Sanlam’s purpose is to build a world that supports people in living their best possible lives through financial resilience and prosperity. We want to create an environment where our clients and their communities are more resilient and can plan for their financial futures with a higher degree of certainty. The Group plays a triple role in terms of sustainable development: risk management, risk carrying and investment.
Sanlam recognises and accepts the scientific evidence that concentration of greenhouse gas (GHG) emissions has been steadily rising. Globally on a business-as-usual trajectory, temperatures are likely to increase significantly. As a Group we face physical and transition risks.
Sanlam identified severe weather/climate change as one of the top 10 strategic group risks in 2018 and 2019. Severe weather/climate change risks further feature in two out of four of Sanlam Group’s strategic pillars: ‘Enhancing resilience and earnings growth through diversification’ and ‘Responsible capital allocation and management’.
At a management level, the assessment of climate change risks falls within the scope of the risk management function. We are undertaking a series of initiatives, such as the development of a Group climate position statement, to assess and articulate climate-related risks to Sanlam’s owned assets, such as investments in stocks, bonds and shares.
Sanlam is a member of ClimateWise, an international grouping of insurance companies, looking at how to effectively manage climate change. The 2019 ClimateWise Response for the Sanlam Group identified gaps in the Group’s approach to climate-related data collection and analyses, with a view to better understanding climate risks facing business segments and the broader insurance industry.
Sanlam has been a member of CDP since 2007. Refer to the reducing our carbon footprint 2018 report.
We recognise that global responses to the requirement to meet the Paris Climate Agreement’s goal of reducing average temperatures to below 1,5°C will require drastic changes to local and international energy infrastructure, as well as the infrastructure required to meet climate adaptation goals.
Sanlam is therefore committed to invest in long-term sustainable businesses, for example through the Climate Investor One Development and Construction Equity Funds. These funds focus on financing renewable energy projects and public infrastructure projects in the green economy. Read more about our investments in the Sanlam Investment Group 2019 Cluster Resilience Report.
Given the significant infrastructure investment needs across emerging economies, public infrastructure projects play a vital role in enhancing resilience and will have a long and lasting impact on vulnerable communities.
Ownership and oversight of climate change decisions resides with the chair of the Board-appointed Social, Ethics and Sustainability (SES) committee, who is an independent non-executive director. The chair of the SES committee has the responsibility to recommend for approval, monitor and advise on all SES matters and relevant issues that significantly impact the Group and its material stakeholders. The SES committee’s mandate with regards to climate change forms part of these issues.
Engagement and oversight of climate change matters is discussed at Group-level committee meetings. This facilitates the integration of multiple functions involved in climate risk across the Group. The processes and frequencies by which the Board is informed include:
The Group’s allocation of climate change responsibilities demonstrates the close connections between Board and climate-related management functions. All Sanlam’s sustainability issues, including climate-related issues, are channelled into and monitored through the enterprise risk management process. The Group Actuarial Risk Management committee is responsible for co-ordinating the input of climate-related risks into the enterprise risk management process.
Sanlam’s sustainability management framework supports our long-term business strategy and considers the implications of climate-related issues. The framework includes specific key performance indicators aimed at ensuring co-ordinated and effective engagement and feedback mechanisms. The nature and outcomes of these engagements feed into the annual performance appraisals of responsible employees and inform the integrated and sustainability reporting processes.
The environmental pillar of the framework considers how the Group's direct environmental footprint contributes to climate change. Sanlam’s environmental performance according to key indicators are available in the Sanlam Group 2019 Cluster Resilience Report.
Examples of initiatives include:
The sustainability management framework transcends the clusters and draws on established processes and systems. Each business cluster ensures that appropriate systems are in place to measure and report on their sustainability performance.
As a general insurer, Santam has a client base highly exposed to climate change aspects. The cluster recognises that insurance products and the nature of underwritten risks will need to change to adapt to a world shaped by population growth, urbanisation, energy supply, water and food shortages, and failed or failing levels of governance.
Santam was the first African insurer to mobilise the short-term insurance industry in response to increasing climate and weather risk to address this need – named the risk protection gap.
Santam partnered with the Embedding Project to explore ways to integrate environmental and social factors into its business.
Further examples of how Santam is developing its long-term business strategy based on climate-related issues include Santam’s Partnerships for Risk and Resilience Programme (P4RR). Read more about P4RR initiatives in the Santam 2019 Cluster Resilience Report.
Santam’s subsidiaries, Mirabilis and Emerald, provide insurance cover for renewable energy technologies such as solar power, wind power, biomass energy production and hydropower.
Santam has a long-standing association with the South African farming community and is listed alongside government and non-profit organisations as a resource to farmers in terms of weather and climate advice. Santam’s dedicated agricultural meteorologist forecasts eminent weather seasonally to aid farmers, and provides training and advice to farmers on how to manage the pending weather.
Santam also sits on the Board of both the UN Environment’s Principles for Sustainable Insurance Initiative and ClimateWise. All relevant and pertinent information gathered from these committees is shared with the South African Insurance Association, either through the various committees or via the leadership. Santam also collaborates with universities and public research institutions. Through research studies, Santam has links with the National Disaster Management Centre and the Municipal Infrastructure Support Agency.
We provide clients with the option to channel their funds and apply their assets to help mitigate climate change risk. Sanlam Investment Group partnered with FMO, the Dutch development bank, and Phoenix InfraWorks, a South African infrastructure development and fund management specialist, to launch Climate Investor One in 2017. CIO was the inaugural finance initiative designed to combat the detrimental effects of unmitigated climate change.
CIO has a mandate to invest in clean energy projects in emerging markets. Read more about the fund and current projects in the case study in the Sanlam Investment Group 2019 Cluster Resilience Report.
We understand climate change will affect our business through liability claims, impacts on certain investment portfolios and changing market dynamics. We also understand that these risks offer opportunities for new products and services.
The Group is starting to prepare disclosures aligned to the recommendations in the Task Force on Climate-related Financial Disclosures (TCFD). TCFD is a market-driven initiative to develop a set of recommendations for voluntary and consistent climate-related financial risk disclosures. It guides companies in providing information to investors, lenders, insurers and other stakeholders.
In the short term, Sanlam will focus on governance for risks and opportunities. This includes, for example, integrating climate change in the Group’s investment policy.
Sanlam will continue to engage with policy makers and industry to contribute to a sustainable financial system for South Africa.
Sanlam’s sustainability and risk teams will build on the work that Santam started to ensure there is clear alignment in managing transition risks.
Read more about how we play our part in reducing environmental-related risk in the Sanlam Group 2019 Resilience Report.