Climate Change Data

Environmental Metrics

ESG Focus Areas

• Investing in our employees
• Building stronger communities
• Operating responsibly and sustainably

Environmental Achievements

• Formed an employee-led Environmental Stewardship Committee
• Implemented a plan to eliminate single-use plastic water bottles in offices, reducing spending by approximately $113,000 and 375,000 bottles

Social Achievements

• 84% employee engagement index score
• 6.8% global voluntary turnover rate
• 100% of Arch executive management team completed Inclusive Leadership Training
• $35.9 million employer contributions to the 401(k)
• Launched a new community giving policy to unify and standardize Matching Gift and Volunteer Time Off (VTO) programs for North American employees
• $3.2 million in employee giving matched 1:1, $1.5 million in corporate giving

Governance Achievements

• Formalized ESG oversight at the Board of Directors level
• Launched an investment manager ESG performance survey
• Formalized policy for responsible investment management
• Integrated ESG performance into the Enterprise Risk Management (ERM) risk register

Climate Goals & Targets

Environmental Challenges

• Need to improve communication of ESG initiatives to employees, customers, and investors
• Need to further build out Corporate Giving Strategy
• Need to expand Matching Gift and VTO policies worldwide
• Need to continue to assess and analyze data from third-party investment manager ESG surveys

Mitigation Strategies

• Created an ESG team to enhance impact and coordinate efforts
• Developed a plan to expand the Good Works platform to worldwide employees
• Created an ongoing strategic plan to improve operations as a corporate citizen
• Launched investment manager ESG due diligence survey

Supply Chain Management

Responsible Procurement

• Working with sustainable suppliers for greener buildout materials

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters (earthquakes, volcanoes, hurricanes, typhoons)

Reporting Standards

Frameworks Used: SASB, GRI

Environmental Metrics

ESG Focus Areas

• Transparent Information & Fair Advice for Customers
• Incorporation of Environmental, Social & Governance Factors in Investment Management
• Policies Designed to Incentivize Responsible Behavior
• Environmental Risk Exposure
• Systemic Risk Management

Environmental Achievements

• Expanded risk control staff to broaden capabilities and increase interactions with policyholders; offered premium credits for insureds with early fire detection and suppression systems, sustainable building construction, and proper property maintenance; developed products addressing customers’ evolving needs and incentivizing responsible environmental behavior.
• Introduced products supporting solar energy, wind, methane recovery, biofuel production, and LEED-certified buildings.

Social Achievements

• Provided COVID-19 resource communications, consulting on work site safety and employee onboarding programs, and consulting to protect the public; launched collaboration with J.J. Keller & Associates, Inc. to provide customers with tools and resources for safe workplaces; partnered with ANS Solutions, LLC for workers’ compensation medical cost containment services; offered training programs for emergency responders and firefighters.
• Over 4,700 potential homebuyers completed the homebuyer education course.

Governance Achievements

• Formalized ESG Aware Statement in 2019, reflecting sustainable value creation approach; Investment Committee made up of senior members of investment team, CEO, and CFO; robust pre-investment due diligence and active engagement with external managers for externally managed assets; systematically reducing exposure to companies with poor ESG scores and opportunistically adding renewables or positive-ESG assets.

Climate Goals & Targets

Environmental Challenges

• Large aggregate exposures to natural catastrophic events; managing capital- and liquidity-related risks associated with systemic non-insurance activities.

Mitigation Strategies

• Utilizing natural catastrophe modeling techniques to estimate loss from catastrophic events; actively monitoring and evaluating the impact of changes in vendor-based systems; limiting exposure assumed from any one insured or reinsured and the amount of exposure to catastrophe losses from a single event in any geographic zone; maintaining ratings from the four major credit rating agencies; Enterprise Risk Management (ERM) framework encompassing all entities across the group.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• hurricanes, earthquakes, typhoons and wildfires

Reporting Standards

Frameworks Used: SASB

Sustainable Products & Innovation

• Products supporting solar energy, wind, methane recovery, biofuel production, and LEED-certified buildings; Green Building Coverages; Pollution Spills coverage; Well Control Events training and resources; Renewable Energy Practice insurance solutions.

Environmental Metrics

ESG Focus Areas

• Climate Risk and Climate Change Management
• Financing Environmental Impact
• Access to Finance & Social Product Development
• Systemic Risk Management/Corporate Governance
• Business Ethics and Standards
• Supply Chain Labor Standards
• Privacy and Data Security
• Responsible Investing
• Employee Health and Safety
• Employee Satisfaction and Diversity and Inclusion (D&I)
• Community Relations/Engagement

Environmental Achievements

• Decreased thermal coal accounts due to various reasons including lack of climate-related transition plans and deforestation benefits.
• Reduced absolute Scope 1 and Scope 2 GHG emissions by 42% by 2030, from a 2020 base year.
• Achieved net zero operations by 2030 through the purchase of carbon removal offsets for remaining Scope 1 and Scope 2 emissions.
• Invested $871 million (4% of AUM) in investments with a specific ESG mission, including green bonds.

Social Achievements

• 341,000 families in the U.S. were able to afford a home with Arch MI in 2021, 28% of which were low-income buyers.
• 2021 voluntary turnover rate was 9.8%, lower than the financial services industry average of 15%.
• 89% favorable score in the D&I dimension of the biennial anonymous employee engagement survey.
• Launched six global Employee Networks to foster inclusivity and connection among employees.
• Donated $6.3 million to charitable organizations.
• 14,153 hours of paid time used by employees to volunteer in 2021.

Governance Achievements

• Risk Management responsibilities are delegated across the organization through a “Three Lines of Defense” approach to risk governance.
• Board and its committees regularly review and are responsible for long-term business strategy.
• Adopted a formal Responsible Investing (RI) Policy in early 2022, considering ESG factors in investment process.
• Invested approximately $4 billion (21% of AUM) with managers that are UN PRI signatories.

Climate Goals & Targets

Environmental Challenges

• Managing climate-related risks in the thermal coal industry.
• Maintaining ethical standards across the supply chain.
• Ensuring data privacy and security.

Mitigation Strategies

• Implemented a Thermal Coal Policy to screen coal accounts against defined ESG criteria and escalate accounts as necessary.
• Developed a Supplier Code of Conduct and used third-party ESG performance data to evaluate supplier ESG performance.
• Implemented a robust privacy and data security strategy including strong governance, policies, training, and regular self-evaluation.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD, SASB

Environmental Metrics

ESG Focus Areas

• Business
• Operations
• Investing
• People
• Communities

Environmental Achievements

• Purchased 6,624 Renewable Energy Credits (RECs), reducing 2021 Scope 2 market-based emissions by 2,152 metric tons.
• Offset a significant portion of 2021 operational emissions through carbon offset projects in Uganda and Malawi.
• Achieved a -8.8% change in emissions (mtCO2e/sq ft) and a -14.7% change in emissions (mtCO2e/FTE) in global facilities between 2021 and 2022.

Social Achievements

• Launched a global mentorship program with over 550 employees enrolled.
• 855 employees completed a course on creating a culture of workplace inclusion.
• Provided enhanced medical coverage for U.S.-based employees, including travel and lodging costs for various healthcare claims.
• Implemented a salary-based medical premium structure for U.S.-based employees, reducing premiums for over 65% of employees.

Governance Achievements

• Adopted a Responsible Investing (RI) Policy in early 2022, aligning with UN PRI principles.
• Formed an ESG Investments Steering Committee to oversee ESG risk in investment strategy.
• Launched a new sustainability performance assessment platform to assess the sustainability profiles of suppliers.

Climate Goals & Targets

Environmental Challenges

• 2022 total emissions increased by 41%, primarily due to increased business travel.
• Exposure to thermal coal and fossil fuels in the investment portfolio increased slightly.

Mitigation Strategies

• Continued focus on energy efficiency measures, sourcing renewable energy, purchasing RECs, and right-sizing office and data center portfolio.
• Integration of ESG factors into investment analysis and decision-making to mitigate ESG risks and expand opportunities.
• Implementation of a new supplier sustainability assessment process to identify and manage sustainability risks in the supply chain.

Supply Chain Management

Supplier Audits: 133 vendors acknowledged Supplier Code of Conduct in 2022

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Natural catastrophes (hurricanes, floods, windstorms)

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Growth in renewable energy projects

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol, SASB, TCFD, UN PRI

Sustainable Products & Innovation

• Green Building Coverage
• Solar Surety Bonds

Awards & Recognition

• Arch RoamRight bronze Stevie® Award
• Arch Property & Casualty (P&C) Programs 5-star carrier
• Arch RoamRight Best Places to Work award
• Arch Insurance U.K. Broker Partner of the Year
• Arch Insurance Australia 5-star Diversity, Equity and Inclusion winner

Environmental Metrics

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities