The ClimateWise Principles Independent Review 2020 shows member insurance industry firms have made significant progress in disclosing their preparedness and response to climate change.
This year’s report for the group convened by the University of Cambridge Institute for Sustainability Leadership (CISL) is the second year of reporting in full alignment with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).
Going beyond this increase in reporting rigour, the Review records a significant increase in average score from 55% in 2019 to 65% this year for the ClimateWise group of companies. This improvement in membership score is particularly noteworthy as it has occurred simultaneously with a 25% increase in the membership base, with ClimateWise welcoming seven new members in 2020 with the majority reporting against the ClimateWise Principles for the first time this year.
Mr Dominic Christian, chair of ClimateWise and Global Chairman, Reinsurance Solutions at Aon, said, “Mandatory TCFD disclosure is coming and our members are building on their decade of experience of voluntary disclosures under ClimateWise. I am delighted to see our average score increase by 10 percentage points this year, reflecting both the goals of our growing membership and wider changes in the disclosure landscape..”
Members of ClimateWise have been reporting against the ClimateWise Principles for 14 years and now set an industry-standard framework for meeting the expectations of the TCFD. This has been whilst also leading ambitions on wider public policy engagement, action on climate change and building societal resilience across the industry value chain. The benefits are already evident through the ClimateWise community’s recognition in the 2020 TCFD Status Report.
Dr Bronwyn Claire, ClimateWise senior programme manager, said, “We’ve seen significant progress being made by members in the incorporation of climate change considerations into investment and underwriting strategies demonstrating growing strategic commitment to corporate and societal resilience to climate change.”
Anna Sweeney, chair of the Sustainable Insurance Forum and executive director, Insurance, Bank of England said, “ClimateWise is an important initiative, assisting the insurance industry in its important role to build societal resilience. Insurers have unique insights into the risks that the world is facing and the ClimateWise Principles provide guidance to share this knowledge more broadly; so informing public policy and supporting the identification, understanding and management of climate risk. Through decisive action, insurance companies can facilitate the transition a low-carbon economy that is resilient to a changing climate, while reducing the climate risk protection gap.”
The ClimateWise Principles have provided a framework for the insurance industry to disclose climate-related risk and opportunity since 2007. All ClimateWise members report annually against this framework. Reports are independently reviewed, scored and anonymised in a combined report to form the ClimateWise Principles Independent Review.
Mr Huw Evans, director general of the Association of British Insurers (ABI), said, “A 10% year-on-year increase in the sector’s performance against the ClimateWise principles will make a significant impact across the economy, especially as these principles align to the TCFD requirements. However, it is also clear from these findings that further progress is needed – and this will require a sustained effort across the sector.
Established in 2007, ClimateWise is a growing global network of 33 leading insurers, reinsurers, brokers and industry service providers which share a commitment to reduce the impact of climate change on society and the insurance industry. ClimateWise is a voluntary initiative, driven directly by its members and facilitated by the University of Cambridge Institute for Sustainability Leadership’s (CISL’s) Centre for Sustainable Finance, which brings business, government and academia together to land’s global goals set by the Paris Agreement.
Whilst progress amongst the membership has been significant, there is still a need for urgent action across the industry. The main focus for members this year will be on deepening the exploration and transparency of strategic resilience to climate change. This will most notably be through expanded adoption and depth of scenario analysis, demonstrating the outcomes and implications on resilience and the resultant impact on decision-making.