Global insurers are making significant progress in disclosing their preparedness and response to climate change but have been warned there is still a long way to go.
The University of Cambridge Institute for Sustainability Leadership (CISL) has published its ClimateWise Principles Independent Review 2020 which found member insurance industry firms have made significant progress in their disclosure efforts.
The annual assessment of the integration of the ClimateWise Principles across members’ business activities is based on members reporting progress, independently reviewed by Deloitte. It highlights the overall progress being made by the ClimateWise community and provides members with individual feedback, scores and rankings that allow them to benchmark progress against their peers and inform development of members’ responses.
This year’s report is the second year of reporting in full alignment with the Recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). The Review records a significant increase in average score – from 55 per cent in 2019 to 65 per cent this year – for the ClimateWise group of companies. This improvement in membership score is of note as it has occurred simultaneously with a 25 per cent increase in the membership base, with ClimateWise welcoming seven new members in 2020 with the majority reporting against the Principles for the first time this year.
Dominic Christian, Chair of ClimateWise and Global Chairman, Reinsurance Solutions at Aon welcomed the progress but cautioned there was still further progress to be made.
“Mandatory TCFD disclosure is coming and our members are building on their decade of experience of voluntary disclosures under ClimateWise,” he added. “I am delighted to see our average score increase by ten per cent this year, reflecting both the goals of our growing membership and wider changes in the disclosure landscape. Yet we know the path is long and progress must rapidly be made.”
Members of ClimateWise have been reporting against the ClimateWise Principles for 14 years and form the foundations for an industry-standard framework for meeting the expectations of the TCFD.
“This has been whilst also leading ambitions on wider public policy engagement, action on climate change and building societal resilience across the industry value chain,” said ClimateWise. “The benefits are already evident through the ClimateWise community’s recognition in the 2020 TCFD Status Report.”
“In this pivotal year for climate negotiations, including the COP26 summit hosted by the UK, the Review highlights the active role ClimateWise members are playing in shaping international climate policy and regulation,” added the report. “Extensive examples and in-depth case studies in the report of specific examples show the actions taken by members across the group’s focus will be on expanded scenario analysis that can support understanding and transparency around strategic resilience to climate change.”
Bronwyn Claire, Senior Programme Manager for ClimateWise said: “We’ve seen significant progress being made by members in the incorporation of climate change considerations into investment and underwriting strategies demonstrating growing strategic commitment to corporate and societal resilience to climate change.”
“ClimateWise is an important initiative, assisting the insurance industry in its important role to build societal resilience,” Anna Sweeney, Chair of the Sustainable Insurance Forum and Executive Director, Insurance, Bank of England said. “Insurers have unique insights into the risks that the world is facing and the ClimateWise Principles provide guidance to share this knowledge more broadly; so informing public policy and supporting the identification, understanding and management of climate risk.
“Through decisive action, insurance companies can facilitate the transition a low-carbon economy that is resilient to a changing climate, while reducing the climate risk protection gap.”