Just 27% of insurers aligning underwriting portfolios with net zero carbon world

Written by Adam Cadle

29/04/2021

Just 27% of insurers are aligning their underwriting portfolios with a net zero carbon world, suggesting insurers’ transition plans are currently focused on their investments, new research published by CDP has shown.

The Time to Green Finance report, the first ever analysis of financed emissions based on self-reported data from global asset managers, asset owners, insurers and banks by CDP, said board-level oversight covers the impact of insurance underwriting on climate change at only 31% of insurers.

Under half (46%) of asset managers report taking action to align investments with a well below 2°C goal.

The report added that overall under half of the 332 disclosing financial institutions report actions to align portfolios with a well below 2°C world. Moreover, the portfolio emissions are on average over 700 times larger than direct emissions, per organisation reporting financed emissions.

CDP global director of capital markets Emily Kreps said: “The financial services sector is critical to achieving a net zero carbon future. The real economy transition will require a massive amount of capital directed at decarbonising the economy and enhancing resilience, which only the finance sector can facilitate and provide. As regulators move towards mandatory disclosure – CDP, with its 20+ years of providing comparable and TCFD-aligned environmental disclosure data to the capital markets, is ideally positioned to assess the global finance sector’s readiness to respond.

“For financial institutions that do not currently measure their financed emissions the message from this flagship report is clear – they must start doing so, now, to understand their overall climate-impact and the risks they face. We urge all financial institutions to commit to de-carbonise their portfolios by setting science-based emissions reduction targets, aligning all activity with the Paris Agreement and disclosing the impact of their financing activities.”

The report named some best practice examples from among the disclosing financial institutions, including Allianz SE for governance of climate-related issues, and ABN AMRO for measurement and disclosure of portfolio emissions.

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