21 April: What’s going on in ESG and insurance?
April 20, 2022 Thomas Spiller
Welcome to our ESG roundup, keeping you up to date on the insurance industry’s most significant ESG-related news. The takeaway this month: Demonstrations ramp up.
Read our summary and analysis below.
Analysis
Demonstrations ramp up
This past fortnight saw two more prominent demonstrations by activist groups against insurers, as Extinction Rebellion blocked the entrances to Lloyds of London – forcing the marketplace to shut their offices for the day, and Campax targeted Zurich. Whilst Lloyds have in the past been accused of lagging behind the industry when it comes to ESG and specifically environmental commitments, having only released their first sustainability report just over a year ago, Zurich have been one of the more vocal supporters and drivers for change – including being one of the founding members of the NZIA.
These contrasting examples of companies being targeted emphasise the community expectations of the insurance industry. This was highlighted in the NZIA recent whitepaper Insuring the net-zero transition: Evolving thinking and practice, which explores how the insurance industry can support the transition to a net-zero economy.
If you would like to discuss any of the issues raised in this email, such as how to push forward your ESG agenda or navigate these emerging ESG trends, please get in touch.
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Summary
Industry white papers
Insuring the net-zero transition: Evolving thinking and practices (UNEP Finance Initiative)
The UN-convened NZIA recently published their whitepaper Insuring the net-zero transition: Evolving thinking and practices. The paper aims to advance net-zero insurance thinking and practices globally, specifically exploring how the insurance industry can support the transition to a net-zero economy.
Read the full article
The future of investor engagement: A call for systematic stewardship to address systemic climate risk (UNEP Finance Initiative)
Similarly, the UN-Convened Net-Zero Asset Owner Alliance released a high-level paper outlining a forward-looking, systematic stewardship approach for investors that seeks to mitigate the existential risk of climate change.
Read the full article
ESG pressure and demonstrations
Lloyd’s closes building following Extinction Rebellion protest (Intelligent Insurer – subscription required)
Last Tuesday (April 12) climate change activist group Extinction Rebellion blocked the entrances to Lloyd’s in an attempt to disrupt the marketplace amid demands it stops insuring fossil fuel projects. The protest resulted in Lloyd’s shutting down the office for one day and formed part of Extinction Rebellions ‘April Rebellion’, a 10-day movement to cause disruption across the UK in a bid to stop all new fossil fuel investments. Protesters stated that Lloyd’s was lagging behind other global insurers and encouraged staff to blow the whistle on any environmentally damaging projects being insured in the market.
Read the full article
Zurich targeted by activists over fossil fuel insurance (The Insurer – subscription required)
Campax campaign activists targeted Zurich the day before their AGM over Zurich’s oil and gas projects. The group unfurled a banner on Lake Zurich that read “stop insuring oil and gas projects”. Zurich have previously announced that they will not underwrite new oil exploration projects unless transition plans are in place, but Campax said the move does not go far enough. In response Zurich outlined that it has cut its market share of oil and gas by more than 60% since 2014 to “low single digits”. Only a week before Zurich announced its plans to reach net-zero operations in 2030 instead of 2050.
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ESG partnerships
Marsh expands D&O ESG program to Bermuda (Business Insurance)
Marsh has partnered with Everest Re to expand its D&O liability initiative to the Bermuda market. The initiative which rewards clients who have superior ESG credentials with preferred policy terms and broader coverage, was first introduced last October in the United States. A global rollout to the United Kingdom, Europe and Asia markets will follow.
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UN teams up with Generali on developing-nations scheme (UNDP)
Generali and the United Nations Development Programme (UNDP) have announced a multi-year scheme designed to increase access to insurance in developing countries. According to the UNDP only 5% of annual losses from disasters are covered by insurance and just 3% of individuals have insurance of any kind in developing countries. To help address this underinsurance, Generali will provide financial and technical resources to design parametric solutions, develop risk finance solutions, and promote thought leadership on human development and social innovation.
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Aon and BNY Mellon create data partnership to boost ESG investments (The Insurer – subscription required)
Aon and Bank of New York Mellon have entered into a data and digital partnership to leverage their collective ESG data and analytics capabilities. The partnership will explore ways to develop solutions that will help their clients make ‘more informed ESG-related investment decisions’, in addition to exploring ‘opportunities to make Aon’s proprietary ESG fund ratings available to asset owners’.
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Aviva, Lloyds join British FloodRe insurance scheme to build flood resilience (Nasdaq)
Aviva, Lloyds Banking Group, Ageas, NFU Mutual and LV=General Insurance have joined forces with FloodRe to provide homeowners with premium reimbursements to build up flood resilience. The reimbursements will cover costs up to £10,000 over and above the cost of flood repairs and losses, to be used for protective measurements.
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ESG commitments
Allianz and Munich Re boycott coverage for African oil pipeline (The Insurer – subscription required)
Allianz and Munich Re have joined AXA, Hannover Re, SCOR, Swiss Re and Zurich, by pledging to not underwrite TotalEnergies’ controversial East African Crude Oil Pipeline (EACOP). EACOP is currently under construction and intended to transport crude oil from Uganda’s oil fields to the Port of Tanga, Tanzania on the Indian Ocean.
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U.S. insurance commissioners endorse internationally recognised climate risk disclosure standard for insurance companies (NAIC)
A bipartisan group of state insurance regulators in the US have adopted a new standard for insurance companies to report their climate-related risks, in alignment with the international Task Force on Climate-Related Financial Disclosures (TCFD). The standard will overhaul the current National Association of Insurance Commissioners (NAIC)’s annual climate risk disclosure survey.
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The Hartford commits to net-zero across its operations by 2050 (The Insurer – subscription required)
The Hartford has committed to achieving net-zero greenhouse gas emissions across its underwriting and investment portfolios by 2050, as a part of a range of ESG commitments. The US insurer stated that it will balance the impact to all stakeholders as it considers initiatives, policies and business decisions to achieve net-zero, with shareholder value.
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UN-backed expert group launched to help assess corporate and investor net-zero targets (ESG Today)
UN announced the launch of a new ‘high-level expert group’ tasked with developing standards used to set, measure and track net-zero commitments of businesses. The launch of the group comes as companies across regions and sectors make net-zero commitments, with the goal to ensure these commitments are science-aligned and have sufficient actions and plans in place to reach the goals.
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ESG investment focus
Private equity, ESG to drive insurance investments: Goldman Sachs (Insurance insider – subscription required)
According to a recent Goldman Sachs asset management survey, Insurers are planning to boost investment in green bonds over the next year as they prioritise yield and ESG factors in their investment decisions. The survey of 328 insurers found that 42 percent are planning to increase their allocation to green or impact bonds.
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