1000 times those of the pre-industrial age, some 25% of species are threatened, about 47% of ecosystems are degraded... “and we know from research findings that there are various drivers behind these numbers." He singles out three reports from 2019. In June 2019, in the run-up to the G7, the OECD published an analysis highlighting the huge risk biodiversity loss forms for the global economy. “There’s an operational risk that scarcities may unfold, driving cost increases and potential business damage from interruptions because the required extent or quality of ecosystem services that businesses depend on aren’t available. And there’s a transitional risk around negative consumer sentiment, the need to follow new regulations, social disturbance, etc.”

“Sustainability is also a passion for us at Swiss Re and something we see as part of our mandate and daily business”

Also in 2019, the DNB (Dutch Central Bank) reported that if ecosystem services were to fall to zero, 36% of all investments in the Dutch financial services industry would be at risk. On the other hand, in the same year the World Economic Forum reported that if we can reverse these biodiversity trends, it could create 395 million jobs globally by 2030. “We can derive from external research and our own proprietary models (e.g. on tropical cyclone modeling) that, given the extinction rates mentioned above, the decline of ecosystem services is a material issue for many industries over the longer-term. Swiss Re takes a long-term perspective and is active across the globe, which meant we had to have a view on where vulnerabilities lie, so we can develop solutions and consider financial protection mechanisms. We realized that the earlier we could map this issue globally, the better.” And the third reason? “Sustainability is also a passion for us at Swiss Re and something we see as part of our mandate and daily business.”

“It’s important we also look at the economic and societal opportunities nature offers

Using data smartly Biodiversity is also integrated into Swiss Re’s Sustainable Business Review Framework (SBR), which is part of Group Qualitative Risk Management and has been in place since 2009. The SBR assesses and addresses potential social and environmental risks associated with Swiss Re's underwriting and investment transactions. As a first step, the SBR applies Swiss Re’s umbrella policies on the environment and human rights. These include strict exclusion lists and escalation mechanisms for companies and countries. The environment policy also states, for example, that Swiss Re will do no business that harms national parks or world heritage sites, or business that might harm indigenous peoples or nature. The SBR is not just a statement of noble intentions, but actually ensures Swiss Re’s overarching principles are implemented and reflected in its business decisions.

After agriculture, forestry and fishing, which are obviously directly concerned with nature, the sectors most vulnerable to biodiversity loss are perhaps surprisingly manufacturing, utilities and real estate, according to BES Index data. “These sectors are all highly dependent on a supply of good-quality water. Particularly in the Northern hemisphere, we take the services nature provides for granted: we have water and energy at the touch of a button, 24/7. But there are, of course, places where good-quality water isn’t so readily available, and the BES Index data reminds us that nature’s contributions to people and the economy are not unlimited. Even in countries where nature’s supply is overall relatively high — such as Peru, Colombia or Malaysia — you'll find areas where people’s vulnerability is high. That's why it’s important we consider both the micro and macro pictures when looking at use cases for the BES Index.”

“Unless we fundamentally change the way we value things, we’re never going to get to a sustainable world”

Click here for papers on biodiversity & health

Thought leadership Swiss Re takes its thought leadership role in the area of biodiversity very seriously. It runs regular training courses and seminars on sustainability issues for clients around the world. Swiss Re also publishes regularly on a range of issues. Recent examples include papers on biodiversity & health, the cost of invasive species and of a decline in pollinators, and a joint publication with WWF UK on spatial finance. “We also communicate directly with clients a lot, for example on our commitment to align with the 1.50 target. The SBR framework is also a great aid to our day-to-day engagement with clients — both on our ambitions in this area, but also when the SBR says ‘no’ to a new prospect or client and we have to explain why.”

The company is so actively involved with sector-wide initiatives that instead of an exhaustive list, Oliver just mentions a few recent examples, which in October 2019 included the Chief Risk Officer signing the UNESCO Insurance Management Guidelines and Swiss Re being one of the companies selected for the Task Force on Nature-Related Financial Disclosures. The company is also a member of several forums, including the World Business Council’s Sustainable Development Nature Group and the World Economic Forum Nature Group. “Being engaged in all these initiatives is very rewarding. I always ask clients what their particular areas of interest are around sustainability and we have great discussions and also learn a lot from them, for example about how governments approach investing in infrastructure or corporate clients plan their production. And these are important dialogues because when you’re taking biodiversity and climate change into account within complex projects, you can’t think in silos.”

UNESCO Insurance Management Guidelines Visit

Task Force on Nature-Related Financial Disclosures Visit

World Business Council Sustainable Development Nature Group Visit

World Economic Forum Nature Group Visit

Financing nature’s resilience Nature’s benefits are often free, and traditional economic models don’t incorporate such ‘free’ benefits. So as someone working within a major financial institution, how does Oliver think the financial world can be made to work for the benefit of nature? “Becoming nature-positive is not something a country or company can do alone. We need a multi-stakeholder approach and hope the Task Force on Nature-Related Financial Disclosures will lead to meaningful progress in this respect.” Oliver thinks it’s important we also look at the opportunities nature offers. “Nature is the answer to a number of issues, for example improving health and combatting climate change. This is why Swiss Re is very active through our Public Sector Solutions team in promoting nature-based solutions (that is, solutions that are supported by nature and build resilience) with governments and other agencies.”

Such nature-based solutions can also have socio-economic benefits. Oliver gives the example of a recent project involving coral reefs. Scientific models from The Nature Conservancy suggest that if a once-in-a-century tropical cyclone hits and there isn’t sufficient coral reef to absorb the wave, it could increase the property damage by 91%. Using a so-called ‘transmission mechanism’ that both finances and insures activities, Swiss Re set up an arrangement with the Mexican government whereby part of a local tourism fee is used to pay the catastrophe cover against a tropical cyclone, with pay-outs in line with the intensity of the cyclone. “But the cool thing here is that the money is used not only to reimburse loss of property, but also to pay trained local people to dive into the coral and remove the debris left in the reef by the cyclone. Because if you don’t remove it, the reef habitat, the fish and other species, and the local tourism and fishing industries will all suffer. So the insurance provides the area with natural resilience, but also economic resilience.”


Throughout the interview, Oliver is careful to stress how, just like Swiss Re Institute’s work, his examples are always data-driven and based on thorough internal and external research. But then at the end, he adds a personal note. “Ultimately, the entire global community — governments, businesses, citizens — must take a nature-centric approach and reduce our footprint on nature and our climate to net zero by 2050. It’s that simple. As the Dasgupta Review says, we must put Earth and our planetary boundaries at the core of our thinking.” You hear in Oliver’s voice that, while his research work may be data-driven, his passion for that work is driven by something more fundamental. Something human.


The BES (Biodiversity and Ecosystems Services) Index assesses and scores the current capacity of ten ecosystem services (water security, timber provision, food provision, habitat intactness, pollination, soil fertility, water quality, regulation of air quality and local climate, erosion control and coastal protection) anywhere on Earth (excluding seas) to a resolution of 1 square kilometer, that can then be aggregated up to any size. In fact, anything from highly-localised to country-, corporate-, or regional-level can be analyzed by BES.

How the data is used Results are translated into seven category scores (from very low to very high). These category scores are used by Swiss Re to support underwriting related analysis and inform their environmental policy. By integrating the BES data with materiality assessments made by the UN World Monitoring Centre (UN-WCMC) and various other external academic research, the BES Index can also measure economic aspects, providing a vulnerability analysis of a country’s GDP or an industry’s dependency on a particular ecosystem service.

Identifying vulnerability The BES Index combines a spatial perspective with data on both ecosystem degradation and the dependency of economic activities on ecosystem services. An economic activity is said to be vulnerable in a particular location if its dependency on ecosystem services there is high and/or the capacity of those ecosystem services is low. Client-friendly risk tool The BES Index also feeds into Swiss Re’s CatNet® natural catastrophe risk tool. This lets commercial clients or government agencies see the vulnerability of a given location or portfolio to various natural catastrophes, such as cyclones or earthquakes. The tool employs current data modelled by Oliver’s team to show the capacity of ecosystem services.

Swiss Re’s CatNet® Visit

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