Measures Based on Climate Change Scenarios
The Group is undertaking various initiatives to prepare for a society with severe climate change and a low-carbon society, based on the Shared Socioeconomic Pathway (SSP) scenarios of the Intergovernmental Panel on Climate Change.
(1) Measures Based on an Intensified Climate Change Scenario
In the Regional Rivalry (SSP3) scenario in which there is a reliance on conventional fossil fuels, a failure to take adequate measures against climate change, and a slowdown in economic development, climate change progresses, natural catastrophes become more severe, investment in infrastructure is insufficient, and vulnerability to natural catastrophes increases.
Based on the aforementioned scenario, the Group is working to strengthen its resilience in medium-to-long term through assessment of the impact on the P&C insurance business using big data on weather and climate, optimizing insurance premium rates and reinsurance coverage, and taking the following steps.
＜Main Initiatives in Japan＞
Sompo Japan Insurance Inc. is working to predict natural catastrophes such as floods and earthquakes using various data related to regional disaster prevention, including data of weather and buildings as well as AI technology. For local governments, Sompo Japan aims to contribute to the safe and secure lives of residents and improve local resilience by providing Disaster Prevention / Mitigation Insurance to compensate for various expenses related to evacuation, thereby supporting swift initial responses by local governments.
As the need for adaptation to climate change increases, opportunities for risk consulting services as well as P&C insurance are expected to expand. Since 2018, Sompo Risk Management Inc. has been participating in the Social Implementation Program on Climate Change Adaptation Technology (SI-CAT) of the Ministry of Education, Culture, Sports, Science and Technology; utilizing a database that projects the climates that would result from global warming with temperature increases of 2°C and 4°C; as well as collaborating with research institutions. Through the aforementioned initiatives, Sompo Risk Management aims to upgrade its natural catastrophe risk models, accumulate know-how on the disclosure of climate-related information, and expand businesses.
＜Main Initiatives Overseas＞
In the overseas insurance business, Sompo International, our core intermediate holding company, launched AgriSompo as an integrated brand in the agricultural insurance field, which has long been their strength. AgriSompo is expanding its business to South America and Asia in addition to Europe and North America. In addition, following research and development conducted through a collaboration among Sompo Japan, Sompo Risk Management, and the Japan Bank for International Cooperation (JBIC), Weather-Indexing Insurance was launched in Southeast Asia in 2010. This product was recognized as meeting the requirement for membership of the Business Call to Action initiative in 2015. This initiative is led by the United Nations Development Programme (UNDP), with the aim of promoting the establishment of business models that combine commercial activities and sustainable development. By providing coverage for risks associated with windstorms, floods, droughts, and other natural disasters, Weather-Indexing Insurance and other products under the AgriSompo brand help reduce the business risks of farmers. We expect that demand for climate change adaptation, including demand for our products, will increase significantly centered on developing countries, which are vulnerable to climate change.
(2) Measures Based on a Low-Carbon Scenario
In the Sustainability (SSP1) scenario, a certain level of economic development underpins the effective implementation of climate change countermeasures and the achievement of harmony between the environment and the economy. Furthermore, a recycling-based society utilizing local resources, an energy-saving society, and post-materialistic sharing services develop. In such a scenario, solar power, wind power, and other types of renewable energy would become mainstream. At the same time, a “mobility revolution” entailing the establishment of seamless public transportation systems in local communities would reduce the numbers of cars, which would mainly affect our domestic P&C insurance business.
＜Contribution to the Dissemination of Renewable Energy＞
The Group believes that switching to new sources of energy will play a significant role in the transition toward a decarbonized society. Therefore, we are advancing initiatives to contribute to the dissemination of renewable energy.
●Consulting Services for Wind Power Generation Companies
In addition to providing wind power generation companies with P&C insurance products, the Group capitalizes on expertise acquired through joint research with universities, research institutions, and other stakeholders to offer a risk management service that comprehensively covers the value chains of wind power generation businesses. More specifically, the service encompasses all phases of wind power generation projects, from project formation and operational start-up through to subsequent removal or replacement.
＜Initiatives for CASE＞
The further penetration of CASE* will dramatically change the automobile insurance market. Aiming to build a new market in anticipation of this change, the Group is leveraging its data to pursue collaborative initiatives with companies in other industries and R&D institutions.
- Connected, autonomous, shared & service, and electric
●Initiatives for Autonomous Cars
Efforts to improve energy efficiency by easing traffic congestion, by improving the fuel efficiency of cars, and by reducing distribution costs as well as efforts to realize seamless public transportation systems are likely to gather momentum. With this in mind, the Group aims to build a platform that combines digital technology with real data*1 on driving, environmental burden, and traffic accidents acquired through its P&C insurance business to provide the accident prevention, monitoring, and coverage needed for safe verification tests of autonomous car-related services. As part of these efforts, the Group has established the Connected Support Center as a base for research on response services for accidents and other issues involving autonomous cars. Also, we are conducting joint research*2 on the Level Ⅳ Discovery insurtech*3 solution, which supports verification tests of autonomous car-related services. Through the low-cost provision of a highly safe platform for autonomous car verification tests, the Group aims to expedite the realization of a society with safe autonomous cars.
- “Real data” refers to data that is acquired from various real-life activities.
- Joint research based on business tie-ups with Tier IV, Inc., a developer of systems for autonomous cars, and AISAN TECHNOLOGY Co., Ltd., a company with technology for high-precision 3D maps
- New, technology-enabled insurance products and services
●Initiatives for Shared & Service Cars
As it develops, Mobility as a Service (MaaS) is expected to fill in “last mile” gaps, thereby playing a critical role in seamless local transportation systems. Mindful of this, the Group offers risk management services for MaaS verification tests and provides insurance for municipal authorities and nonprofit organizations that operate mobility support services. Also, by establishing businesses that facilitate customer-to-customer car sharing, private car leasing, and parking space sharing, the Company is popularizing such activities. We will contribute to the mobility revolution and create new business opportunities through the expansion of businesses that take advantage of our automobile insurance data and agent-based sales network. Further, as one solution to last mile issues, electric scooters have been attracting attention. With a view to popularizing electric scooters, the Group is developing dedicated insurance and conducting risk assessments to ensure safety.
(3) Other Initiatives
＜Initiatives as an Institutional Investor＞
As a responsible investor, the Group promotes various initiatives. For example, through dialogue we encourage investee companies to take measures in relation to climate change.
In addition to engaging with investee companies with respect to environmental, social, and governance (ESG) considerations, Sompo Japan is working on quantitative verification of the influence on its investment portfolio of climate change and other trends.
Sompo Asset Management Co., Ltd. participates in Climate Action 100+, an initiative that coordinates the engagement activities of institutional investors. Also, the company actively encourages investee companies to reduce greenhouse gas (GHG) emissions and prepare long-term plans. Further, in September 2017 the company became a signatory to the Montréal Carbon Pledge, which is overseen by the Principles for Responsible Investment. Accordingly, it regularly calculates and discloses the overall emissions of the Japan Value Equity Sustainable Strategy, which is focused on long-term investment, as well as the GHG emissions per 10,000 beneficial interest units of the fund.
＜Initiatives for the Development of Environmental Personnel in Partnership with Civil Society＞
Since former Group company The Yasuda Fire & Marine Insurance Co., Ltd., established the Department of Global Environment in 1992, the Group has understood the importance of establishing a basis for spontaneous action by heightening each individual’s awareness of and concern over climate change and other environmental issues. For this reason, we continuously develop environmental personnel through collaboration with civil society. Further, the Group widely disseminates the results of research on environment-related issues that it conducts in cooperation with research institutions and government agencies.