The general insurance and long-term savings industry is making significant progress in setting transparent Net Zero targets and joining the UN’s ‘Race To Zero’ campaign according to the ABI’s updated Climate Change Roadmap.
Among the market share represented by ABI members, almost 90% of the Long-term Savings market and over 50% of the General Insurance market are now part of the campaign. More firms are expected to follow: a survey of ABI members showed that 94% of respondents not already signed up are considering joining the Race to Zero global campaign. As a result, the ABI was granted official ‘Race to Zero accelerator’ status earlier this year.
In a message recorded for the ABI Climate Change Summit, His Royal Highness The Prince of Wales said that: “The insurance industry has a fundamental role to play through its understanding of physical and transition risks, and its ability to provide a financial safety net to empower brave climate action and innovation. The power of greener pensions is also now better understood.”
And: “I can only call on every individual and every firm in this sector to take action in the four areas set out in the ABI’s own excellent roadmap.”
Five key asks
While the figures show good progress on the industry’s Net Zero targets more action is needed. As the industry convenes today for the ABI’s Climate Change Summit, five urgent requests for Government are set out by the sector that would enable the insurance and long-term savings sector to maximise the vital role it has to play:
Strengthen the industry’s role as key investors in Net Zero infrastructure: let us put more of our capital into green investments and ensure we are central to the conversation about how green infrastructure is developed and funded. Unlock the significant investment potential from the insurance and long-term savings industry through meaningful reform of the Solvency II regulatory framework, and bring investors into the heart of the decision-making process on green infrastructure and technology development.
Publish a strategy for delivering the required investment in reducing carbon emissions in homes and commercial buildings. The UK has a strategy to decarbonise the entire transport system – we need to set out the same clarity on targets for the UK’s building stock that delivers energy efficiency and low carbon heating without increasing any building safety risks. This can enable the sector to support not just lower emissions but a just transition offering lower bills and warmer homes.
Improve the planning system to ensure Net Zero alignment, including by reducing development in high flood risk areas and ensuring new homes are resilient to climate risk. This must be underpinned by a long-term funding commitment to investing and maintaining the UK’s flood defence infrastructure.
Ensure all sectors produce consistent and quality data on carbon emissions. Businesses cannot accurately calculate progress towards Net Zero targets without consistency across the carbon emission data published across their full portfolio.
Put the protection of the natural environment and our ecosystems into climate change policies. Net Zero targets alone are not enough. The Dasgupta Review sets out how we can achieve sustainable economic growth whilst ensuring the demands on Nature do not exceed its supply. We need Government guidance on how businesses should respond to this – customers and international regulators are asking us.
Andy Briggs, Chair, ABI Board Climate Change Committee and Group CEO, Phoenix Group said: The long-term savings and insurance sector is committed to playing a central part in the race to net zero – but we need to take the handbrake off.? There is no time to spare in making the changes needed which can unlock the once-in-a-lifetime opportunity to drive investment which can cut emissions and deliver growth across the country.
Meaningful reform to investment frameworks and the regulatory regime, including Solvency II, is essential if our sector is to turbocharge investment in the green infrastructure that we urgently need.? If we can get those structures in place – supported by better planning systems, transparent data, and clearer climate change policies – we can put our foot even harder on the throttle”.
Hannah Gurga, ABI Director General said: There is no greater risk to society, our planet and to our sector itself than climate change. The role the insurance and long-term savings industry has to play has never been greater or more important. We have made significant progress on the transition to Net Zero and it’s good to see so many of our firms sign up to the UN’s ‘Race to Zero’ campaign. However, we need to continue to focus our efforts on this greatest challenge and collaborative working across the industry, and with Government and regulators, will be key.”
Karen Ellis, Chief Economist at WWF said: Many UK insurance companies have played a leading role in advocating for greater action on climate change because they understand the true scale of risks we face from climate change and nature loss. The next two years will see huge changes as the Government compels all large UK companies to publish their net-zero transition plans.
The insurance sector is well placed to help its corporate clients manage the risks from climate change and also to contribute in developing the approaches – such as investing in nature-based solutions - that will put us on a more resilient pathway for the future.”
Clare Shine, Director and CEO, University of Cambridge Institute for Sustainability Leadership (‘CISL’), said: The insurance industry plays a crucial role in tackling climate change, given its unique ability to understand and price risks and its influence as a significant investor. We are delighted that ABI, as a founding member of ClimateWise, is updating the industry’s roadmap to measure progress against its four pillars and set bolder goals for the next 12 months. The sector has a long way to go to deliver its full potential for a sustainable economy, including greater collaboration across finance, business and policy and higher ambition on environmental and social needs, so we welcome ABI communicating clear goals for insurers and policymakers as a major step to drive progress.”
Towards greener supply chains
The ABI has also published a Best Practice Guide to Green Supply Chains. This sets out proactive steps that the ABI will be working with its members on to:
Take account of emissions reduction strategies and targets of suppliers
Make sustainability a factor in decision making on suppliers on
Track emissions and driving further change.
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