Climate change – a challenge for Switzerland

Our commitment

It’s up to all of us

Ladies and Gentlemen,

Ladies and Gentlemen,

Corporate Responsibility is a top priority for Zurich. Our aspiration is to make a long-term contribution to the well-being of society. At Group level, we honor this commitment through the Z Zurich Foundation. It promotes initiatives that seek to find sustainable solutions to urgent social and environmental challenges. We want to support people so that they can better manage changes and risks in their lives and in their environment. To achieve this, we are working in partnership with selected local and international organizations. This allows us to combine Zurich’s global experience and capabilities in risk management with the local know-how and specialist knowledge of our partners in the area of sustainable development.

People and their environment are subject to constant change processes to which we have to adapt. Here at Zurich Switzerland we grapple with these changes actively – after all, hedging current and future risks is, and will remain, our core business.

The Z Zurich Foundation seeks to raise awareness of the need for climate protection by funding the Zurich Climate Prize Switzerland & Liechtenstein. The focus is on areas that are relevant to consumers – housing, consumption and mobility. The Zurich Climate Prize is awarded to projects that are making a sustainable contribution to climate protection and to changing behavior. We are convinced that the challenge to people and society lies in recognizing future risks, assessing them correctly and taking precautions to minimize the negative impact of global warming wherever possible. In particular, we would like to promote dialogue that addresses the complex subject of global warming. This brochure will give you an idea of the key aspects of our commitment. Thank you for your interest and your contribution to climate protection.

The global increase in average temperatures means that there is a need for adaptation – particularly here in Switzerland. The floods in the Rhine Valley and the hailstorms that moved across Western Switzerland in the summer are evidence of this. One thing is clear: isolated extreme disasters always cause tremendous human suffering and high material losses. This is also due in part to the fact that more and more people live in regions where an increasing frequency of natural disasters can be expected. However, Switzerland is not only affected by local natural events. Due to the globalized economy, extreme disasters are increasingly taking on an international character. After all, the economy is networked across continents, resulting in new interdependencies. Production outages due to a local natural disaster in Asia interrupt supply chains, with a negative impact on sales markets in Europe or the United States. We must face up to these diverse challenges in the coming years. Many people in Switzerland are already committed to meeting the challenges of a changing climate. By awarding the Zurich Climate Prize Switzerland & Liechtenstein, Zurich Switzerland encourages dialog with regard to climate protection and rewards sustainable effort and dedication. Join us in our commitment!

Martin Senn

Joachim Masur

President of the Z Zurich Foundation Group Chief Executive Officer Zurich Insurance Group

Chief Executive Officer Zurich Switzerland

* The ”Z Zurich Foundation” is a private foundation under Swiss law and complies with modern foundation principles in terms of its organization, management and funding guidelines. The foundation is funded by contributions paid by Zurich Insurance Company Ltd

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and Zurich Life Insurance Company Ltd.

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Climate change – a global challenge Climate change is one of the greatest challenges of our age. It affects each and every one of us and has diverse impacts on the environment, the economy and society. At the same time, it intensifies existing challenges, such as the future of power supply. In order to effectively face this challenge, first and foremost there must be a massive reduction in greenhouse gases. The goal is to prevent world temperatures from rising by more than two degrees Celsius, compared to pre-industrial levels. Otherwise, the consequences for the economy and society could be devastating: more conflicts over natural resources such as water, agricultural crop failures due to droughts and flooding, increased migration due to environmental factors, and health impairment.

Changes can be clearly felt The climate is changing. The changes are already evident worldwide. Temperatures are rising: the 2013 report from the Intergovernmental Panel on Climate Change (IPCC) shows an increase in average global temperatures by 0.85°C since 1880. Precipitation patterns are also changing: the sea level has risen more quickly in the last forty years than in previous years, while the large ice sheets in Greenland and the Antarctic are shrinking (IPCC 20131). In addition, the number of natural disasters such as storms, floods and droughts has increased significantly since 1970, resulting in greater damage from extreme weather. Insured damage alone amounted to around USD 71 billion in 2012 (Swiss Re 20132).

Local events with global consequences Climate change does not just have local consequences. As the economy is increasingly networked on an international scale, new interdependencies have arisen. Breaks in production following a local natural disaster can also lead to interrupted supply chains and breaks in production in other parts of the world. For example, the flooding in Thailand in 2011 resulted in delivery problems in the IT sector in Switzerland. The challenge for people and society lies in adjusting to changing framework conditions, knowing the future risks of climate change, correctly assessing these risks and minimizing negative impacts.

IPCC 2013: Climate Change 2013: The Physical Science Basis, Summary for Policymakers.

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Swiss Re 2013: Natural catastrophes and man-made disasters in 2012: A year of extreme

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weather events in the US. Sigma, No.2/2013.

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Major impacts in Switzerland

Climate protection and adaptation are important

Climate change has an above-average impact on Switzerland. Since the start of the 20th century, the average annual air temperature has risen across Switzerland. This warming has accelerated significantly in the last 50 years and is greater in Switzerland than on average in the northern hemisphere.3 The latest climate scenarios for Switzerland predict rising temperatures for all regions and seasons, namely between 1.2 and 4.8°C by the end of this century. Summer precipitation is likely to decline throughout Switzerland (CH20114).

Climate protection and adapting to change are two inseparable strategies for dealing with climate change. On the one hand, massive efforts to minimize greenhouse gas emissions are needed to prevent dangerous consequences, such as the complete melting of Arctic ice. On the other hand, we must adapt to unavoidable changes. Diverse measures are available that also offer opportunities for the economy and society.

Switzerland is faced with several challenges as a result of these changes: • The impact on winter tourism as a result of declining guaranteed snowfall • Increasing irrigation needs in agriculture • Pressure on flora and fauna to adapt

Examples include: • Establishing and expanding early-warning systems for extreme weather events • Raising general awareness about how to deal with summer heat • New tourism offerings and promoting summer tourism • Cultivation of agricultural products that are less sensitive to drought

• Stress and damage to infrastructure (roads, rails incl. cables and ski lifts) • The health impacts of hot spells

ZKB study 2013: ”Klimawandel im Grossraum Zürich” (”Climate Change in the Zurich Area”).

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CH2011 (2011): Swiss Climate Change Scenarios CH2011, published by C2SM, MeteoSwiss, ETH, NCCR Climate, and OcCC, Zurich.

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Reducing greenhouse gases is necessary To keep global warming at a manageable level, the goal is to essentially cut global greenhouse gases by half by 2050. This is only possible if all countries make massive efforts, particularly those currently emitting very high levels of greenhouse gases. The costs and investments associated with this are high, but they are considerably less than the cost of the damage that unbridled climate change would cause.

CO2 emissions from the burning of fossil fuels, metric tons of CO2 per capita (2010)

In the medium term, greenhouse gas emissions should be reduced to approximately one ton per person. Industrial countries and increasingly even emerging countries are far from reaching this goal.



North America

17.2

Middle East

7.6

European Union

7.3

Switzerland

5.6

Asia (excluding Middle East)

3.6

Latin America

2.7

Africa

0.9

The figures relate exclusively to CO2 emissions from the burning of fossil fuels. Other greenhouse gases are not taken into account. Source: IEA 2012: CO2 Emissions from Fuel Combustion (2012 Edition), Paris.

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Switzerland has reduction potential Transport & Mobility Private mobility is responsible for almost a fifth of the greenhouse gas emissions from private consumption. Added to these are the emissions from the transportation of goods. At the same time, the desire for mobility continues to grow. The greatest reductions can be achieved in passenger and freight transportation through increased efficiency and electrification on roads, by switching to public transport and by using ecological traffic planning.

Switzerland shares responsibility. Although it is only responsible for about 0.15 percent of global emissions, Switzerland can contribute to reaching global goals. The Swiss emit 5.6 metric tons of CO2 per person each year, solely from the burning of fossil fuels. This places us well above the target of one metric ton and above the global average of 4.4 metric tons of CO2 per person. There is thus great potential to reduce these emissions even further.

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Housing

Energy-saving behavior Sustainable energy MINERGIE-P standard (passive house) Economical household appliances Heat pump

Areas

Production & Consumption Producers and the purchasing behavior of consumers are especially significant in terms of lowering the great demand for resources in private consumption. Through their demand behavior, households and companies exercise an important influence on the manner, number and variety of products manufactured, sold and used and their environmental impact. Conscious consumption requires that appropriate bases for decision-making be available to consumers. This could be in the form of logos about the production method or information about the contents, country of origin or energy consumption. Producers can play their part through a sustainable offering and production methods that save on resources.

Measure

Mobility

Buildings & Housing Despite many improvements in efficiency and the increased use of renewable energy sources, there is still great potential for optimization in the areas of architecture, infrastructure and utilization. There is still tremendous savings potential, particularly when it comes to energy consumption used for heating: better building envelopes, new building technologies and energy renovations to existing buildings in general will play an important role.

In addition to changing one’s own behavior, technological and structural changes can also help to fully utilize existing potential. Studies show that around half of greenhouse gas emissions could be reduced through an environmentally friendly lifestyle, i.e., the combination of various measures in the areas of food, mobility and housing (Jungbluth et al. 20125).

Public transportation Electric car Most efficient car No flying Vegetarian food

Food

The greatest reduction potential is found in the three areas of housing, consumption and mobility.

Organic products Less food waste -15%

-13%

-11%

-9%

-7%

-5%

-3%

-1%

Reduction potential of greenhouse gas emissions from private consumption

Legend: By consistently choosing public transportation over cars, 15 percent of the greenhouse gas emissions from private consumption can be reduced. N. Jungbluth, R. Itten, M. Stucki, 2012: ”Umweltbelastungen des privaten Konsums und Reduktionspotenziale.” (”Environmental Impact of Private Consumption and Reduction Potential.”) On behalf of the Federal Office for the Environment, Uster.

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Opportunities for the economy and society In terms of the economy, there are tremendous opportunities for Switzerland. The domestic economy could be reinforced, since energy imports can be replaced with more efficient technologies and alternative energy sources. Cost savings can be realized by creating a more efficient economy. The export sector could benefit from opportunities to export clean technology products and know-how on dealing with natural hazards and developing, sustainable solutions. Finally, an economy that increasingly relies on renewable energy sources decreases its dependence on the few countries that export oil and gas. Society also stands to benefit. New employment opportunities in sustainable sectors will arise from developing renewable energy sources and increasing energy efficiency. Comprehensive solutions will contribute to raising the quality of life for the population, for example by reducing air pollution, as well as creating sustainable housing structures and intact recreational spaces.

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Every contribution counts The transition to a climate-friendly economy and society requires efforts and decisive action from everyone – from the government, companies and organizations, as well as from each and every individual. Politics can promote the transition to a climate-friendly economy and society by introducing conditions for a stable and far-sighted framework. This can be done, for example, by defining ambitious climate protection targets and high efficiency standards or promoting climate-friendly technologies and products. Municipalities, in particular, can play a leading role by setting an example of a sustainable climate policy or dedicating themselves to sustainable housing or climate-friendly mobility. Companies have the power to minimize their greenhouse gas emissions: in the supply chain, in the production and transport of goods, as well as in the products and services themselves. They can make their business processes climate-friendly, consistently produce climate-friendly products and increase their customers’ awareness of the need for climate protection. At the same time, each and every individual can actively contribute to climate protection. Our everyday consumption decisions alone can have a major impact: we can switch to climate-friendly mobility, buy energy-efficient vehicles and appliances, give preference to organic products and purchase energy from renewable energy sources. All of these are important steps towards creating a more climate-friendly economy and society.

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Zurich is doing something to help

As one of the world’s leading risk management companies, Zurich Insurance has recognized the challenges and opportunities associated with climate-related issues. Zurich has concentrated on understanding the risks associated with climate change and developing products and services that help clients to cope with these risks.

Zurich Climate Prize Switzerland & Liechtenstein We want your projects! Zurich supports projects that make sustainable contributions to climate protection. It is looking for projects that contribute to reducing CO2 emissions by cutting resource consumption, increasing energy efficiency or bringing about changes in behavior. The Zurich Climate Prize Switzerland & Liechtenstein is endowed with CHF 150,000, divided among three main prizes and four special prizes. One of the four special prizes is aimed specifically at start-ups and will be awarded for the first time in the 2014 competition. Alongside the financial reward, the prizewinners benefit from increased publicity. Individuals, small and medium-sized enterprises, startups, municipalities, institutions, associations and organizations, as well as national and international companies can participate. 14

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Further information, participation conditions and the participation form can be found at: www.climateprize.zurich.ch www.facebook.com/risikodialog twitter.com/zurich_ch

51242-1401

[email protected]

Zurich Insurance Company Ltd Corporate Responsibility – Zurich Climate Prize Thurgauerstrasse 80 8050 Zurich Email: [email protected] Zurich, January 2014