Living our Values - Environmental, Social and Governance Review 2019 - Liberty ...
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Living our Values Environmental, Social and Governance Review 2019
Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Welcome
At Liberty Mutual, we believe progress OVERVIEW
happens when people feel secure. This belief is CEO welcome 3
underpinned by our conviction that insurance Q&A with our CSO 4
is a socially responsible product, delivering About us 5
security to people and businesses. Impact at a glance 6
APPROACH
We are committed to being Environmentally conscious
and a force for Social good, while operating with the Our focus topics 7
highest standards of Governance (ESG). In this ESG ESG governance 8
review, we describe how we deliver on this commitment, Managing enterprise risk 9
with examples and performance metrics from across the
The global agenda 10
business. We focus on the 2019 calendar year, but since
this is our first review, we also reference activities in recent
ENVIRONMENTAL IMPACT 11
years that have led us to where we are now.
Climate change and the divestment dilemma 12
Peace of mind in a warming world 13
Decarbonizing investments 14
Leading by example 15
SOCIAL IMPACT 16
Insurance as a social good 17
Empowering our people 18
Diversity and inclusion 19
A community partner 20
GOVERNANCE 21
Values-driven for more than a century 22
Data protection 23
Our purpose: Our Values: DATA AND DISCLOSURE
to help people embrace 1 . Act responsibly ESG in numbers 24
today and confidently 2. Be open Awards and recognition 25
pursue tomorrow 3. Keep it simple
4. Make things better
5. Put people first
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 2
Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
CEO
welcome We exist to help people embrace we live and work stronger. In 2019, this
amounted to $46 million and more than
impact of climate change, has been a key
focus for us for some time. In addition to
today and confidently pursue
150,000 employee hours. I’m proud that managing climate risk in our underwriting,
tomorrow. This purpose is clear in we were recognized by People Magazine we are expanding our investments
our insurance products that bring as one of 50 Companies That Care in renewable energy production and
security to individuals, families and other accolades that speak to our decreasing our exposure to fossil fuels.
and businesses around the world; commitments as a responsible corporate Transitioning away from fossil fuel
within our diverse, inclusive and citizen. financing is surprisingly complex, and it
won’t happen overnight – we explain why
dynamic workplaces; and in the A diverse and inclusive business
in our climate change feature. Leading the
trust that communities place in us. We bring our Values to life every day
way in our own operations, our buildings
through our inclusive workplace culture
are more sustainable than ever, with six
focused on career development, employee
This may be our first ESG review, but we’ve offices in the U.S. all certified as meeting
well-being and, above all, doing the right
been helping people face environmental Leadership in Energy and Environmental
thing. Our Diversity and Inclusion strategy
and social change since 1912. Today, with Design (LEED) standards, alongside many
is central to this, driving innovation and
a dedicated Office of Sustainability led other eco-efficiency accomplishments.
maintaining our reputation as an employer
by a chief sustainability officer (CSO), of choice. Employee engagement, The path ahead
we address ESG challenges within the candidate experience and customer Operating with transparent, ethical
context of a global agenda for change, satisfaction all depend on a culture of governance is vital to helping our
with consideration to the UN Sustainable inclusive leadership, so I’m proud to see customers face environmental and social
Development Goals (SDGs), the UN Global us listed once again as a Best Workplace challenges — and to our own viability as a
Compact (UNGC) and the Taskforce for for Diversity by Fortune magazine. But respected corporation. I am proud of the
Climate Related Financial Disclosures there’s always more to do, and creating ambitious commitments we have made
(TCFD), among other international more paths for women and under- and look forward to working alongside our
principles. represented groups to progress through CSO to continue making progress on our
Investing in our communities the organization will be one priority as we ESG journey.
We believe that we can play a positive role move forward.
in our communities, and giving back is Our climate commitment
David H. Long deeply ingrained in our culture. Through As an insurer, we see the impact of
Chairman & Chief Executive Officer, Liberty Mutual Insurance both volunteerism and financial giving, climate change firsthand as we help
we invest generously in the causes and David H. Long
our policyholders recover from loss and
programs that our employees care about Chairman & CEO
protect what matters most to them.
and that make the communities where Environmental sustainability, and the
46 million
Best
Workplace $
for Diversity
Fortune magazine 2019 community investment
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 3
Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Q&A with our CSO
In 2019, Francis Hyatt took the and embrace the opportunities that a organizations in greater Boston working to
helm as our first CSO. We spoke more sustainable world offers. I also think reduce and end youth homelessness.
there’s a great story we can begin to tell
to him about what sustainability the wider world. This inaugural review is
The review also discusses how we embrace
means at Liberty Mutual and what insurance as a social good, diversity
an important first step in our reporting and
and inclusion and community giving,
his priorities are for 2020. communications journey.
data protection and ethical conduct.
Q. Why has this new role been As a steward of Liberty Mutual’s important Across these topics, we’re capturing key
introduced at Liberty Mutual? ESG work, I take my new responsibilities performance data and case studies of best
very seriously. I believe that we can all drive practice. We still have work to do in this
A: Our employees and other stakeholders positive impact in society — as individuals, area, and I plan to continue developing our
are rightly concerned about issues facing as communities and as companies. reporting capabilities in this role.
their communities and the planet. We’ve
been tackling many of these issues for Q: What are the Q. What are your
decades, but we’ve not been very good main ESG challenges priorities for 2020?
at talking about it. With my role, and the we are facing? A: As a global, values-based company
new Office of Sustainability, we’ve got an
A: Each day, we see firsthand how committed to doing what’s right for
enhanced organizational focus that allows
environmental and social trends are our customers, our employees and
us to share our achievements and what
impacting policyholders and their communities, we also need to continue
we want to do better. It’s also a chance to
communities. Whether it’s homes and to do our part to make the communities
coordinate across the enterprise so that
businesses damaged by wildfires or in which we work and live better for those
the approach we take is consistent across
floods or safeguarding employees from in need or who may have special needs.
our various business functions. Addressing
discrimination. ESG issues are rarely I’m focused on fostering a culture of ESG
topics ranging from diversity and inclusion
straightforward and are usually connected awareness. That starts with making sure
and climate change, to homelessness
to wider societal challenges. This review we have the right tools and systems in
and data protection requires us all to play
gives insight into some of these issues. place to anticipate future ESG risks and
our part. My task is to ensure we work
Liberty was an early leader in the global address them proactively.
together, from board members to claims
handlers — to create a truly positive impact transition to renewable power and We continue to make progress in
on society and the environment. resources, and since 2007 has invested Diversity and Inclusion, and this year
over $1.25 billion in wind, solar, and hydro we’re expanding our efforts globally
Q: What do you think it will power projects and sustainable forestry and increasing our employees’ skill
add to the business? initiatives around the world. We continue development to strengthen Liberty’s
to pursue opportunities to help move our inclusive workplace. A motivated
A: Something that first drew me to Liberty economy to more eco-friendly sources of
almost 30 years ago was our reputation workforce that mirrors the diverse
energy and products. customers and communities we serve
as a trusted business. There’s no doubt
Francis Hyatt that we’ve always embraced our social and I’m proud of the work our teams have is critical to success, as is communicating
Chief Sustainability Officer environmental responsibilities, and we’re done to advance access for people both our successes and challenges.
always striving to build on the progress with disabilities with the openings of I’m proud to be building on strong, ethical
we’ve already made. With this new role Liberty Playground in Plano, Texas, and foundations. Applying Liberty Mutual’s
and the Office of Sustainability, I see a Thomas M. Menino Park in Boston, solid principles to the ESG agenda is an
real opportunity for us to more formally and to empower individuals who are obvious next step and I’m excited to
integrate ESG activities into every business experiencing homelessness with our $5 move forward.
function. This will help us live our Values million philanthropic grant that supports
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 4
Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
About us
From our humble beginning in We offer a wide range of insurance
products and services, including Find out more about
1912, we’ve grown to become Liberty Mutual on our website
personal automobile, homeowners,
the world’s sixth largest global specialty, reinsurance, commercial
property and casualty company1, multiple-peril, workers compensation,
employing more than 49,000
75
commercial automobile, general liability,
people in 29 countries around
the world.
surety and commercial property.
#
As of Dec. 31, 2019, we had $43.2 billion
in annual consolidated revenue. Fortune 500
(based on 2018 revenue)
6th
Largest property and
United Kingdom casualty insurer globally1
Netherlands
Ireland Germany
Belgium
Canada
Luxembourg
France
Boston – Headquarters Spain
Switzerland
Italy
United States Portugal
China
Bermuda
more than
49,000
UAE
Hong Kong
Mexico
India Thailand
Colombia Vietnam
Singapore
Malaysia
employees
Ecuador
Peru
Brazil
Australia
29
Chile
countries and economies
around the world
1 Based on 2019 gross written premium, excluding state owned companies
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 5
Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Impact at a glance
Financial highlights ESG highlights
Net written premium ($m) Revenue ($m) CO2 e emissions Ratio of investment in renewables
(metric tons) absolute to investment in oil and gas
2017 2017
36,789 39,409 2017 2017
153,753 1:130
2018 2018
39,100 41,568 2018 2017
2018 2018 2019
149,456 1:130
1:10 1:10 1:5
2019 2019
39,814 43,228 2019 2019
139,365 1:5
Combined ratio (%) Net income ($m)2 Community investment Number of employee
spend ($m) hours spent volunteering
2017 2017
105.6 17 2017 2017
52,648,140 152,849
2018 2018
99.2 2,160 2018 2018
44,547,518 158,831
2019 2019
101.7 1,044 2019 2019
45,857,389 152,574
Total equity ($m) Total long-term debt ($m)3 Score in Human Rights Campaign’s Number of women on the board
Corporate Equality Index (%)
2017 2017 2017
20,688 8,368 2017 4/12
100
2018 2018 2018
20,762 8,282 2018 4/12
100
2019 2019 2019
23,619 8,671 2019 4/13
100
2 Net income represents net income attributable to
Liberty Mutual Holding Company Inc.
Find out more about our financial Find out more about our ESG
performance on our website 3 Excludes unamortized discount and debt issuance costs metrics later in the report
See definitions online
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 6
Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Insurance in a changing world: ESG megatrends
Our focus topics
Our role as a global insurer
and investor exposes us to a
broad spectrum of ESG issues.
That’s why we try to focus
2,400
stakeholders engaged
our sustainability work on the
areas where we can make the
biggest impact. In a further In the coming 18 months, we plan to
step along our ESG journey, in develop this work by engaging more
2019 we conducted research to stakeholder groups, expanding in
markets beyond the U.S. and exploring
gain insight into the issues that topics more deeply, with a view to
matter most to our stakeholders. prioritizing them in a formal “materiality”
process. In the meantime, the Office
We engaged ESG experts to design of Sustainability will be driving our More extreme weather Rising expectations for employers to
and deliver an online survey for approach forward by:
events associated with embrace talent from all backgrounds,
our employees and select external • I ntegrating the ESG framework through
stakeholders in our U.S. market. Over climate change are impacting and to foster inclusion and equality
the business via the ESG Operating
six weeks, 1,200 employees completed Committee
claims and risk engineering in their communities
the survey, as well as 400 individuals
from each of the following groups: •C
ollaborating with peers, governments
Liberty customers, prospective and other stakeholders to better
employees and general consumers. understand issues
Our goal was to understand the relative •B
uilding organizational capacity and
importance of key ESG issues for our applying our Values to the ESG space
stakeholder groups.
•T
ransparently disclosing progress
The key headlines from this and challenges
process were:
• S ocial issues of data privacy and health/
welfare are top concerns, especially for
employees and job seekers
•C
onsumers are generally most
concerned with governance issues,
particularly around ethics and
communication
•A
s expected, participants report
concerns about environmental issues
Customers expect innovative products, Protecting customers’ privacy
designed for their individual needs, and and their data is paramount in a
delivered with outstanding service volatile cybersecurity landscape
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 7
Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Cascading ESG management
ESG governance through the business
Managing our material ESG issues robustly and consistently across
multiple business units requires a clear system of governance. The
board has ultimate accountability for our ESG framework, and the Board of
ESG Operating Committee working with our businesses to further Directors
embed it strategically and operationally.
To ensure open lines of communication,
the ESG Operating Committee regularly
reports progress to the executive
leadership team and the board, with
critical or urgent issues raised in between “I look forward to working
these updates. across the business to
embed and enhance Executive
The CSO will formalize our ESG our response to the ESG Leadership Team
Operating Committee. The CSO will
lead the company’s Sustainability Office
issues we face. We have
and drive implementation of our ESG complete engagement from
initiatives, in partnership with subject our leadership, and our
matter leads across the organization. employees are motivated
Recognizing that the ESG agenda is to play their part in
constantly evolving, the ESG Operating
Committee will work with the ERM
making a difference.”
– Francis Hyatt, CSO
Emerging Risks Committee to catalog ESG Operating
and understand ESG-related emerging Committee
risks and coordinate appropriate
monitoring and/or mitigation activities.
The ERM Emerging Risks Committee
identifies, evaluates, prioritizes, and Corporate
monitors latent and manifesting Sustainable Development Goals (SDGs) Function Liaisons
emerging risk exposures that could have
a significant financial or operational Business Enterprise Risk Management
impact on the enterprise, and reports up Unit Liaisons Public Affairs
to the Board Risk Committee via the ERM Enterprise Services
Global Retail Markets
governance structure. This group helps Diversity & Inclusion, HR/Talent Management
the ESG Operating Committee address a Global Risk Solutions
Ethics & Compliance
wide range of growing ESG issues. Liberty Mutual Investments
Corporate Philanthropy
Brand & Communications
Investor Relations
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 8
Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Managing enterprise risk
We’re continually improving our In Global Risk Solutions, we conduct
understanding of ESG issues risk assessments into extreme weather
The workers’ compensation
exposure, deploying risk tools and
so we can create sustainable communicating a plan of action. In landscape continues to
Enterprise Risk Governance value and help people embrace addition to having insurance, this helps evolve due to medical,
today and confidently pursue people manage climate risks. legal and social trends.
tomorrow. This work spans Alongside our trusted
Board Oversight Risk in a changing world
not only our underwriting and
Our Enterprise Risk Management (ERM) brokers and partners, we’re
investments, but also our wider function has consistently earned a offering certain corporate
risk management insights that “Strong” rating from Standard & Poor’s,
1st line 2nd line 3rd line help customers prepare for the placing us in the top 20% of North customers a Prevent &
Business Units Corporate ERM Global American insurers. Like most of our Protect Portal to enable
Internal Audit unexpected.
peers, we adopt a “three lines of defense” their employees to access
approach to risk governance.
In Investments, we believe that material support on any workplace-
ESG issues should inform investment Recognizing the increasing threat from related issues they face.
• Business units • Responsible for • Independent review decision making and risk-management climate change, ERM has a specialized
own and manage risks the risk management of 1st and 2nd lines practices. The identification, Catastrophe Research and Development
framework understanding and management of ESG function to analyze catastrophe models
• Day-to-day risk • Independent factors can enhance our ability to meet for perils such as hurricane, earthquake,
management • Sets standards for assurance of overall our long-term investment objectives. tornado/hail, and winter storms. This
risk identification, effectivness of risk We’re committed to continuously Sustainable Development Goals (SDGs)
• Apply internal group customizes vendor models or
assessment, appetite governance improving our knowledge of and
controls and risk builds specific models to create what we
and tolerances engagement on ESG issues, which will
responses call the “Liberty View of Risk,” which helps
help create sustainable value and help Liberty make informed underwriting,
• Monitors risk levels
people feel secure. pricing and reinsurance decisions that will
against established
standards protect customers. In 2019, we enhanced
In our Credit Research analysis, we our wildfire modeling capabilities as part
look at many ESG factors of interest to of continuous improvement (see our
credit rating agencies, which drive the response to growing wildfire losses in the
underlying long-term fundamentals of Environmental section).
the business. These may range from Visit our website for more
carbon regulation and demographic In 2020, ERM will continue to evolve details on our approach to risk
trends to risk management, health and Liberty’s risk appetite framework and
safety, and financial transparency. We improve models and processes to allow
Global Compliance & Ethics also monitor sector-specific factors like the company to better understand
the environmental impact of oil and gas. risk-return trade-offs and make sound
business decisions in service of our
policyholders.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 9
Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
The global agenda
By managing ESG challenges and opportunities
strategically, we’re making a valid contribution
to the wider global agenda for sustainable Our commitment to operate as a
development. In 2019, following an external responsible business is underpinned
by our ability to deliver sustainable
materiality review, we correlated our approach to
economic growth. Across everything
five of the UN’s 17 SDGs. we do, we’re guided by the Universal
Declaration on Human Rights, the UN
Guiding Principles on Business and
Human Rights and the principles of
the International Labour Organization.
These are reflected in our policies,
Code of Conduct and human resources
programs. We are looking to align our
activities with the UNGC in the
coming months.
On the topic of climate change,
we support the recommendations
• Insurance as a social good • Peace of mind in a • Insurance as a social good made by the TCFD, and we intend
warming world to investigate how best to apply the
• Managing ESG risks • Empowering our people
• Decarbonizing investments framework in 2020.
• Empowering our people • Diversity and inclusion
• Leading the way
• A community partner • A community partner
• Peace of mind in a • Decarbonizing investments Find out more on our website
warming world
• Diversity and inclusion
* Decarbonizing investments
• Managing ESG risks
* Leading the way
• Data protection
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 10Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
12
PAGE Renewable energy has
Environmental
overtaken coal as the
largest source of installed
power capacity globally
Impact 13
PAGE We’re continuously
enhancing our insurance
offerings and developing
our underwriting
expertise in low-carbon
energy sources
The world is fully
14
aware of the need for PAGE Over the past decade,
climate action, and our energy investment
strategy moved toward
the insurance sector low-carbon projects
is no exception
15
PAGE We’re walking the talk
in our own operations,
reducing our carbon
footprint and conserving
resources across our sites
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 11Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Climate change and the
divestment dilemma
The 2015 Paris Climate First, the global reality is that renewable and renewable sources while making
$4.2 – $43 tn
Agreement and the fifth report energy still lags fossil fuels in affordability the transition to a fully decarbonized
and is therefore prohibitively expensive system. This gives us the greatest chance
of the Intergovernmental Panel to many. For example, in some of addressing the climate challenge
on Climate Change (2018) both Estimated financial risk from developing economies, people and without undermining the economic and
make unequivocal cases to limit climate change to global governments are left with no option geopolitical systems required to invest in
manageable assets by
global warming to well below but to draw on what may be the only decarbonization.
the end of the century5 resource they have — coal pits or gas
2 degrees Celsius. Around the
wells. Second, the challenges associated At Liberty Mutual, we’re working hard
world, we are seeing extensive with sporadic renewable energy sources to fully understand the complex risks
climate action, and the insurance UN reported cyclone Idai to potentially remain unsolved — we’re still some years associated with the investments we
sector is no exception. However, be the worst ever disaster to strike away from a workable solution to store make and the projects we underwrite.
the world cannot simply flick the southern hemisphere, impacting surplus wind energy at night and excess This understanding is vital to finding
more than 2.6 million people across solar during the day. Third, renewable the right partners to help us responsibly
the switch on fossil fuels
Mozambique, Malawi and Zimbabwe energy infrastructure is energy-intensive deploy capital for a decarbonized future.
overnight — here is why. — very few of whom were insured. In in itself — it usually takes fossil fuel
Renewable energy has overtaken short, climate change mitigation, and power to build wind turbines and solar Setting evidence-based targets and
coal as the largest source of installed the transition to a zero-carbon economy, panels. Finally, the fossil fuel sector making public commitments around
power capacity globally, outstripping is not only a moral obligation — for the employs millions of people — from energy consumption and emission
all fossil fuel sources in terms of new insurance sector, it’s business-critical. miners to gas station workers, engineers reductions are a first step in this, as is
annual growth4. This news is arguably to truck drivers. Any rapid divestment gradually divesting from coal.
more welcome in the insurance sector This begs the question: could have substantial regional impacts.
than any other. We see firsthand how a Why are insurers still investing
warming world can destroy the lives and in fossil fuels? Maintaining energy security while
assets of entire communities. Extreme It may appear contradictory that while pursuing decarbonization
weather has almost become the new one side of the insurance coin acts as Prematurely pulling out of fossil fuel
norm as climate change pushes our a climate change first responder, the investments would disproportionately
planet into a new, more volatile state. other is investing in fossil fuel assets. punish those living in energy poverty
Recent years have been a reminder It’s a paradox that we’ve thought and regions that depend on oil and gas
of that. about deeply as we review our energy for jobs and economic stability. It could
investment strategy. We believe we have significant, potentially devastating
Australia experienced its worst wildfires need to keep expanding our green impacts on energy security — with
on record in 2019, with more than 11 energy portfolio in parallel with gradual possible geopolitical consequences.
million hectares of land destroyed and 33 divestments from fossil fuels. Suddenly Grid stability is critical to the functioning
people losing their lives. In California, the boycotting fossil fuels would cause more of societies. That’s why we take the
2018 wildfire season was the deadliest harm than good. There are four key view that, at least for the immediate
and most destructive ever recorded, reasons why. future, the world needs to retain some
with 55 fatalities. In southeast Africa, the level of balance between fossil fuels
4 Source: REN21(2016). Renewables 2016: Global Status Report
5 Source: World Economic Forum, June 2018
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 12Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Peace of mind in a
warming world
Our unique perspective on
concentrated solar power
We’re continuously enhancing policyholders in the event of a loss. and factors climate as a variable into
Established Concentrated Solar
our insurance offerings and Our dedicated specialists include loss catastrophe risk modeling. Liberty also
Power (CSP) companies are
adjusters, claims handlers and lawyers. reflects changing realities in product
developing our underwriting They align themselves closely with our adaptation during annual insurance
forming new partnerships and
expertise in low-carbon or investing in developing markets,
underwriters, risk engineers, brokers renewal cycles, especially for property
transferring expertise to South
zero-carbon energy sources. and clients, allowing us to respond and casualty products, given the direct
Africa, the Middle East and North
Embracing the renewable immediately to reduce losses and settle physical exposure to weather that
Africa (MENA) region and China
energy transition, Liberty claims quickly. For example, after the property, specialty and automobile
with accelerated growth expected
recent devastating fires in Australia and lines face. Liberty works with industry
Specialty Markets, a part of our California, our claims teams were on the committees to improve standards, and
over the next few years. We are
Global Risk Solutions business, a market-leading solar power
ground immediately to support people with other industry stakeholders and
insurer with particularly extensive
has expanded its renewable and deploy compensation. public private partnerships, co-develops
experience in the CSP sector
energy insurance products that innovative event-driven parametric
across Europe and MENA. With
Following these fires and others over insurance products that help address the
support wind, solar, geothermal, the expertise of our engineering
the past several years, in 2019, our protection gap. Examples include Africa
hydroelectric and biomass. catastrophe research and development Risk Capacity, providing micro-insurance
team, we have developed a
unique understanding of industry
Risk engineering is fundamental to our team in ERM, working with business unit to farmers facing drought risks, the
and technological issues. Our
underwriting strategy and, in turn, to modelers and brokers, developed a new Caribbean Catastrophe Risk Insurance
underwriting and engineering
the trust our customers place in us. Our “Liberty View” stochastic wildfire model Facility, providing quick liquidity after
capabilities enable a distinct
in-house risk engineers work alongside by adjusting the latest wildfire model natural disasters, and hurricane coverage
approach to risk management,
underwriters to model exposure and from our catastrophe model vendor to for forestry and timber producers in Asia
ensuring our clients can grow
provide information on a vast range of better match Liberty’s historical data, and LatAm.
and prosper.
loss prevention and control issues. We underwriting practices, and the latest
also draw on the expertise of external info on the weather-wildfire relationship.
academics, researchers and startups. Going forward, we’ll be applying similar Members of the Disaster
For example, we’re currently exploring approaches to enhance our modeling Responder Partnership Program
partnerships with companies that capabilities for other perils such as of the American Red Cross, a pre-
integrate climate prediction with risk flood, European windstorms, and investment in disaster response so
analyses to model asset-level risks from Asia/Pacific typhoons. that the Red Cross is able to help
flood, fire, heat, drought, cold, wind when it’s needed most.
and hail events down to one-meter Future resilience
resolution. With this level of detail, our Hurricanes and severe storms make
risk control and claims teams are better up the majority of our policyholders’
natural catastrophe exposure and we Sustainable Development Goals (SDGs)
prepared to deal with such events.
will continue to enhance our view of
In addition to risk engineering, another these risks as well. The ERM Corporate
key strength is the in-house claims Exposure Management team studies
handling service we provide to our the shifting nature of these risks
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 13Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Decarbonizing
investments Over the past decade, our energy investment sustainable forestry management, including conserving
biological diversity, water resources and soils as just a few
strategy moved even further toward
examples. In Brazil, we have invested in over 25,000 acres of
low-carbon projects, notably wind, solar planted teak forests. Here, the land had previously been used
and hydroelectric. As discussed on the for intensive cattle-rearing; turning it over to forest avoids
previous page, our approach is to increasingly further significant methane emissions associated with grazing.
divert capital to green energy projects by working The teak plantations have a net beneficial carbon impact – with
alongside organizations that share a net GHG emissions balance (emissions + removals) at a rate
of 168,769 metric tons CO2e removed per year. By protecting
our commitment to sustainable energy. an additional 40,000 acres of the forest’s permanent legal
preserve areas, a further 4.6 million metric tons of CO2e
With regard to renewable energy financing, we recently have been sustainably sequestered. In Uruguay, we have
established a partnership to develop 3,000 megawatts (MW) investments in over 200,000 acres of planted eucalyptus
of domestic solar power in the U.S., a portfolio that’s expected and pine forests.
to grow in the coming years. We’ve also recently enabled
the acquisition of 31 hydroelectric facilities with a 255 MW
capacity, bringing our total hydroelectric investment to 345
MW across New England, Washington, New York, Virginia,
The complexity of coal divestment
South Carolina, Idaho, California, North Carolina, West Virginia
Our 2019 policy states that we will:
and Pennsylvania.
• Not make new investments in debt or equity securities of
Globally, we insure on-shore and off-shore wind farms, as well companies that generate more than 25% of their revenues
as solar projects, in both developed and emerging markets. For from thermal coal mining or utility companies that
example, in Taiwan we're supporting the country’s transition generate more than 25% of their electricity production
from nuclear and fossil fuel-sourced energy to more affordable from thermal coal
clean energy.
• Phase out coverage and investments for existing risks that
exceed this threshold by 2023
Financing carbon sequestration
As the world transitions to a low or zero-carbon economy, there “The release of our global policy on coal is only one step
is still important work to be done to absorb carbon dioxide we’ve taken that demonstrates our commitment to
that’s currently in the atmosphere. That’s why, alongside our the shift toward clean energy. Our future investment
45
investments in renewable and decarbonized energy sources, commitments to fossil fuels have also declined by more
we also finance projects that remove or “sequester” carbon than 50% over the past several years. We will do more to
from the atmosphere. drive change. We continue to evaluate our practices and
governance while remaining thoughtful and measured
In South America, for example, we invest in several forestry about the complexities of transitioning to a low-carbon
assets that are already having a significant carbon-positive economy globally.”
Number of individual impact. Each asset is certified by the Forest Stewardship — Francis Hyatt, CSO
hydroelectric facilities Council, which represents industry best practices for
we are invested in
Find out more about our global policy on coal
Sustainable Development Goals (SDGs)
underwriting and investing on our website.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 14Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Leading by example
Our emissions footprint
While making lower-carbon Since 2016, we’ve raised $3.4 million for
investments and underwriting Smarter travel the Furniture Trust by recycling office
With an ultra-low emission furniture at our Massachusetts and New SCOPE 3 SCOPE 1
to support customers in an
increasingly changing world,
vehicle fleet of Low Emission Hampshire offices. To celebrate and 23% 23%
Vehicles (LEV), Ultra-Low champion employee involvement in our
we’re “walking the talk” in our Emission Vehicles (ULEV), Super- environmental initiatives, we’ve added a
own operations by reducing our Low Emission Vehicles (SULEV), sustainability category to our employee
carbon footprint and conserving and Partial Zero Emissions awards offerings. It recognizes colleagues 139,365
resources across our sites. Vehicles (PZEV), we’re quite that go the extra mile for a greener planet, metric tons
literally driving down our carbon including recycling efforts, renewable CO2 e emissions,
From sustainable building construction footprint. In fact, even though energy, charitable partnerships and
and maintenance approaches to reducing carbon.
absolute
our growth demanded a 5%
smarter catering, procurement and increase in vehicles in 2019, our
2,801 tons
fleet management, our environmental fleet greenhouse gas footprint
initiatives reflect our purpose — helping decreased by 3%. We’re also
people embrace today and confidently incentivizing colleagues to make
pursue tomorrow. As a primarily office- of paper recycled via our secure SCOPE 2
smarter commutes, with priority
based business, our focus continues to rideshare parking, electric vehicle
shredding program 54%
be on the buildings we own and occupy. charging and lockers/showers for
While reducing our total building footprint active travelers across our U.S. Counting our impact
by 17% since 2017, we’re also pursuing offices. In 2019, we further enhanced our
the very highest sustainability credentials
data-collection capabilities to support
within our existing offices. In 2019, we
the disclosure of our environmental To understand what's included in scope 1, 2 and 3, see our definitions online
had six offices in the U.S. certified to up to 100% of its energy needs from our
impact, including carbon footprint, water
Leadership in Energy and Environmental investments in wind energy for internal
usage and waste. We can leverage this
Design (LEED) standards, along with eight needs. The renewable energy credits
information to establish tangible goals
Energy Star certifications. In London, represent the environment benefits
(e.g., reducing water use and greenhouse
we achieved BREEAM6 status at our 20 equal to the removal of more than 3,000
gas emissions), track our progress on key
Fenchurch office, now dubbed one of vehicles each year from highways over the
metrics and expand our climate-related
the most sustainable buildings of its span of the contract.
data reporting in the years ahead.
kind in London. Resource efficiency
By the end of 2019, our investment In a sector that’s historically been
associated with a large amount of
Liberty Seguros, an
portfolio included 90 MW of hydroelectric
power in Massachusetts, New Hampshire paperwork, we’re actively moving toward international subsidiary
and Vermont, as well as 309 MW of becoming a paperless operation. In the of Liberty Mutual, is the
wind and solar power in Chile. Today, meantime, increasing recycling is a priority
first company in Spain to
LEED
our Northeast U.S. office buildings and — our secure shredding program alone
data centers under our operational recycled 2,801 tons of paper in 2019. offset all its CO2 emissions
control are able to source up to 100% That’s the same as more than two tons of
Platinum
hydroelectric power generated from our CO2 avoided, or 47,000 trees saved. Our
Sustainable Development Goals (SDGs)
own investments. Likewise, our LEED Print$mart program has also saved us
Gold campus in Plano, Texas, can meet $1 million in paper and printing costs.
for our 175 Berkeley St. office in Boston
6
Building Research Establishment Environmental Assessment Methodology
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 15Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
17
PAGE For 108 years, our
Social
philosophy has been
that insurance is far
more than a safety net
Impact 18
PAGE Empowering colleagues
to bring their full selves
to work is key to living
our purpose
Insurance can be more
19
than a safety net; it can PAGE Working together to share
also be a springboard for our unique perspectives
helps us make better
positive change decisions and deliver
innovative solutions
20
PAGE Through charitable dollars,
employee passion and
expertise – and our public
platform – we strive to make
lasting and impactful change
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 16Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Insurance as a social good
For 108 years, our philosophy has A source of courage in times
been that insurance is far more Protecting our customers of change
from fraud Our municipal bond portfolio helps
than a safety net. Whether a
As an insurer, we have an ethical support environmental and social projects
source of comfort in difficult times, duty of care to our customers, throughout the country. For instance,
a source of courage in times of particularly when it comes to we have $700 million invested in water
change or a source of support to human health. In early 2018, our projects that provide cities and towns with
progress further, insurance can be special investigators were alerted to safe drinking water, and mitigate pollution,
potential fraud by an MRI imaging while also promoting conservation
a springboard for positive change.
company servicing our commercial efforts. In addition, we have over $1.4
A source of comfort in customers. They discovered that billion invested in public K-12 and higher
difficult times the company had not complied with education institutions, and another $700
When two catastrophic hurricanes hit State ownership laws, thus making million in non-profit hospitals that serve
Florida within two weeks of one another in it unclear whether the MRI and communities.
August 2017, we rapidly moved our Mobile X-Ray scans had been performed by A source of support to
Claims Response Vehicles from Houston to certified technicians. progress further
the Florida Panhandle, so they were ready After a two-year investigation, a By providing insurance to the International
for deployment. It is times like this that settlement was reached that would Finance Corporation under its Managed
our customers need us more than ever, protect customers from $15 million Co-Lending Portfolio Program, we
and our Claims Resolution Specialists went in active payments, and over $25 help support small and medium sized
above and beyond to answer their call. This million in pending medical invoices. enterprises (SMEs) in developing markets
is exactly why we’re in business – to build This is good news for customers – worldwide, providing efficient and
trust and relationships with our customers, and good news for wider society. effective financial arrangements that
and to ultimately be there to help them support growth and expansion. Projects
when they need us most. supported recently include:
• Vietnam: supporting SMEs, specifically
those owned by women
• Bangladesh: catalyzing the growth of
green lending programs for banks
“I guess you never know—until you are really • Kenya: expanding the underserved
using it—the benefits of having insurance. My experience so far micro-SME segment
• Panama: supporting the low and
has been great, something that I wasn't expecting after all the middle-income mortgage sector, as well
damage in the house. My adjuster was very knowledgeable and as climate-smart projects in solar power Empowering women entrepreneurs across Central America
explained the process the same day and gave us hope to get generation, green buildings and energy Through a credit risk-sharing agreement with the U.S. International Development
the place repaired as soon as possible. This type of service is efficiency Finance Corporation (DFC), we’re helping to facilitate private sector involvement
something that gives us the peace of mind we all need when • Ghana: supporting the expansion of SMEs in developing markets. For instance, in El Salvador, Costa Rica, Guatemala,
and women in banking Honduras, Nicaragua and Panama, our support enables the DFC to expand
we are going through tough times.” SME and housing loans, with a portion of proceeds going to women borrowers.
– Liberty Mutual Customer Sustainable Development Goals (SDGs) In Paraguay, our support is helping to increase the availability of affordable credit
for SMEs, particularly those owned or led by women, and in Ecuador, we’re
supporting women-led and owned micro enterprises.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 17Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Empowering
our people
With our focus on development Liberty, a three-day workshop aimed to
opportunities and workplaces help managers build their capabilities
to lead themselves, lead others and
that nurture well-being, we’re lead through change. The program will
committed to enabling our more strengthen our environment so that all
than 49,000 employees to reach “We’re continually
employees can come to work and feel
their full potential. We believe that their voices are heard. All managers looking at new ways
that empowering colleagues to will complete the program by December to attract, engage and
bring their full selves to work is
2021 as part of a broader development retain employees who
strategy to build high performing talent reflect the needs of our
key to living our purpose. across the enterprise.
clients, customers and the
In 2019, we were recognized as a Great Employee wellness communities we serve.
Place to Work® US, an independent We offer employees a range of support We’re focused on creating
authority on high-trust, high-performance services for their physical and mental a sense of belonging
workplaces. Our own employee survey well-being. These range from on-site for all. And our ongoing
revealed that we scored above the medical centers in our Boston, Seattle
and Plano offices and free face-to-face
success depends on our
financial and insurance sector average for
employee engagement, though we need counseling to virtual health visits and ability to respond and
to do more to further increase pride and online tools for physical, emotional and adapt to change.”
camaraderie scores. financial health. – Dawn Frazier-Bohnert,
senior vice president
Our workplace flexibility policies are and Global Diversity
85%
designed to promote a healthy work- & Inclusion officer
life balance. Likewise, our parental
leave policy allows new mothers with
of employees “extremely one year or more of service in U.S.
satisfied” to work here7 offices to take up to 16 weeks of paid
leave, while new fathers and adoptive
parents get eight paid weeks. For eligible
employees, Liberty provides an adoption Sustainable Development Goals (SDGs)
Through in-person and online training, and surrogacy subsidy of $20,000 per
employees receive both on-boarding adoptive/surrogacy event, up to
and continuous training and two per lifetime.
development opportunities. Mobility
and growth are encouraged and, in 2019,
we began the full roll-out of Leading at
7 Source: Liberty Mutual Employee Opinion Survey 2019
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 18Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Diversity
and inclusion We know that working together
Employee action
to share our unique perspectives Recognized as a Military
As well as championing inclusion
helps us make better decisions Friendly® Employer by the
from the top and enabling
and deliver innovative solutions to Military Friendly organization programs through the business,
achieve our goals. We recognize employee grassroots action is also
the strategic importance of Association of Latino Professionals for
vital to achieving a fully inclusive
valuing diversity, inclusion and workplace. There are currently six
America, Ascend and numerous legal
company-sponsored Employee
belonging to drive the business. associations for women and people
Resource Groups. Led by employees
of color.
and executives, they offer a
In 2019, we were listed for a second •U nconscious Bias Awareness and
community and network of people
time in Fortune magazine’s Best Guidelines for Inclusion: We launched
with different backgrounds to learn
Workplaces for Diversity, which an eLearning and a mini-series to help
and connect with each other. They
benchmarked employee responses employees disrupt bias and strengthen
also help increase engagement,
against more than 4.8 million employees inclusion.
develop our talent pipeline and
across various organizations. Despite • Men as Allies initiative: Launched
offer an opportunity to address
progress, there is always work to do, to support men in building their
challenges within the business.
and we recognize that this is a journey collaboration skills, the initiative
for us. Leadership from the top is critical, includes a summit, online platform and Amigos@Liberty:
and that’s why we were one of the first a council to learn, act and share ideas. Hispanic/Latinx community + Allies
companies (of now more than 800) to
LEAAP@Liberty:
sign The CEO Action for Diversity and Our talent management strategy
Asian professionals + Allies
Inclusion in 2017. is centered on inclusion, including
continued improvement in gender LEADA@Liberty:
A holistic framework
diversity. We’re driving diversity and African descent + Allies
Our diversity and inclusion framework
inclusion awareness and accountability Pride@Liberty: LGBTQ+ + Allies
spans talent, development, the
at senior levels by updating appropriate
work environment, customers and Valor@Liberty:
management information dashboards
communities, and communications. Military and veterans + Allies
on a quarterly basis, introducing Race
Some of its programs and initiatives
& Ethnicity Understanding workshops, WE@Liberty: Women + Allies
include:
aiming to have a 50-50 gender split in
100%
•P
artnerships with professional our graduate recruitment, and we’re
associations and other nonprofit continuing to review and enhance our
organizations: These are a key parental leave and family friendly policies
in the Human Rights source for identifying talent for the and benefits.
Campaign’s Corporate organization. They include Out &
Equality Index Equal, The MBA Women’s Leadership
Invitational, National Black MBA Sustainable Development Goals (SDGs)
Association, American Corporate
Sponsors, Simmons Leadership
Conference and International
Simmons Leadership Conference,
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 19Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
A community partner
In 2019, we donated $46 million, Over the past eight years, we have
and our employees gave more committed approximately $770 million
in equity to low-income housing tax
than 150,000 hours of time, credits. This has supported nearly
to support community causes. “We are committed to helping
50,000 affordable housing units across
Through charitable dollars, our grantee partners eradicate all 50 states and the District of Columbia.
employee passion and expertise, homelessness by convening We’re also the majority participant in the
and our substantial public local organizations to generate Massachusetts Property and Casualty
ideas and solutions, funding Initiative Fund, a state-wide community
platform, we strive to make lasting loan fund that’s created or preserved 6,145
and impactful change. nonprofits that work with
91%
units of affordable housing and supported
homeless youth in various 118 small businesses, 29 economic
Accessibility
We partner with cultural and recreational capacities and supporting development projects and 3,722 jobs.
programs that create inclusive, accessible research to measure progress Education of colleagues feel good about
environments for people with disabilities. and understand what services We invest in our collective future by how Liberty Mutual contributes
We’re especially proud of our universally- are needed.” helping underserved youth reach their full in the community8
accessible playgrounds, which give potential. Specifically, we provide support
children of all abilities the chance to play – Melissa M. MacDonnell, Liberty
Mutual Foundation president from early education to college and career
and learn together. We recently opened a readiness and everything in between.
second playground in Plano, Texas. These Recently, we deepened our commitment
playgrounds help children develop social- Liberty Torchbearers
to Artists for Humanity with a $1.5 million
emotional skills and encourage creativity. Each year, our employees contribute favorite health and human services
grant to build a Liberty Career Center at
They promote inclusion and allow for both thousands of hours and dollars to organizations through online
its epicenter. Here, marginalized teens
mental and physical development. Homelessness support community initiatives they pledging and payroll deduction.
can explore a range of job opportunities
We support organizations that deliver care about. To further encourage We match $0.50 of every dollar
in creative industries. Liberty Mutual has
immediate, life-saving aid and basic and recognize this generosity, we with no limit.
even hired young people to undertake
services to men, women and children created Liberty Torchbearers, a
projects like creating billboards, sculptures • Volunteer with Liberty: supporting
$500 mn
who are homeless. In Boston alone, U.S.-based community service
and paintings. and celebrating employees who
we have committed $5 million over platform that includes:
do inspiring, vital community
the next three years to address youth • S erve with Liberty: our annual service work.
10-year community investment Sustainable Development Goals (SDGs)
homelessness; specifically, to foster enterprise-wide community
Liberty Torchbearers are encouraged
3,919
permanent connections, create stable service program held during the
housing, provide mental and physical to log their volunteer hours and gain
first two weeks of May. In 2019,
health services, offer early interventions, recognition. This year, they have the
24,143 employees in 23 countries
and promote education and workforce chance to win a $500 mini-grant to
service projects in 23 countries participated.
development for young people who are donate to eligible nonprofits. Last
12,000+
Learn more about how we support •G
ive with Liberty: a year-round year, more than 1,500 employees
unstably housed or homeless. A list of
our communities by reading the opportunity that encourages earned a $250 grant for their
grant recipients so far can be found on
Liberty Mutual Giving Report employees to donate to their favorite eligible organization.
our website.
community beneficiaries
152,574
employee volunteering hours
8 Source: Great Place to Work® 2019 U.S. National Employee Engagement Study
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 20Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
22
PAGE Our governance structure
Governance
is carefully designed to
ensure all our employees
make responsible and
ethical decisions
23
PAGE Protecting the security
and privacy of customer
and employee data is
Today our Values are more absolutely fundamental
to our license to operate
relevant than ever before
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 21Overview Approach Environmental Impact Social Impact Governance Data and Disclosure
Values-driven for
more than a century
Speaking up
We recognize that we all have a responsibility to speak up if
we see or suspect behavior that violates the Liberty Mutual
Code of Conduct. Employees can raise their concerns online
or by phone and are guaranteed protection during any
investigation process.
Drawing on our heritage as a Open and accountable The Liberty Mutual Code of Business
trusted, respected corporate Entrusted with Liberty Mutual’s sustained Ethics and Conduct is the foundation for
success, our board of directors holds the how we conduct our business lives. It
citizen, our governance puts our Values into practice by guiding
Executive Leadership Team accountable
structures are carefully and provides guidance on key issues our ethical behavior and illustrating how Find out more on our website
designed to ensure our facing the organization. Among the we do business with integrity. It covers
49,000-plus employees board’s chief responsibilities are: topics including conflicts of interest,
make responsible and ethical protecting information and compliance
• Nominating independent directors
with the law, including competition,
decisions. Today, our Values • Ensuring strong succession plans bribery, trade sanctions and data privacy.
are more relevant than ever
• Overseeing strategic plan development
before and cascade across our and monitoring progress
All employees are responsible for
global entities. knowing and following the guidelines in
• Setting Executive management the Code whenever and wherever they
compensation do business or act on behalf of Liberty
Mutual. Employees must complete
31%
• Providing oversight for financial
mandatory annual training on facets of
reporting, enterprise risk management,
the Code, with topics varying from year to
internal control systems, ESG and Code
women on board of directors year based on risk. The training requires
of Business Ethics & Conduct
employees to certify that they have read,
100%
Ethical conduct understood and will continue to comply
Aligned with our Value of acting with the Code. Every year, each employee
responsibly, our Global Compliance & must also complete a conflict of interest
of in-scope employees Ethics team fosters a culture in which our disclosure and certification.
have completed a conflict employees do business the right way. It’s
of interest disclosure responsible for:
Responsible procurement
As a global property and casualty insurer,
• Establishing enterprise-wide we maintain supplier relationships with
compliance strategy and policies over 15,000 businesses. When engaging
suppliers, we inquire as to the current
Learn who is on our board • Developing and launching compliance business practices and operations of
and management team on education those third parties. In 2020, we will
our website implement a Supplier Code of Conduct
• Overseeing legal, regulatory and risk
assessment processes as an expectation of our Suppliers in
their performance of duties for Liberty
• Implementing strategies to reduce Mutual.
enterprise risk
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REVIEW 2019 22You can also read
