S&P Global Market intelligence recently partnered with Instech on a live in-person event and explored ESG Reporting in 2023 for Insurers. The central focus was on practical applications for managing and measuring carbon emissions.

To fully reflect the importance of the insurance market, consider it one the largest global industries with more than USD 6 trillion in world premium volume and 36 trillion in global assets under management. As risk managers, risk carriers and investors, the insurance industry plays a key role in supporting the transition to a resilient net-zero emissions economy. In order to support and engage with the challenge- insurers need to adapt a consistent approach, by addressing the need to set global benchmarks, standardised methodologies for measuring and disclosing greenhouse gases (GHG) emissions associated with Re/Insurance portfolios. To achieve this, a cohesive approach will be needed to manage climate risks and opportunities.

With the urgent need to address climate related risks, the event provided subject matter expertise with panellists from firms such as: Swiss RE, Fidelis, Convex , The World Benchmarking Alliance, Lloyds of London, Cactus, Gamma Location Intelligence and Ecologi. Here are some the key takeaways from the event. If you would like to watch the event replay panel highlights please click here

• The assessment of ESG requires, and benefits from an integrated approach across multiple aspects of business activities from underwriting, portfolio management, client engagement and assessment.

• Physical risk is one of the most well-known areas impacted by climate change, but an area where insurers already have some of best experience of any industry in assessing catastrophic loss potential. Looking ahead, insurers need to focus on transition and liability risks as a result of transition to low carbon economy.

• The transition risk with moving to insuring new assets and moving away from those activities that have a high carbon footprint has many challenges, but also opportunities for insurers that show leadership in this area. The increasing use of hydrogen is one example of transition that requires a new approach to underwriting.

• Many data sets and tools are emerging, but insurers need to be selective in what they use and understand limitations and uncertainties.

• Addressing the climate risks will require an all-hands-on approach. Public-Private-Partnerships was identified to be an important factor in improving resilience, with programs such as FloodRe but the question is how that is achieved on a global scale.

• Understanding Scope 3 emissions from suppliers and clients is hard but not impossible. Solutions are becoming available for companies of all sizes that will, over time, help to create standard and accepted approaches.

• Sharing and reporting of ESG metrics between brokers, insurers and the insured is increasingly becoming a requirement for leading insurers.

• The ESG issues should not be viewed in isolation. Embedding ESG frameworks can enable insurers to make robust decisions about their strategy and approach to driving sustainability across all business activities.  

• Biodiversity has moved rapidly up the agenda for corporations and financial institutions. By factoring in nature-based solutions – Re/Insurers can meet the growing need for companies and governments to invest in greener infrastructure for a resilient future,

• Industry initiatives such as PCAF (Partnership for Carbon Accounting Financials), NZIA (Non-Zero Insurance Alliance) and the Poseidon Principles for Marine Insurance are recognised as successful examples of collaboration and a move towards standardised reporting.