Munich Re in the climate crisis: cautious commitment because of the USA?

Munich Re in the climate crisis: cautious commitment because of the USA?

The reinsurer Munich Re has a checkered relationship with the issue of climate protection, which has come into focus in recent years. After years of actively promoting climate protection and issuing regular warnings about the consequences of global warming, Munich Re is now more cautious. This reluctance could be related to the policies of the new government in the USA. When discussing necessary measures to combat climate change, CEO Joachim Wenning emphasizes the increasing number and intensity of natural disasters, which will be felt on all continents. He demands that global warming be a maximum of 1.5 to 2 degrees compared to the pre-industrial era.

In the past, Munich Re has not only offered insurance for renewable energies, but also charged high costs for CO2 emissions. The company has actively participated in the Paris Climate Agreement by providing climate science insights. Despite these successes, Germany is lagging behind its own goals in reducing greenhouse gas emissions: by 2020, emissions should be reduced by 40 percent compared to 1990; currently the value is only 30 percent.

Changes in corporate strategy

A striking sign of change is the adjustment of Munich Re's insurance guidelines. Since 2018, the company has no longer insured new coal-fired power plants or coal mines and does not invest in companies that generate more than 30 percent of their sales from coal. These measures are intended to address both risks and opportunities for insurance demand in the context of the climate crisis. Wenning sees a complex interaction here and admits that the pricing of CO2 emissions also needs to be improved.

From 2021, CO2 emissions in Germany are to be priced at 25 euros per ton, with a planned increase to 55 to 65 euros by 2026. However, Wenning doubts whether this price will have a sufficient control effect. This could undermine the climate-friendly measures that Munich Re is aiming for.

Future prospects and challenges

The need for insurance against natural disasters is particularly evident in the United States, where only about 50 percent of households are insured against such events. In Europe and Germany the rate is usually even lower. In parallel, the rise in cyberattacks is causing losses of over $600 billion per year worldwide, only a small portion of which is insured. This scenario represents a significant challenge for Munich Re, which now has to take new paths in order to remain successful in a changing market.

In addition, the company has cut 900 jobs worldwide, including 450 in Munich, in order to operate more efficiently. Wenning emphasizes the importance of the Munich location due to its high quality of life and connections. Despite the current challenges, Wenning believes he will not achieve the average tenure of a CEO at Munich Re, underscoring the uncertainties in the industry.

The coming months and years will be crucial for the direction Munich Re takes with regard to climate protection and risk prevention. The company is faced with the task of finding a balance between economic success and social responsibility.

For more information read more at Süddeutsche.de and Merkur.de.