BOSTON (April 15, 2022) – At Liberty Mutual, we believe progress happens when people feel secure. Underpinned by our conviction that insurance is a force for social good, we are committed to addressing environmental and social challenges while delivering security for our customers, employees and communities.
While we believe this work is never complete, we are proud of the progress we made in 2021 – from announcing a commitment to emissions reductions to advocating for more climate resiliency to working with partners to advance our Environmental, Social and Governance (ESG) journey. These milestones and more are captured in our third annual ESG Review and our second annual Task Force on Climate-related Financial Disclosures (TCFD) Report, both published today. (To learn more about how we’re investing in the communities where we live and work, see our 2021 Giving Report.)
Some new and notable milestones on our ESG journey include:
Forming a new Board of Directors Governance and Sustainability Committee
In recognition of the importance of governance and oversight regarding ESG issues, we established the Governance and Sustainability Committee of our Board of Directors in April 2022. This development further strengthens our strategic oversight and performance evaluation of our company’s ESG efforts and priorities.
Advancing our Human Rights Policies and Joining the UN Global Compact
In 2021, we formally codified Liberty Mutual’s Human Rights Principles, which serve as the basis of our relationships with our employees and other stakeholders in the countries where we operate. These principles are a fundamental part of our Identity and Values, which are further reflected in our Employee Handbook and Code of Business Ethics and Conduct. To further this work, we also recently became a signatory to the United Nations Global Compact, a global group of sustainable companies and stakeholders focused on responsible business practices.
Supporting the Energy Transition Through Customer Partnerships
We are committed to transitioning to a low-carbon economy in a responsible and strategic manner and believe this includes a partnership with our customers to advance their ESG adoption practices and own energy transitions. Global Risk Solutions in North American recently announced it will be offering complementary access to ESG-related risk advisory services for sustainability- and climate-related risks for customers who also opt-in to Marsh’s ESG Risk Rating service. Through Liberty Specialty Markets , we were the first major insurer to support the Climate Transition Pathway solution, an accreditation framework developed by Willis Towers Watson that gives insurance companies and financial intuitions a consistent approach to identifying businesses with robust low-carbon transition plans.
Developing a Climate Scenario Analysis Using NGFS Data
The TCFD reporting framework requires climate-related scenario analysis over short-, medium- and long-term horizons. We pursued two distinct and complementary exercises that allowed us to take a portfolio-level, bottom-up stress test (commonly done across the industry) and complemented it with a system-level, top-down view (which hasn’t been done before). We leveraged the scenarios published by the Central Banks and Supervisors Network for Greening the Financial System (NGFS) to do this work. The insights generated from this approach showed us that because a global common policy scenario is unlikely, regional policy coordination is the best path to reduce the economic costs of transition risks.
Establishing the Liberty Mutual Climate Transition Center
The world is at an important moment to address the challenges of climate change. For more than 100 years we’ve cultivated deep expertise helping policyholders manage various risks, including climate impacts – and we believe it is our responsibility to share this knowledge and participate in critical conversations to encourage real, sustainable change.
With this in mind, we established The Liberty Mutual Climate Transition Center, which will focus on four key areas: continuing the development of data and technical capabilities to improve understanding of physical climate risk; researching and creating thought leadership around climate transition risk; promoting the need for increased resiliency to mitigate risk and protect communities; and supporting innovation through strategic opportunities and/or investments to expedite action. We look forward to sharing more details as we build out the Center’s programming in the coming months.