Articles - Updating Climate Change disclosures from Life Insurers

Last year, we undertook a study of the climate change disclosures of ten UK life insurers. We found that there was a wide range of disclosures reflecting the various stages that insurers were at in embedding climate change risks. We have repeated the exercise based on 2020 reports and accounts and extra disclosures.

 By Scott Eason, Partner and Head of Insurance Consulting at Barnett Waddingham

 Our key findings are:

 More firms have disclosed climate related goals
 Greater disclosure of climate related metrics
 This article discusses these findings:

 Climate related goals
 In 2019 reports, only two large firms made clear statements of climate related goals. This has significantly increased this year. Half of the firms make explicit statements of intent to support Paris Agreement or UK Carbon neutrality targets. A number have signed up to initiatives such as the United Nations Principles of Responsible Investment, Energy Savings Opportunity Scheme or the Science Based Target Initiative.

 New targets were disclosed in respect of the following:

 Reducing carbon emission intensity
 Reducing paper usage
 Reducing total waste
 Sourcing renewable electricity
 Reducing travel emissions
 Divesting from firms with significant coal extraction/burning
 Commitment to planting trees

 However, four companies still make no explicit statements of intents and two of the companies that commit to achieving high level goals don’t set out any explicit targets consistent with these goals.

 Climate related metrics
 As you would expect, with an increase in measurable goals comes an increase in disclosed metrics.

 Three new companies disclosed their carbon emissions and intensity (including two split by Scope) on top of the three doing this last year.

 Other metrics disclosed included:

 Portfolio temperature alignment
 Climate Value-at-Risk (VaR)
 Paper / Water usage
 Percentage of Green Assets
 However, four firms still do not disclose any climate related metrics.

 Other findings
 Firms have changed little in terms of climate risk ownerships, with senior management still maintaining key involvement and oversight.
 Greater detail can be found about firms’ risk frameworks
 Scenario testing or modelling has not changed much, with many gearing up to the 2021 Bank of England Exploratory Scenario exercise.

 The ten companies reviewed were Aviva, Just, L&G, NFU, OneFamily, PIC, Rothesay, Royal London, Scottish Friendly and Wesleyan.

 "It is clear that there has been significant progress made by a number of firms and that we are seeing more statements of intent and disclosure of climate related metrics. However, there is still a wide range of approaches within the industry, reflecting differences in strategy."  

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