DEFA14A: Chubb Responds to ISS Proxy Research Report, Addressing Concerns on Climate and Pay Gap Reporting

Chubb Limited has issued a response to Institutional Shareholder Services (ISS) addressing concerns raised in their proxy research report regarding Scope 3 greenhouse gas emissions reporting, pay gap reporting, and the approval of the Sustainability Report.

Summary

• Chubb Limited has responded to an ISS proxy research report, seeking corrections and clarifications on several agenda items for the 2024 Annual General Meeting of Shareholders.
• The response addresses concerns related to Agenda Item 15, a shareholder proposal on Scope 3 greenhouse gas emissions reporting, arguing that there is no agreed methodology for calculation and that it wouldn't accurately reflect Chubb's climate-related risk.
• Chubb believes its current climate strategy, focused on new technologies and risk engineering, is more effective than allocating resources to Scope 3 emissions counting.
• Chubb also seeks correction on ISS's discussion of climate regulations, particularly regarding the Corporate Sustainability Reporting Directive (CSRD), clarifying that Scope 3 disclosure is not explicitly required.
• Regarding Agenda Item 16, Chubb requests ISS to acknowledge that its gender and racial pay gap analysis is included in its 2023 Sustainability Report and clarifies the difference between its existing disclosure and the proponent's request.
• Chubb argues that the unadjusted pay gap metric requested by the proponent does not provide actionable information due to factors like geographic distribution and workforce structure.
• For Agenda Item 14, Chubb requests ISS to remove the flag indicating contentious issues or controversy regarding the approval of the Sustainability Report, as Swiss law does not require external assurance on the full report.

Sentiment

Score: 7

Explanation: The document presents a balanced view, defending Chubb's position on key issues while acknowledging external scrutiny. The tone is professional and proactive in addressing concerns.

Positives

• Chubb already meets or exemplifies all of ISS's climate disclosure pillars in its Climate Awareness Scorecard.
• Chubb discloses gender and racial pay gap analysis in its 2023 Sustainability Report.
• Chubb's climate strategy focuses on supporting new technologies and risk engineering.

Negatives

• ISS recommends Chubb disclose Scope 3 greenhouse gas emissions, which Chubb believes is not feasible or beneficial.
• ISS flags the approval of Chubb's Sustainability Report as potentially contentious, which Chubb disputes.

Risks

• Potential for misinterpretation of unadjusted pay gap data.
• Risk of resources being misallocated to ineffective Scope 3 emissions counting.
• Reputational risk if ISS's recommendations are perceived as accurate without Chubb's clarifications.

Future Outlook

Chubb intends to continue disclosing the results of its adjusted racial and gender pay gap analysis on an annual basis in the Sustainability Report.

Management Comments

• Chubb believes its climate strategy, which is focused on supporting new technologies, building resilience through risk engineering and our technical underwriting criteria, will do far more to reduce real-world emissions than allocating our resources to counting.
• Chubb believes that ISS clients would be well-served by transparency about what an unadjusted pay gap metric does not do.

Industry Context

The document highlights the ongoing debate and evolving standards around Scope 3 emissions reporting within the insurance industry, with Chubb positioning itself as a leader with a distinct climate strategy. It also touches on the broader discussion around pay gap reporting and the limitations of unadjusted metrics.

Comparison to Industry Standards

• The document mentions that only one insurance peer has disclosed insurance-associated emissions, and even then, only for Scope 1 and 2 estimates associated with one segment (commercial P&C only).
• The document references the Corporate Sustainability Reporting Directive (CSRD) and its requirements for large European insurers, indicating a comparison to European regulatory standards.

Stakeholder Impact

• Shareholders: The response aims to address shareholder concerns regarding climate and social responsibility.
• Employees: The discussion on pay gap reporting could impact employee perceptions of fairness and equity.
• Customers: Chubb's climate strategy could influence customer perception of the company's commitment to sustainability.

Key Dates

Keywords

Scope 3 emissions, pay gap reporting, sustainability report, ISS, proxy statement, climate disclosure, Chubb