The insurance sector is going to be one of the hardest hit by climate change, from rising claims to losses on investments. The winners in this sector will be those companies that understand the risks and opportunities facing their businesses, and embed it into their strategies and operations. ClimateWise provides an effective framework for the insurance sector to take action and show leadership.
The report shows that against a challenging market backdrop the consolidated membership have maintained the high levels of compliance seen in the 2010 Independent Review, with average compliance across all the principles standing at 88% (2010: 88%). Posting further growth in compliance in this reporting period was always going to be difficult against the backdrop of the external market challenges, so this can be seen as something of a strong performance.
Leading companies are linking climate change to corporate strategy and embedding it across different functions. Those that are able to demonstrate that activity in one principle is informing and supporting activity in another are able to articulate strong evidence that climate risk is an integrated, embedded part of core activity. This is particularly true for research informing product development and/or investing activity.
There is also a good level of disclosure relating to governance structures and high level board responsibility for managing climate risk. However, what we see much less of is evidence that the executive oversight is leading directly to climate risk being incorporated into core business strategy and planning.
Integrating climate change into new products and investment strategies are areas where there has been least progress, other than with a handful of leading insurers, and this represents the largest area of risk and opportunity for the sector.
ClimateWise members are the leading tip of the insurance iceberg on climate change. The priority to expand membership and globalise the initiative remains a top priority if the industry as a whole is to manage the impacts of climate change on its future business success.
Jon Williams from our Sustainability and Climate Change team talks more about the findings of the report and their implications for the insurance sector in this short video.
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