UN forum launches first global guide on transition plans for insurers at COP29

Written by Adam Cadle

15/11/2024

The United Nations-convened Forum for Insurance Transition to Net Zero (FIT) has launched the first-ever global guide on transition plans for insurance companies at the 2024 UN Climate Change Conference (COP29) in Baku, Azerbaijan.

The guide entitled, Closing the Gap: The emerging global agenda of transition plans and the need for insurance specific guidance, assesses key features of insurers’ underwriting portfolios – across lines of insurance, the insurance value chain, and insurance actors involved – which need to be considered in transition planning, alongside relevant sustainability risks and opportunities.

The guide also articulates the insurance industry’s triple role as risk managers, risk carriers and investors in supporting a just transition to a resilient net-zero economy, including addressing the interconnected, climate-related sustainability issues of protecting nature and biodiversity and preventing pollution via a circular economy.

The FIT report outlines the existing typology of transition plans, the landscape of emerging policies and regulations relevant to transition plans, and the evolution of transition plan frameworks and guidance. A growing number of governments and insurance and financial regulators around the world are now requiring companies in the real economy and in the financial sector to disclose their climate-related impacts, risks and opportunities. In the European Union, the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) already mandate corporate transition plans, and a growing number of countries and jurisdictions will soon require the preparation and disclosure of corporate transition plans as well.

The second deliverable of the FIT‘s Transition Plan Project will be to develop deep-dive guidance for underwriting portfolios to further support insurance companies in developing and disclosing credible transition plans. Thereafter, the FIT will produce the third and final deliverable of the project—transition plan guidance that provides a holistic, total balance sheet and organisation-wide view that covers and links the underwriting and investment portfolios of insurance companies.

“The unprecedented global transition to a resilient net-zero economy requires insurance companies to adapt their business models and strategies to reduce risks, seize opportunities; and support economic, social and environmental sustainability. This requires a credible transition plan,” said Butch Bacani, UNEP head of insurance & FIT chair.

“The FIT’s inaugural report provides a first-of-its-kind global roadmap to ensure the development and delivery of credible insurance company transition plans that are fit for purpose—plans that turn climate ambition into climate action.”

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