Environmental matters

This section describes the influence of environmental matters on our business activities along with the impacts of our business activities on the environment. It explains the concepts and measures in place as well as specific targets and impacts.

The following topics in particular are of material importance in terms of environmental matters: commitment to climate action, commitment to European climate targets, and advice on and prevention of natural disasters. We are tackling these challenges by supporting the transition to a low-carbon economy via our capital investments and our insurance products. It is also our aim to structure our own operational management in an exemplary fashion, taking into account our environmental and social targets.

UNIQA climate strategy

We took our first major step towards implementing our own climate strategy in early 2019, when we approved UNIQA’s decarbonisation policy to phase out coal in our investments and underwriting. To pursue more general climate targets, we acceded to the Net-Zero Asset Owner Alliance (NZAOA) in 2021 and the Green Finance Alliance in 2022, committing ourselves to more binding targets.

The key objectives in UNIQA’s climate strategy are as follows:

• Pursuit of climate target trajectory in line with the 1.5 degrees Celsius target set under the Paris Agreement in investments and underwriting, and operational ecology in compliance with both EU climate change mitigation and climate change adaption targets
• Climate neutrality within our business model by 2040 in Austria, and by 2050 throughout the entire Group
• Pursuit of and compliance with science-based interim targets for 2025, 2030 and 2035 based on climate target trajectory in line with the 1.5 degrees Celsius target set under the Paris Agreement
• Increase in sustainable investments to more than €2 billion by 2025
• Containment of any negative impact on other EU environmental targets
• Compliance with minimum social standards

Environmental matters in investment

UNIQA is committed to managing capital investments responsibly and sustainably.

We believe that a sustainable investment strategy can bring about financial success in the long term and is a positive addition to the traditional investment objectives of returns, security and liquidity. In 2022, we achieved some key ESG milestones in ESG KPIs, coal-related activities, fossil fuel energy policy, sustainable investments, development of climate pathway and ESG engagement.

Our overriding defined aim is to improve the ESG quality of our assets on an ongoing basis. The integration of sustainability data from our specialist data provider, ISS ESG (Institutional Shareholder Services), allows us to conduct detailed sustainability analyses of our investments. These analyses are based on fundamental research and a holistic approach pursued by ISS ESG.

The main focus in 2022 was on climate data, such as CO₂e emissions for companies as represented in our bonds and shares, as well as on countries whose government bonds we hold.

The indicator we use to evaluate CO₂e emissions is carbon emission intensity. This measures emissions per “output” and indicates emissions per unit of revenue for companies and emissions per unit of gross domestic product for countries. Our aim is to continuously improve these key figures. In 2022, we reduced our carbon emission intensity for the UNIQA Group’s entire investments by approximately 3 per cent compared to the previous year. This reduction was achieved across our investments in both companies and government bonds.

With regard to corporate bonds and shares, our overarching objective is a 15 per cent reduction in our CO₂e emission intensity by the end of 2024 relative to 2021. We have set this objective as part of our membership of the Net-Zero Asset Owner Alliance.

Another key figure is the carbon risk rating, which provides an overall assessment of a company or country for any climate-related matters. Here, too, during the course of 2022 we achieved an improvement in the overall investment activities of the UNIQA Group, with a 7 per cent improvement year-on-year.

This was largely due to the companies we have invested in having improved their own management of climate-related risks.

Coal-free balance sheet assets

Back in 2019, the UNIQA Group excluded from its investments any issuers whose coal-related activities made up more than 30 per cent of their turnover. We stepped up this obligation in 2022 by reducing the limit from 30 per cent to 10 per cent (see UNIQA Group Decarbonization Statement). In the meantime, the integration of our AXA acquisitions in Poland, Czechia and Slovakia increased UNIQA’s coal exposure. We corrected this exposure during the course of 2022, ensuring that the Group’s investments are now coal-free again.

Fossil fuels

As a member of the Green Finance Alliance, the UNIQA Group has fundamentally revised its requirements with respect to fossil fuels and integrated those requirements in internal policies. The key changes are as follows:

Coal: The issuer turnover threshold for our own direct portfolio will be reduced from 10 per cent to 5 per cent in 2023, and removed completely by the end of 2030.

Oil: No new investments in/financing of conventional oil projects intending to expand oil infrastructure, and no new investments in/financing of companies generating more than 30 per cent of their turnover from the oil sector by the end of 2024. Shares in oil companies generating more than 5 per cent of their turnover from oil will be sold by the end of 2030.

Natural gas: No new investments in/financing of natural gas projects intending to expand natural gas infrastructure, and no new investments in/financing of companies generating more than 30 per cent of their turnover from the natural gas sector by the end of 2025. Shares in gas companies generating more than 5 per cent of their turnover from gas will be sold by the end of 2035. Potential exemptions from the SBTi, the EU Taxonomy or the Paris Agreement will be considered for natural gas.

Nuclear energy: As part of our Green Finance Alliance membership and with the EU Taxonomy in mind, we will also withdraw from companies involved in nuclear energy by the end of 2035. By the end of 2024, we will cease new investments in nuclear projects intending to promote the expansion of nuclear infrastructure. Shares in nuclear energy companies generating more than 5 per cent of their turnover from nuclear energy will be sold by the end of 2035.

Sustainable investments

UNIQA Group increased its volume of ESG-related investments to €1.7 billion by the end of September 2022. These include green bonds, social bonds, sustainability bonds, Article 8 and Article 9 funds in accordance with the Sustainable Finance Disclosure Regulation and infrastructure projects classed as sustainable under internal guidelines. We have set ourselves the target of increasing ESG-related investments to €2 billion by the end of 2024. This also forms part of the requirements set by the Net-Zero Asset Owner Alliance.

Development of a climate target trajectory

In accordance with the requirements set by the Net-Zero Asset Owner Alliance and the Green Finance Alliance, we developed a climate target trajectory in 2022 with the aim of achieving climate neutrality by 2050.

The first section includes individual issuers, with the status at year-end 2021 used as the base year. An analysis of the individual company investments was used as the basis for calculating estimates of their future greenhouse gas emissions. The metric used to calculate GHG emissions was weighted average carbon intensity (WACI).

Based on IPCC (Intergovernmental Panel on Climate Change) estimates, the first key milestone, both for the Net-Zero Asset Owner Alliance and the Green Finance Alliance, is a 15 per cent reduction in WACI greenhouse gas emissions from year-end 2021 to year-end 2024.

The SBT-compliant issuer ratio was also introduced as a further metric. It is used for the weighting of company investments that pursue science-based targets themselves. As part of our Green Finance Alliance membership, UNIQA has set itself the target of increasing the SBT Approved weighting to 100 per cent of individual corporate issuers by 2040. To achieve this long-term target, we set an initial 2023 target of increasing our Approved SBT Issuers (Owned Emissions) from 18 per cent (from 2021 base year) to 30 per cent. To this purpose, we revised our investment guidelines and introduced a system to monitor corresponding KPIs.

We have also revised our Responsible Investment@UNIQA policies so that the following thresholds apply with effect from 1 January 2023: no new direct investments (including investment funds managed by UCM) in securities of companies with high GHG intensity (>80 t CO₂ intensity) for which none of the following conditions apply:

1. The security in question qualifies as a green, social or sustainable bond, or
2. The issuer has committed to implementing a plan to reduce GHG emissions that is either classed as ambitious by ISS or consented/approved by the SBTi, or
3. The issuer was granted Prime ESG Sector status (ESG Score >50) by ISS, or
4. The investment was approved by the Group Asset Liability Management Committee.

The threshold of >80 t CO₂ intensity was defined as a target in order to achieve our objective of 84 t CO₂ intensity by the end of 2024. .

Principal adverse impacts

Three new KPIs will also apply for new investments with effect from 2023. These three metrics form parts of the principal adverse impacts and are provided by an external data provider.

No new direct investments (including separately managed investment funds) in securities of corporate issuers that are in breach of either the principles of the UN Global Compact or the OECD Guidelines for Multinational Enterprises

No new direct investments (including separately managed investment funds) in securities of corporate issuers that trade in controversial weapons (including anti-personnel mines, cluster munitions, chemical and biological weapons)

No new direct investments (including separately managed investment funds) in securities of government issuers without tax cooperation arrangements in place with the EU

Engagement

Our Net-Zero Asset Owner Alliance and Green Finance Alliance memberships require us to actively communicate with companies to encourage them to reduce GHG emissions and/or commit to carbon neutrality. UNIQA has also been a member of the Climate Action 100+ (CA100+) Initiative, the world’s largest investor initiative on climate change, since the end of 2022.

Environmental matters in underwriting in the Retail segment

As Austria’s largest health insurer, we bear equal responsibility for protecting the personal living standards of our customers and the value added processes of our Company. Risk prevention and mitigation are key areas in which environmental and social impacts increasingly need to be incorporated into the advisory approach. Sustainability factors are therefore being taken into account in the underwriting process as well as products and services within our insurance business.

Our product managers in all of our business lines require in-depth expertise, particularly in endowment life insurance, which is where the focus of our training and product development work will be in 2023. In addition to endowment life insurance, we will also integrate the structured collection of sustainability preferences indicated by our customers into our digital advisory activities. This will ensure our sales team provides quality advice as required. We converted the UNIQA portfolios I to IV in early 2022. These portfolios now only include sub-funds that take account of both environmental and social characteristics and invest in companies with good corporate governance or sustainable investment objectives and a track record of working towards the United Nations Sustainable Development Goals (SDGs). Investments can only be made in sub-funds in accordance with Article 8 and 9 of the Sustainable Finance Disclosure Regulation (investment funds and ETFs). Article 8 funds consider environmental as well as social characteristics and invest in companies that demonstrate good corporate governance. Article 9 funds also aim to achieve a sustainable investment objective and help implement the United Nations’ Sustainable Development Goals.

We support modernised medical care in health insurance, motivating people to live healthier lives by building medical centres, expanding the LARA partner network and offering telemedicine surgeries and trained VitalCoaches.

As for accident and property insurance, climate change requires measures to protect against the consequences of weather events, such as hail, storms or severe weather. This is where preventive measures and insurance solutions come in, supporting our customers in adapting to climate change. Prevention is also a key tool. In 2022 alone, around 7.9 million location-based severe weather warnings were sent to UNIQA customers via SMS and email, enabling them to take swift precautions.

We also focus our efforts on key future issues, such as the circular economy and alternative energy sources. In line with the “Repair, don’t replace” principle, we offer products where repair costs for domestic appliances or building services can be covered when there is a claim. Alternative energy sources, particularly solar energy, are becoming increasingly important. This is why our solar power system insurance covers technical components used in these systems. Working with UNIQA Leasing GmbH, we have launched a green tech financing product, which our customers can use not only to finance solar power and photovoltaic systems or heat pumps, pellet stoves or similar items, but also to insure them. In doing so, we can help our customers contribute to creating a sustainable world.

In motor vehicle insurance, customers who opt for an electric vehicle are offered a 25 per cent reduction on their motor vehicle liability premium. In addition, customers with comprehensive vehicle insurance benefit from repair cost coverage if their electric vehicle suffers indirect lightning damage during charging. A replacement item is also provided if a portable charger or charging cable is stolen during charging.

Environmental matters in underwriting in the Corporate and Affinity segment

We also want to offer our corporate customers tailor-made products and services with added value in terms of sustainability. Drafting a long-term strategy for the implementation of measures to combat climate change was the top priority for this in 2021. Examples include advice on and services for natural disasters, restoration work following a loss (post-loss consultancy) or preventive measures to combat business interruptions caused by natural disasters.

A cut in carbon emissions that meets the Paris climate targets requires a joint effort whereby we motivate our corporate clients to work with us towards reducing them. This will help prevent significant volumes of harmful emissions, especially amongst our energy-intensive industrial customers. Separate Management Board teams for Corporate and Affinity have been set up in all of UNIQA International’s markets so that we can address customers’ needs in a targeted way. UNIQA Corporate Business is currently realigning its business model with ESG criteria so that our underwriting, risk engineering and claims management activities are geared towards holistic long-term strategies. This increased focus on sustainability in our core business is also reflected in the forthcoming integration of an ESG rating into our insurance business. This is integrated into the Underwriting Standards and is based on SDG principles, provides for monitoring measures and depends on continuous individual ESG evaluation by client and by portfolio. One of the key tools employed by UNIQA Corporate Business is the Corporate Business Navigator (CBN), which serves as a data platform for logging all information and workflows relating to corporate business for large companies within the UNIQA Group. As a central knowledge database, the CBN is also an essential tool for assessing and encouraging our customers’ efforts to act sustainably. The UNIQA Corporate Business ESG strategy was brought to application maturity in 2022, and is based on four phases:

• Phase 1: Definition of purposes and targets
• Phase 2: Development of UNIQA Corporate Business underwriting, risk engineering and property ESG strategy
• Phase 3: Development, implementation and monitoring of KPIs
• Phase 4: Communication and publication of information within UNIQA Group

Action items

The following action items were drafted as a paper with proposals in accordance with the contractual requirements arising from UNIQA’s commitments to complying with SDG criteria and the Paris Agreement, and based on recommendations from rating agencies and requirements of the Austrian Green Finance Alliance:

1. ESG and CO₂ (decarbonisation)
2. Adjustment of Underwriting Standards and underwriting products
3. Customer service and support provided in the event of a claim/Taxonomy
4. Monitoring of compliance with human rights
5. Green Finance Alliance

Decarbonisation as a key principle at UNIQA

In 2018, UNIQA became the first insurance group in Austria to begin a gradual divestment of its coal-based business and embrace a forward-looking strategy with the UNIQA decarbonisation policy. Since 2019, we have declined to engage in any new customer business with companies where coal directly or indirectly makes up over 30 per cent of activities. This proportion will be reduced to 5 per cent at the start of 2023. Subject to certain conditions, UNIQA will also help existing customers looking to exit the coal business to transform their business model until at least 2025. They are required to develop and implement a credible transformation plan and align themselves with set sustainability criteria.

The proportion of premiums related to coal in power generation in our portfolio reduced to 1.7 per cent in 2022. This reduction is attributable to the general ban on accepting new business in this area, along with noticeable changes as a result of decarbonisation measures already implemented by our customers. We also made additional arrangements in 2022 to further improve our decarbonisation approach. Our Corporate Business Standards will be revised in early 2023 and expanded to include guidelines to accelerate disinvestment in crude oil and natural gas.

Human rights in Corporate Business

The ESG assessments undertaken as of 1 January 2023 also record criteria related to human rights. In preparation for this, we produced a risk heat map and also defined business lines and business types that must check human rights compliance in the event of suspicion.

These processes also help us bring to life the various ambitions we are pursuing with our many different memberships and alliances, particularly the Green Finance Alliance (GFA) founded by the Federal Ministry for Climate Action, and the Principles for Sustainable Insurance (PSI) developed by the United Nations’ Environment Programme Finance Initiative (UNEP FI).

Environmental matters in operational management

UNIQA is committed to exemplary operational management. This commitment is a key focal point in our sustainability strategy.

Our overriding objective is to continue reducing our environmental footprint and be carbon neutral by 2040 in Austria, and by 2050 in our other international subsidiaries. We therefore ensure that international certifications and standards are applied, both by our suppliers and within our own operational management. We are committed to improving energy efficiency, using more renewable energy, reducing carbon emissions, systematically conserving resources and promoting environmentally friendly mobility. In Austria, we have also had an energy monitoring system in place since 2018. This transparent system allows us to illustrate and compare our sustainability initiatives and resulting progress. To support and enhance our existing environmental initiatives, we will introduce an EMAS-certified environmental management system for our sales offices in Austria by the end of 2024. In the 2022 financial year, we reduced recorded carbon emissions from 9,585 t CO₂e to 8,124 t CO₂e compared with the previous year.

Environmental matters in our operational management fall within the remit of the Chief Operating Officer and are the responsibility of the Group Procurement department.

The initial focus here is on our largest core market in Austria.

We pursue specific CO₂ reduction targets in the following five areas in particular:

• Purchase of 100 per cent green electricity
• Installation of photovoltaic systems
• Greening of heating/cooling systems
• Optimisation based on energy monitoring
• Conversion to LEDs throughout the company
• Greening of the vehicle fleet