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Managing Climate Risks

As a property and casualty insurance company, we understand that climate change creates greater unpredictability of weather-related loss frequency and severity. This poses a long-term risk to our customers' lives and livelihoods – and our business.

Understanding and helping mitigate these perils for our business and customers is core to our operations and strategy.

Managing Climate Risks

Prudent Oversight and Management of Catastrophe Risk Exposure

Our Chief Risk Officer heads a team responsible for our overall climate risk management strategy, which the Boards of Directors of our Insurance Subsidiaries oversee.

Helping Our Customers Mitigate Climate-Related Risks

Helping our customers mitigate climate-related risks includes efforts such as responsive claims handling, safety management services, proactive messages, and value-added services. For example, we proactively message our customers and distribution partners alerting them to severe weather conditions, such as increased wildfire risk or incoming storms with practical, timely tips for risk mitigation.

Preparing for the Continued Transition to a Clean Energy Future

As part of an economic transition to a low-carbon future, we expect new technologies, infrastructure, and processes to be introduced – all of which may require insurance coverage. We believe that these developments could present sizable business opportunities.

Reducing Our Carbon Footprint

As a financial services organization, we are not a major producer of greenhouse gases. However, we have several initiatives in place to help reduce our carbon footprint.

Climate Exposure Oversight and Risk Management

We have a robust enterprise risk management framework that includes modeling of our catastrophe risk aggregations, along with strong oversight from senior management and the Board of Directors.

We manage our aggregate catastrophe risk exposure through strict underwriting guidelines, sophisticated modeling, and reinsurance risk-sharing programs. Responsibility for measuring, assessing, and mitigating environmental risks resides with our Enterprise Risk Management (ERM) function. Our Executive Risk Committee oversees ERM and includes our Chief Executive Officer, Chief Financial Officer, Chief Risk Officer, and General Counsel. The Audit Committee oversees and monitors climate change-related risks.

Our customers' safety and well-being is a top priority. We strive to educate our customers about potential risks through our safety management and proactive messaging efforts and help them reduce risks by incorporating value-added tools, technologies, and services. We continue to invest heavily in technologies and capabilities to meet and exceed evolving customer expectations, including our omni-channel platform allowing customers to interact with us in the manner and times most convenient for them.

CAPITAL ALLOCATION AWAY FROM SPECIFIC ENVIRONMENTALLY-HAZARDOUS RISKS

We do not underwrite specific environmentally-hazardous risks related to production from coal mines, thermal coal plants, or oil sands extraction because they are outside of our underwriting appetite.

We believe that, through our underwriting and investment actions, we can play a part in helping fight climate change. On the underwriting side, we have minimal exposure to specific environmentally-hazardous risks.

Our investment strategy considers climate change risk by prohibiting any new direct equity or debt investments in thermal coal enterprises, including those generating 30% or more of their (i) revenue from the ownership, exploration, mining, or refining of thermal coal, or (ii) electricity generation from thermal coal. We believe the value of these assets could be at greater risk in the transition to a low-carbon economy.

REDUCING OUR CARBON FOOTPRINT

We actively seek to reduce our carbon footprint through reducing our use of natural resources, increasing our energy efficiency, and recycling waste materials.

We expect to continue to reduce our carbon emissions over the long term. We have many initiatives that we expect will reduce greenhouse gas (“GHG”) emissions over time. Some include:

  • Upgrades to our corporate headquarters building management system, which should reduce heating and cooling natural gas consumption
  • Efforts to transition our fleet from gasoline to hybrid vehicles
  • LED conversion of all corporate headquarters light bulbs
  • Hybrid work schedule going forward
  • Migrating our information technology systems to the cloud

 

We have also implemented additional initiatives at our corporate headquarters to lower our environmental impact, including:

  • Enhanced waste management and recycling
  • Re-purposing commingled recyclables
  • Installed electric vehicle charging stations for employee use
  • Eliminating Styrofoam products in our cafeteria
  • Recycling and more efficient energy use of electronic equipment
  • Reducing our water usage through automatic plumbing features

 

Selective strongly believes in a clean energy future. We built ground-mount and garage-canopy solar photovoltaic facilities at our corporate headquarters. The facilities generate approximately five million kWh of electricity annually, and we sell the related solar renewable energy credits to others. Since we sell these solar renewable energy credits, our GHG emissions are not offset – but we do produce cleaner energy for others.