UNEP chief outlines six key asks of insurance industry to build on sustainability progress

Written by Adam Cadle

21/06/2022

Under-Secretary-General of the United Nations and Executive Director of the United Nations Environment Programme Inger Andersen has outlined six key asks of the insurance industry to build on its achievement so far in driving towards a net-zero economy and sustainable future.

Speaking virtually for the 10th anniversary of UNEP’s Principles for Sustainable Insurance Initiative, Inger Andersen said the first key as is to commit to the net-zero transition.

“Insurers should set and implement science-based net-zero strategies and targets for their insurance and investment portfolios by joining the Net-Zero Insurance Alliance (NZIA) and the Net-Zero Asset Owner Alliance,” she argued.

“The NZIA’s work with the Partnership for Carbon Accounting Financials to produce the first global standard to measure greenhouse gas emissions associated to insurance underwriting portfolios by November 2022 is a good starting point. The NZIA’s work with the Science Based Targets Initiative to develop an NZIA target-setting protocol by January 2023 is another important step. This protocol will be used by NZIA member insurers to set interim, science-based five-year targets for their respective insurance underwriting portfolios, starting July 2023.”

Secondly, Andersen said insurers should commit to a nature-positive transition and pollution prevention.

“Insurers should build on the PSI’s agenda-setting work to protect natural World Heritage Sites, tackle plastic pollution, and combat illegal, unreported and unregulated fishing,” she stated. “Insurers should commit to science-based nature-positive strategies and targets for their insurance and investment portfolios. The PSI should establish a Nature-Positive Insurance Alliance – just like the Net-Zero Insurance Alliance that it established in 2021 ¬– particularly given the expected adoption of the Post-2020 Global Biodiversity Framework later this year. Insurers should also support the aims of the upcoming legally binding international agreement to end plastic pollution, which will be forged by 2024.”

Andersen moved on to the need for insurers to commit to climate resilience and adaptation.

“Protecting the most vulnerable and leaving no one behind is indispensable in a just transition to net-zero. Tackling loss and damage and building resilience must not be the forgotten component of climate action. Reducing disaster risk and closing the insurance protection gap are paramount. Insurers should commit to supporting the Sustainable Insurance Facility of the Vulnerable Twenty Group of Finance Ministers, hosted by the PSI. This facility aims to deliver insurance protection to micro, small and medium-sized enterprises in the most climate-vulnerable countries in Africa and the Middle East, the Asia-Pacific, and Latin America and the Caribbean.”

Fourthly, Andersen said “health is our greatest wealth”, and “life and health insurers must embed sustainability in their core insurance business, not just in their investments, particularly in a post-COVID world increasingly impacted by climate change, nature loss, pollution and social inequality”.

“Insurers should adopt and build on the recommendations of the first-ever sustainability guide for the global life and health insurance industry, which the PSI is launching at this 10th anniversary event.”

The last two areas Andersen highlighted was around a commitment to accountability transparency and sustainability expertise, and also creating sustainable insurance roadmaps.

“The entire insurance industry value chain of insurers, reinsurers, brokers and agents ─ along with insurance associations and insurance regulators ─ must make sustainability an integral part of their decision-making. Insurers should implement the recommendations of the Task Force on Climate-related Financial Disclosures, the Task Force on Nature-related Financial Disclosures, and the International Sustainability Standards Board – all important steps to drive systemic change.

“Furthermore, all insurance professionals should develop expertise in sustainability, instead of leaving it up to a few people within an organisation. Sustainability should be an integral part of an insurance organisation’s culture, principles, values and core business strategies and operations. In short, it should form part of every insurance decision. Insurance markets around the world should follow the lead of the California Insurance Commissioner to develop the world’s first sustainable insurance roadmap, an initiative supported by the PSI. California’s Sustainable Insurance Roadmap will be presented at this PSI event.

“A sustainable insurance roadmap is a comprehensive strategy and action plan to harness the insurance industry’s risk management services, insurance solutions and investments to accelerate the transition to resilient, net-zero, nature-positive and inclusive communities and economies. Such roadmaps would serve as foundational frameworks for insurance markets to support the global agenda of the UN Decade of Action.”

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