There is a commonality of purpose between the insurance sector and sustainability. Indeed, policies are certainly not a business of transformation of raw materials that originates particular emissions or that pollutes.
Among other things, this sector is strongly impacted by climate change which affects the frequency and intensity of hurricanes, water bombs, floods and forest fires (California and Australia are the most recent example). the bill for companies due to disasters, according to Swiss Re’s Sigma report, grew by 40% to 89 billion, of which 81 billion attributable to natural devastation alone. In short, the madness of the climate could no longer become “sustainable” not even for company budgets. Many risks could in fact become no longer insurable if not at stellar premiums. The quality of the air is also important as it increases the incidence of diseases and deaths. In short, the very decisive conversion that insurance and reinsurance companies around the world have operated on the sustainability front for some time is due to the heart, but also to reason and to the “portfolio”.
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It is recent news that seven of the world‘s leading insurers and reinsurers, in partnership with the UN Environmental Program Financial Initiative, are currently establishing a pioneering Net-Zero insurance alliance (Nzia) which is expected to be launched at the UN 2021 Conference on climate change scheduled for November in Glasgow (Cop 26).
The levers of the companies
There are many levers that insurers can exercise to accelerate towards an ecological transition. First of all the financial one: thanks to the enormous managed portfolio (reserves and premiums of policyholders) they can certainly influence the issuing companies. They are also among the main creators of green bonds.
Thanks to their business, companies have the opportunity to encourage virtuous behavior, such as decarbonisation for companies, but also to influence the choices of private customers. For example, ESG investment policies are on the rise. About twenty were launched in 2020 alone. It must be said that on this front, more rigor is needed in the definition of investment policies. A close goal given that, probably from 2022, the new rules on taxonomy will be introduced and KIDS (Key information documents) will have to be integrated with non-financial information.