Sustainability

History of Initiatives to Address Social Issues

The forerunner to the Sompo Group, Tokyo Fire Insurance Company, Inc., was founded in 1888 as Japan’s first fire insurance company with the desire to protect the residents of Tokyo from fire. Today, the Group works to solve a variety of social issues toward the realization of a sustainable society, amid major changes in the social and economic landscape, such as population declines, low birth rates and an expanding elderly demographic, climate change, and technological advances.
In 1992, the Group established the Department of Global Environment (a first for a financial institution in Japan), tackling global environmental problems from an early stage. We began to publish the Environmental Report in 1998, and Sompo Asset Management started to manage the Sompo Japan Green Open Fund (“Buna no Mori”) eco-fund in 1999. In 2001, the Company stepped up its efforts to disclose information with the publication of Environment and Social Report 2001: Sustainability Report, another first for a financial institution in Japan.
The effectiveness of Group-wide initiatives was reinforced with the inauguration of NKSJ Holdings, Inc. (now Sompo Holdings, Inc.), and the formulation of the Group CSR Vision in April 2010, the identification of Group CSR Material Issues in 2011–2012, and the creation of Group CSR-KPIs in 2013–2014.
In 2016, we started the Mid-Term Management Plan with the aim of achieving “A Theme Park for Security, Health & Wellbeing,” and revised the Group CSR Material Issues to align better with trends in international society, such as the SDGs and the Paris Agreement. In 2018, with the intention of mitigating climate change, we set medium-to-long-term goals for reducing greenhouse gas emissions, targeting reductions of 21% by fiscal 2030 and 51% by fiscal 2050, compared with fiscal 2017 levels.

Group CSR Material Issues

The Group has identified social issues to address, and has decided on three key approaches that leverage Group strengths in order to continue efforts toward a sustainable society.

Strengths and Characteristics

Stakeholder Engagement

The Group places a priority on stakeholder engagement in keeping with the belief that communication with stakeholders is essential to amplify outcomes, by building relationships based on trust and cooperation while furthering a deeper understanding of social issues.
We have two primary aims in stakeholder engagement.

  1. Reflect stakeholder opinions in Group decision-making to spark innovation in business and improve quality
  2. Deepen mutual understanding and collaboration by proactively engaging with stakeholders to become a group that takes action toward creating a better society while sharing value systems with stakeholders

The Group aims to improve on these efforts by constantly engaging with stakeholders, while developing and advancing products and services that contribute to solutions for social issues, based on Group CSR Material Issues and Group CSR-KPIs.
We aim to help solve social issues that have materialized and worsened as a result of the COVID-19 pandemic, by providing support to local NPOs and medical institutions.

 

Proactive Participation in Initiatives

By participating in initiatives around the world, the Group takes advantage of opportunities to engage in dialogue with companies on the cutting edge and international institutions, gaining knowledge and learning about leading case studies that help improve its own initiatives in a constructive cycle.
With the awareness that cooperating with a diverse range of entities while addressing issues can have a larger impact, we proactively get involved in initiatives from the ground stage. Through information disclosures, the Company distributes information about its experiences gained through this participation in a bid to help create a sustainable society.

Key Initiatives and Participation Dates

Reinforcing the Sustainability Promotion Structure

The Group has created a framework for advancing a broad range of CSR initiatives through the CSR Management System, which is based on the ISO 14001 standard. Group companies draw up CSR action plans for the year and implement a PDCA cycle to ensure improvement.
In order to accelerate efforts amid increasingly intertwined and complex social issues, the Group’s Council for CSR Promotion was turned into the Sustainability/CSR Committee, headed by the Group COO, in April 2020. At the same time, two new working groups were formed, called CSR Promotion and ESG / Sustainability. This put into place a structure for enhancing effectiveness, by facilitating the exchange of opinions with stakeholders, including Group business divisions, and discussions about the finer details of insurance underwriting, loans, and investments.

Climate Change Initiatives

The Group supports the Task Force on Climate-related Financial Disclosures and is involved in various initiatives to address climate change as well as highly transparent information disclosure.

1. Governance and Risk Management

The Group has risk management systems based on the Group Basic Policy on ERM, established by the Board of Directors. Under these systems, risks that may have significant impact on the Group are defined as “Material Risks.” The Group Chief Risk Officer exhaustively identifies and assesses Material Risks involved in the Group’s business and reports regularly on the status of those risks at meetings of the Managerial Administrative Committee (MAC), the Board of Directors, and other bodies.
Climate change risks, such as the occurrence of greaterthan-expected damage from windstorms and floods as well as reputational damage and the impact on asset prices caused by the transition to a decarbonized society, are also recognized as Material Risks, and the Group’s executives are responsible for implementing countermeasures.

2. Addressing Climate Change Risks and Opportunities

(1) Response to Risks Associated with Intensification of Natural Catastrophe

The Group’s P&C insurance business has inherent risks of being affected by the intensification of natural catastrophes resulting from climate change. For this reason, the Company is engaged in measures including analysis using climate scenarios.
We conduct stress tests for such risks as windstorms and floods. The Group quantitatively assesses the impact of the stress scenarios to verify the adequacy of capital and the effectiveness of risk mitigation measures. Further, since 2018 we have been conducting large-scale analyses of typhoons and heavy rains using weather and climate big data from the Database for Policy Decision-Making for Future Climate Change (d4PDF).* This entails quantifying changes in the average trends of natural catastrophes as well as quantifying trends in the occurrence of extreme weather events over the mediumto-long term under climates conditions where the temperature rises by 2°C and 4°C.

*The Database for Policy Decision-Making for Future Climate Change was developed by the Program for Risk Information on Climate Change of the Ministry of Education, Culture, Sports, Science and Technology. By utilizing a number of experimental examples (Ensemble), future changes in extreme events such as typhoons and heavy rains can be evaluated stochastically and with higher accuracy. It is also characterized by its ability to draw more reliable conclusions about the impact of natural catastrophes caused by climate change on future society.

(2) Responding to Risks and Opportunities Associated with the Transition toward a Decarbonized Society

The Group’s future performance and financial position could be affected by changes in insurance needs and decline of the value of its assets under management, including stock equities, resulting from the strengthening of laws or regulations for the transition to a carbon-free society and changes in the industrial structure and local communities resulting from the development of technologies. At the same time, we believe that transformation of the industrial structure will lead to the expansion of business opportunities, such as the creation of new insurance needs and markets. Therefore, we are developing a variety of businesses in anticipation of a transition toward a decarbonized society.
To respond to the aforementioned risks and opportunities appropriately, the Group has established a system for ascertaining the situation and holding discussions at the Sustainability/CSR Committee, chaired by the Group Chief Operating Officer and comprising executives from respective Group companies, and reporting to the Managerial Administrative Committee (MAC) as necessary. The Company also continues to engage in dialogues with internal and external stakeholders as an important opportunity to grasp social and economic changes, understand expectations for the Group, and develop the Group’s business.

3. 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

Earthquake damage prediction screenshots, map version (above) satellite version (below)

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 the 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.

  • Strengthen the profitability of the domestic P&C insurance business by enhancing sales of new risk products and creating new customer services through the use of digital technology
  • Expansion of business scope (diversification of revenue sources)
  • Geographic diversification (overseas M&As)

[ 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 an 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 its 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 catastrophes, 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 energysaving 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.

Photograph provided by WIND POWER Group

  • 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 Cars ]
The further penetration of CASE* cars 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



An operator at the Connected Support Center speaking with a customer remotely

  • Initiatives for Autonomous Cars
    Efforts to improve energy efficiency by easing traffic congestion, improving the fuel efficiency of cars, and 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. In addition, 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.

    *1 “Real data” refers to data that is acquired from various real-life activities.
    *2 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
    *3 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. In addition, 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. In addition, 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 Montreal 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.

4. Metrics and Targets

To encourage corporate social responsibility and ESG initiatives and check their effectiveness, the Group uses the following CSR key performance indicators (CSR-KPIs) to assess ongoing efforts.

  1. Development and provision of products and services that contribute to climate change adaptation and mitigation
  2. Number of participants in environmental conservation awareness and educational opportunities in collaboration with civil organizations
  3. CO2emissions
  4. Electricity consumption
  5. Paper use

In fiscal 2018, we set reductions in GHG emissions versus fiscal 2017 levels of 21% by fiscal 2030 and 51% by fiscal 2050 as medium-to-long-term targets. To these ends, we are taking measures to mitigate climate change.
We are also implementing the aforementioned measures with a view to acquiring certification under the Science Based Targets (SBT) initiative, which promotes reductions in GHG emissions that will enable the realization of the Paris Agreement’s long-term goals. Moreover, we are engaged in the creation of SBT frameworks. The Sompo Group is the only Japanese financial institution that is a member of the expert advisory group tasked with developing SBT guidelines for financial institutions.

Notes:

  • Figures are the total of Scope 1 (direct emissions due to use of gasoline, etc.), Scope 2 (indirect emissions from electricity and other energy sources), and Scope 3 (indirect emissions across entire value chains, including transport and business trips). The coverage of the survey is as follows.
  • Fiscal 2014: Sompo Japan Insurance Inc. and NIPPONKOA Insurance Co., Ltd., including their consolidated subsidiaries
  • Fiscal 2015: The Company’s main consolidated subsidiaries and operating companies
  • Fiscal 2016–fiscal 2019: The Company and its main consolidated subsidiaries (Sompo Care Inc. included from fiscal 2017)
  • Since fiscal 2012, the Group has received an Assurance Statement from a third-party certification organization.
  • Fiscal 2017 and fiscal 2018 emissions have been recalculated using fiscal 2019 calculation methodologies.