Shaun Tarbuck: 

Good afternoon, everyone. I hope you’re all safe and well. My name is Shaun Tarbuck, and I’m the CEO of ICMIF. And I’m delighted to welcome you to this webinar, titled “Using the SDGs in business strategy for mutual value creation”. This is the last in this series of four Sustainable Investment Leaders webinars we’ve hosted this week. We have those all now available on the website.  

It does give me great pleasure to introduce our key speaker, Ann Sommer, and Ann for 25 years was CEO of Lansforsakringar. She’s now a member of the management board, but she has certainly, in the time that I’ve known Ann, over the last 10 years or so, been an absolute advocate for sustainability, even to the extent that she managed to fly over to New York, at very short notice, for a very important meeting that we had with the UN Secretary General Ban Ki-moon, at the time, and was able to join that. And then since then, she’s gone on to speak at the UN in various different forums, on the sustainability side of things, so she’s definitely an advocate for this. 

So we’re delighted to have Ann with us, to tell us about the story, as to how Lansforsakringar, under her guidance, has actually used the Sustainable Development Goals in that business model, so Ann, over to you. 

Ann Sommer: 

Thank you very much, Shaun. It’s a pleasure to be here. I feel very honoured to be able to work here. And today’s subject is using the SDGs in business strategy for mutual value creation, and this is a subject that I like to talk about a lot, so I hope two hours is enough, or was it … Well, no? Okay. We’ll change slide and go to the first slide.

Well, I come from Sweden, and maybe not everyone knows a lot about Sweden. We’re about 10 million inhabitants. It’s a very large country, but most people live in the big cities. The largest city is Stockholm, with approximately two and a half million inhabitants. 

We are a country with a lot of non-life insurance companies, and we have, I think, it’s 46% are co-ops or mutuals, and LF, or Lansforsakringar, that it’s called in Swedish, have 30% of the non-life market, and within motor, we have 40%, and pet insurance, which is very big in Sweden, we have approximately 57%, through our special company Agria, that takes care of the pet insurance. 

I work for the Lansforsakringar Alliance, and it’s a very old company, can say, but actually, it’s 23 mutual companies, situated all across Sweden. And they are working in the local communities. They are working in the areas. They do not compete with each other. They have an assigned area each. Of the 10 million people in Sweden, 3.7 million customers are within the Lansforsakringar, and these are local. You can walk into any small town in Sweden, and you will see the blue and red logo type, because we have an office. And we do have three core businesses. We have insurance. We have bank, and we do have a real estate agency. 

That makes it possible for us to open offices, when others are closing, because we have three businesses that are supporting an office. And this is really going opposite toward our competitors, which are closing their offices. And we seem to be growing stronger. We are increasing, especially now, when we have the Corona, COVID-19. It seems like people, yet even more local, and they turn to us for help. 

We can change. Every mutual has their own board. It’s elected from the community around it. They have their own CEO, and they’re totally independent. Together they own common company, that supports with IT, product development, and things like that, and every month, the managing directors or CEOs of the mutuals meet and discuss the future and important questions, and four times a year, the CEOs are accompanies by the chairman of their boards, to discuss the future. And of course, now, sustainability is one of the core issues that we discuss. And the local companies, they are there to really support the area within their work. To the left, you see the CEO of Gavleborg. 

They have the biggest forest fire we’ve seen for a long time, and in this picture, he is explaining how the company actually could go out and physically … The people from the company could actually go out and physically help, to salvage and help. The second one is the CEO of Kalmar. They work a lot with sustainability, and they work a lot with other corporate and mutual companies, within their area. Goteborg and Bohuslan, their CEO, they work a lot about social responsibility, and so that’s Uppsala, you can see that CEO there. 

So there’s so much part of the community in where they work. I am very proud of working in insurance, because insurance is the foundation of all societies. Just imagine a world with no insurance. Everyone would stay home, look after their home, watch their car so it wasn’t stolen, everyone be worried that they would be seeking, couldn’t work. Insurance is really, really the basic for having a good society. And it provides opportunities, and growth, and possibilities for companies to grow. And I am convinced that local and mutual is the future. And like I said, we can see now, that customers we have, that have been insured with other companies are now coming back and especially the small and medium sized companies, they come to us to get the insurance now. 

Well, I’m going to talk a bit on how we work with our sustainability and the SDGs. We have signed on The UN Global Compact. I think we were the first company that actually enforced that all our reinsurers would have signed The Global Compact, in order for us to do business with them. We have signed the Principle of Responsible Investments. I will go back to that a bit, and we’ve also signed UNEP’s Principles for Sustainable Insurance. We were the first company in Sweden to do that, and it’s very interesting to see how that develops. We feel a bit like pioneers in this.  

Let’s talk about investments. I’m going to be very honest. I’ve been a CEO for many, many years. I’ve had a lot of money that we should invest. And up until about four or five years ago, I was told that you could not invest in green, in bonds or anything, because you would lose dividend. And it would be expensive. I just talked to my boss yesterday, and I told him I was making this speech, and we talked about this. And it was a long time, since we heard in the boardroom, anyone saying we should not go for the sustainable investments. It’s now in everyone’s heart to try and save the world from climate changes, from everything, and then it’s very important. 

We have a model, in which we look at the investments we’re going to make. We look at the ESG requirements. We look at analysis. We have sustainable thematic investments. And we have, now, built a department, around maybe five or six people that works with this, but I should say that all the investment people now are into this and really works according to this model. Of course, you can exclude, and we have a list of exclusions. We do not invest in companies that have controversial weapons, coal companies, oil and sand, tobacco producers. We have very recently excluded companies that sells gaming. In Sweden, we have been flooded with foreign country based game companies, and this created a lot of problems. A lot of people get addicted on these gaming companies, playing the games. And they lose a lot of money, and it’s really a problem. It’s almost like alcoholism. 

 We decided to ban and exclude the non serious ones, because we have health insurance. And the health insurance we have, we have treatment. If someone is an alcoholic, they can get treatment, but also if they are … I don’t know what it’s called in English … but game dependent. And we can’t invest in companies that we actually, in the products, have treatment for. It seems very strange. Then you can say, why don’t you exclude alcohol? And this is a tough question, because what we are doing is looking at what is really bad for people. But who is the one to decide where the limit goes? So we have a lot of discussions about this, but I love just the fact that we are discussing these questions, because five years ago, we would have never talked about it. 

It’s very important not to just exclude. It’s very important to engage, to be there in the nomination committees, and vote on the AGMs, when you have invested in a company. It’s also very important to give the companies a chance, not maybe exclude them from the start, to say, look, you have a year to sort yourself out and get rid of these bad things. And if they do, we can continue to invest, and if they don’t, well, someone else can invest in them. We will leave them, and then of course collaboration with other investors. 

We put a lot of time and effort and discussion in these questions. Next. I love this picture. Here is our green bonds. We have, today, 13.9 billion Swedish kronas, might not seem much to you, but it is a lot of money. 11% of our assets are now in green bonds. And we have developed a way to look at them, so we can see what SDGs they are actually supporting. And climate change is the biggest one. And just that we do this is very, very interesting, and it’s also made the investment guys, that works for us in company very interested in this. When they go out and show this picture, they get a lot of credit. People are very happy to see. 

What is our target? Well the target is to have 100% of our assets, not in green bonds, but in sustainable investments, that you not let any CO2 out in here 2013. And my personal mission would be that 100% is not enough. Now you say, she’s mad, but I would like to see us investing a lot in Swedish forests, that actually bind CO2, and if you invest in different assets that bind the CO2, you can actually get more than 100%, because you’re actually doing not zero. You are doing more, which I think is a very interesting thought. 

Well, we talk about investments, but what about our core product, the non-life insurance offering? What is that? How do that map on the SDGs? Well, of course, in health, in healthcare insurance, you would have the social part, pet insurance, and we do have reinsurance and special insurance. Claims preventing, that’s a very important part. If the house doesn’t burn, it doesn’t let any CO2 out, but how do you know that it hasn’t burned? You know if it burns, but if you’ve been very good in your preventions, it’s very hard to measure. 

But we work a lot with claims prevention. We work in security and crime prevention, fire damage. We have a lot of water damage, it is a big problem, road traffic accidents, and natural catastrophes. It’s very linked to the SDGs, if we prevent a claim from happening. But it’s hard to measure what did not actually happen.

We also work a lot with research, as a big part of social commitment. The pet insurance company has a big research fund, as well as Lansforsakringar. Research areas that we have looked at, and are looking at, is tomorrow’s society. What are societies going to look like in the future, road safety, of course, climate change. A couple of years ago, we made a very big investigation about flooded areas by the sea, and it made a lot of discussion around whether you should actually insure houses that were built too close to the sea, either that they could suddenly slide down into the sea, or they could be flooded. It’s a very hard discussion. How shall I explain this? 

There was a big argument between the researchers that thought that we should tell the municipalities not to build in these areas, but a lot of the attraction in municipalities in Sweden, because we have a long coastline is actually gets people to move there to live along the coast. And we could not, as an insurance company, go out and say, we will not insure houses that are built too close to the sea. So as we saw a problem there, saw at the local bases, the mutuals talked to the municipalities and try, when they’re starting a new residential area, to agree and look at the consequences of building too close to the sea, because there has to be a discussion. 

We look at the mutual business future, the models, and we look a lot at secure homes. And we have research results, that are available on the public domain, so everyone can look at them and see. And we have chosen six of the SDGs, as our core areas for our research.

Climate change is a very important sustainable risk. You can of course raise the premium, but as I said, it’s not as simple as that, because some of the areas that are very vulnerable are also very attractive to build on, but of course, the climate change affects our investments, our insurance risks, and definitely our credit risks. Next. 

We have gone through all of the 17 SDGs with the locals. We have had a lot, a lot of workshops. We are very used to that, because it’s very hard to get 23 companies to agree on everything. And they do not really have to either. But we have, from the 17 goals and the 169 targets, that the UN set up, decided on seven targets. And the good health and well-being; decent work and economic growth; reduced inequalities; responsible consumption; climate action; peace, justice, and strong institutions; and partnerships for the goals. And as I said, some have more targets or more goals. We work with them, and they’ve also picked some targets. I will not go into this.

Now, if you do analyze this odd investments, that has been done always. But you have your investments in line in the SDGs. How do you make sure that your insurance products and policies are in line? And I know that the EU is working on a lot of new legislation concerning climate change and sustainability. How do you know that your policy, that you sell to a customer, really is sustainable? Well, we decided to go through and analyze all of our insurance policies. We looked at all of the documents, insurance terms, conditions, and everything should be based on sustainability. And this was a big job, and it resulted in a status report, where we could see areas of improvement. We could actually find some new business opportunities. And we could link our products to the SDGs. That has been a fantastic job, and we will have that as a base in the future, when we change our insurance conditions, the wordings. And we will always look at trying to have the best in sustainable policies. 

We want to learn more. This is a new area. I mean we can talk about it but to actually measure and to actually understand what our business industry environment. We also joined a project with the UN, as the only Swedish company to work with the UN project and look at the climate risks in the industrial. The project will develop methods and models for using forward looking at climates and areas and understand how the climate change affects the industry. And it took a long time for the project to start. I think there are 24 participants, but now it is running. And it will come with a report during late Autumn this year. This is very interesting, and we learn from a lot of other companies, how they think and what they do. And I think it’s very important, in this new world, with analysis and actually putting numbers and facts, to be interested and to be very open-minded and listen to others, have really big ears. 

We were also happy to get, from the brokers, really green light when they did their first rating on non-life insurance companies in Sweden.

We want all the regional companies to invest in companies that contributes to the SDGs. And I think they are now all working on that, but it’s a process. And it’s not going to take just one day. It’s going to take a lot longer.

It’s easier for the mutuals to actually work physically, if I should say so. This is just some examples on what they’ve always done, but you can take it to your sustainability goals, where we’ve always helped farmers to have safer farms. I have a farm, a small horse farm, and it’s actually called a safe horse farm. When I got the farm and wanted the insurance in my own company, where I worked, I had to have a safe farm. And they came out here, and they looked at the barn. They looked at everything, that there was safe passage for the horses, that we had … I don’t know what that’s called in English, something that cuts the power if something goes wrong. It was quite expensive to rebuild parts, but we, like a lot of farmers … I think we insure 90% of the farmer … have done that, in order to have a safe environment. 

We inform about risk. We give advice. We teach first aid to children. We have a lot of claims prevention. We have neighbourhood watch, to prevent crimes. I am sure a lot of you do the same. One thing we do is actually, once a year, we come out and collect scrap and hazardous waste from the farmers. That was a big need. First it was like an insurance … I think we started this around 2002, but now, it’s a courtesy for the farmers, if they have their insurance with us and if they have a safe farm. 

We have safety tips for driving. We have a slippery country. I was going to say we have very slippery roads, so insure, teaches first aid. This is just an example of what the mutuals actually do, that are directly linked to sustainable goals.

I think every team, in Sweden, or most, has the LF logo. We are a very big supporter of sports, especially for the kids and the young, and our social engagements is … Every company do what they find the best in their area

We have 23 ways of sustainability, and then here’s two examples, one from Kalmar, which is in the Southeast of Sweden, and you Gavle, which is more Northeast of Sweden, by the coast.

Contributing to fair play in Kalmar. This might sound strange, but this is to have equality in the teams and also use good language, which is very important, if you want to have a nice environment. I know that a lot of the mutuals work a lot with this fair play, within their areas. And they support the SDGs.

In Kalmar, which is situated by the sea and the East sea, outside Sweden, is very polluted, so they work a lot, to try and clean it up and prevent it from getting more dirty. They work with solar panels, and they work with a carpool, to see that there’s less cars polluting in the area. This is just some examples, very local, with local companies, all built to work together with other companies in the area.

Kalmar is, as I said, they’re risk of flooding, so here’s some easy advice for people to avoid either flooding, or if heavy rains happen, or if it gets too dry, just some examples.

In Lansforsakringar, we started 1801, with insurance. Then, in 1980, I think, we thought that there was only big life companies, so we started a life company, so the customers would have something to choose from, and that grew. We started a bank, because there was only five big banks, five I think at that time. That was in 1990. And this now, the fifth largest bank, and we started that because the customers had nothing to choose from. They only had the big ones. We also started a real estate agency, which was very clever, because in all the … As I told you earlier, in all our local offices, which we do actually open new ones, you have all the houses for sale, so people come in and talk about their houses. And then we can support them in the insurance, with Unit Linked products, pension, life, and bank. And we create a safer environment. And I usually say that if I was a Swedish person, which I am, if I put everything into Lansforsakringar, I would have no problems in life, because they will always be there if the worst happens. And we do have a commercial campaign at the moment, which I think goes very well with being there in the future. 

It’s called forever. It’s a bit different in Swedish. But that was what I was going to say, and I hope you have got a little view of Sweden, but if you missed what I said, I was called one day by a film producer, and he said to me, “Would you like to make a movie?” And I said, “You called the wrong person. You should call my daughter.” “No,” he said. “I got your name from the UN, and they wonder if you would like to do a movie with you about how you work with the SDGs. So we did, and I would, as an ending, like to show you this movie.

[VIDEO]

Do you remember the night when Hurricane Gudrun hit? 

I think everyone remembers, and also what they did, while I was home … And I just think about the calmness in the day, was no wind at all. And then in the evening, it started very low. 

On the afternoon of January 8th, 2005, Hurricane Gudrun tore through the heart of Sweden, causing damages across the country and affecting many lives. A storm like this only happens every third or fourth generation, creating one of the greatest natural catastrophes in the history of modern Sweden. 

If you look around this corner, we are surrounded by water, and we have a long coastline. The climate change, when it comes to storms and rain, and draft is really affecting this part of Sweden. We try to learn our customers, how to behave when the storm is coming. And we also try to cooperate with all the other industries in the area, especially in the business sector, of course, but also the municipalities and other authorities. 

A warmer climate leads to extreme weather conditions and Lansforsakringar takes great responsibility in providing thoughtful insight into how climate change affects their customers. 

On a January weekend, in 2005, where I’m standing right now, there was a complete inferno. By that Sunday, we had begun to understand the extent of Hurricane Gudrun, and we realized that there would be extensive damages. In the first few days alone, more than 6,000 people called from our country, and of course, may of our employees were affected themselves. We try to meet as many customers as possible, every year, in order to provide tips and advice on how they can better protect themselves against different types of damages that might occur in their business, or in their forest, or actually at home. 

The insurance industry has traditionally been one of the first to understand climate change, and Lansforsakringar, with their genuine local commitment has accumulated much knowledge and developed practices to make a difference in this area. 

Climate change has a lot to do with managing risks and uncertainties, and that’s, of course, the basic core business for an insurance company. We don’t need to sit around and wait for all the climate researchers in the world to be 100% sure about all the details. We see this already in our statistics, and that’s enough for us to act upon. 

The core in our business is sustainability. It fits so well with the SDGs of the UN. We see what happens in the countryside and in the cities, when there’s a heat wave, or the water rises. And we are trying to see where the risks are and prevent them. 

We have a wonderful world. I would like to leave a better world for my children, and I hope everyone wants that, because it’s a gift, leave it for the generations to come. I think that’s everyone’s responsibility, to do whatever they can. 

Shaun Tarbuck: 

Thank you Ann. That was brilliant. Excellent presentation there. And the video, obviously, capped it off beautifully, at the end. So I’ve got a couple of questions that come through. Firstly, just want to say that the sustainable development goals, as we all know, were developed … were signed off in September 2015, so they are very new, as a benchmark or as an opportunity, for all businesses across all industries to utilize these as a mark of achievement for their own organizations. Now last year, when we asked members of ICMIF, who were using them in the similar way to what you just heard with LF, and there were 11 members that were using and reporting back in their annual reports the certain sustainable development goals that they were embedding in their business strategy. 

Of those 11, they varied on how many of the sustainable development goals they had chosen, anywhere from three to thirteen, but collectively, the ICMIF members actually report back on all of the 17, so again, that would depend on the type of business, the type of products they have, the type of investments they have, and obviously farming, so it can do the 14 and 15 on the farming and the ocean side, so those depended on who your client base potentially are. 

We asked again, just last month, how many were using the Sustainable Development Goals to report, in 2019, and we’re up to 16, so another five have added in. But we also asked the question as to how many more are going to be doing this at the end of 2020 or in the very near future, and there were another 10, so we’re up to about 26 members now using this as a form of report back, and I think, ultimately, that’s what the Sustainable Development Goals are built for, were built for the world to take and to judge themselves against, as a form of success, as to how sustainable they are in the world. 

So the first question, given that you’re one of the leaders, Ann, is what advice would you give to other members, who are starting on this journey, as to how they would embed the SDGs in their business model, or how would they popularize it within their organization? What levels of support and governance did you need? And about how long would you think that journey would take you, if you had the knowledge and could learn from someone like yourself, who’s been there, seen it, done it? 

Ann Sommer: 

First, I wouldn’t say I’ve been there, seen it, and done it, because we are doing it all the time. And like I said, even this, you have to have very big years. What we’ve done is having a lot of workshops, because there’s so many angles you can look at these goals. You can pick five or three very easily, but when you get really down to it, it might be some other goals that you have to working towards. It takes some time to pick your goals and listen to a lot of people in the organization, because this is a lot of different views on how you should look at them, and I think they’re made that way, to create a discussion. 

Shaun Tarbuck: 

Yeah, that’s a very good point, and certainly the ones I’ve seen, where members have come and done this, it started as a collaboration, as workshops, and building to a framework, that all the companies signed up to. It’s a very cooperative way of doing business strategy, isn’t it Ann? About how long do you think it would take you, a year or two? 

Ann Sommer: 

Well, I don’t know. It took us, say, a year and a half, to manage to get these seven, out of the group, but as I said, some didn’t think these seven were enough, so they took more. 

Shaun Tarbuck: 

Right. And secondly, a question, on one of the slides you had there, was on the green bond investments and the 14 billion krona that you’ve invested. And I thought it was fascinating that you’d managed to earmark sustainable development goals against those green bond investments. Was that easy to do? How did you go about that? Do you sort of look at a green bond and say, well, it fits certain criteria of SDG 3, so we’ll do that one? I mean, what was the process behind that? 

Ann Sommer: 

Well, the process was really that we wanted to see if it could be done. And there’s a lot of very, very bright people in the investment department, that are not used to working with this, but they got very, very interested, because this was something different. So it’s maybe not easy, but it can be done, and that’s certainly proved it. And I remember, two of the people that work sent out I’ve known for years, they came back from a conference in Paris, a sustainable conference, about sustainability and the SDGs, and they said, “We were the only investment people there, but we could show this, that we were actually doing it, so it was so interesting. We felt really good.” 

Shaun Tarbuck: 

Do you think that will inform your decisions, as to which green bonds you invest in going forward? 

Ann Sommer: 

Yes. As I said, we will also look at other kinds of investment, like we have invested in forest, infrastructure, COVID-19 bonds. That’s more in the social part. And I think it’s opened our eyes, that this can be done. And you’re not losing dividends. You’re building a better world at the same time as you invest. 

Shaun Tarbuck: 

In fact, I’ve heard one of our CEOs, on the Canadian side, say that they actually have made significant more on their sustainable investments than they have on the rest, so that’s actually outperforming, which is good news, as well. And I think you’re feeling the same, aren’t you, that sustainable investments are outperforming the benchmarks, so that’s good. And just last here, I was intrigued. You said you are looking to target about 100% of your investment to be sustainable … about, approximately … About what sort of timescale would you put on that? Are you looking 2030, 2050? 

Ann Sommer: 

2030. Yeah, because we want to ensure some are fierce competitor. 

Shaun Tarbuck: 

I think you’ll both do it together. Well we said, it’s lovely that the mutual sector’s driving that agenda, to be 100% sustainable. So about where are you now, just to give a flavor to those who are listening? 

Ann Sommer: 

We were about 15, 16%, but in the small companies, like Agria and smaller companies, it’s more, as many as 20%, but the target is there, and I know that the CEO of our life company, he’s really, really into this. I reckon, we could change the world, because all the pension funds, if people knew that they were not green investments, and they would like them, they could vote with their money, and the pension money could turn the whole investment sector green. 

Shaun Tarbuck: 

Yeah, it absolutely could. Yes. And it’s certainly doing so in the Scandinavian countries, where many of those are doing really well. Thank you, Ann. That’s been a brilliant discussion and presentation. I’d like to just finish by saying one thing that is coming our way, which I know you’ll look to be involved in is the UN Environment Program, UNEP, is working with Swiss Re, which is one of our supporting members, to come up with the Insurance Sustainability Development Goals, or the iSDGs, in short. 

A fair bit of work has been done by Swiss Re, at this stage, and we have engaged with them, at a very early stage, because no one else is thinking about this. They’re saying, well how is it that the insurance sector, itself, can collectively contribute towards the SDGs, so I think it will be a fascinating discussion to be involved in. And we are involved in. And we’ve been involving our members, as much as we possibly can, as they develop a framework, which will probably be launched second half of next year. And this would give the whole industry a framework by which to live that sustainable development goals by. I’ll smile. And I think that’s great that we have so many leaders in our markets that are already doing this, which is why Swiss Re really want just the mutual sector involved in this and themselves, because they can see the leadership that we actually have, so that’s something to think about. 

So that’s your macro level, but if we’re not doing it on the micro level, at every member company, then we’re really not moving the needle far enough, so thank you for your leadership in this area, Ann, and for all those others that are doing great work in the SDGs. I do believe this is the way we can actually save our planet. And I think that’s your favorite saying.

So just moving on, all the webinars I’m recording, from this week, are actually now available, apart from this one, which will be soon, on the new webpage, which is ICMIF.org/sustainableleaders. If you’ve got any comments on any of these or want to be involved in any of our influence work with the UN bodies or anything like that, please do contact us, myself or Steve, at the email addresses on the webpage there now. Thank you for your attention today, and thank you for your listening to this as a recording later. And I’ll look forward to seeing you in the near future. And thank you very much again, Ann. 

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