5 June 2024 - CISL’s ClimateWise, in collaboration with Howden, the international insurance intermediary group, has published one of the first nature-related financial opportunities use cases, showcasing the role of mangroves, coral reefs and seagrasses in supporting and protecting near-shore fisheries in Bolinao, the Philippines.
Download the use case
Members of ClimateWise worked with CISL and academic partners from the University of Cambridge to determine a common language and framework for financial institutions to identify and assess nature-related financial risks and opportunities so that these can be measured and managed.
This use case is one of a series, each assessing a specific type of nature-related financial opportunity, aimed at galvanising further assessments of nature-related opportunities across the insurance industry. The opportunity use cases were developed using the LEAP approach (Locate, Evaluate, Assess and Prepare) from The Taskforce on Nature-related Financial Disclosures (TNFD) framework as a grounding model.
Through its membership of ClimateWise, Howden has explored the nature-related financial innovative opportunity, focusing on the role of mangroves, coral reefs and seagrasses in supporting and protecting near-shore fisheries in Bolinao, Philippines, and how insurance could be used to help protect the financial resilience of small-scale fishing communities.
The Philippines boasts a diverse marine ecosystem that is crucial for coastal communities, offering benefits like fisheries, tourism, and cultural and coastal protection. However, the Philippines faces significant vulnerability to climate change, especially from typhoons and storm surges, which pose threats to lives, livelihoods, and ecosystems. By investing in equitable insurance solutions, there is potential to safeguard biodiversity, ecosystems, and the resilience of coastal communities, ultimately contributing to sustainable development in the region.
The use case emphasises the importance of insuring natural assets like mangroves, corals, and seagrass beds, and proposes various potential insurance solutions. The design and implementation of insurance products are crucial, focusing on incentivising resilience, promoting conservation through carbon credits, incorporating gender considerations, establishing insurable interest, and ensuring financial sustainability. Such measures aim to make insurance more inclusive and effective, tailored to the needs of coastal communities and ecosystems. Supporting Nature-based Solutions (NbS) is essential for the insurance industry's long-term financial viability amidst increasing climate risks.
Quotes
Dr Nina Seega, Director of the Centre for Sustainable Finance, CISL, said:
The insurance industry is absolutely key for enabling investment into nature. These use cases demonstrate how insurance products can be used to support emerging markets and developing economies in building resilience to climate and nature-related financial risks and paving the way for a more sustainable and resilient economy overall.
Laura Deltenre, Senior Project Manager, Centre for Sustainable Finance, CISL, said:
An estimated 1 million species are at risk of extinction, with alarming implications for ecosystems worldwide. There is a need for insurance companies to engage on nature loss and transition towards nature-positive strategies. Using the TNFD’s LEAP approach, ClimateWise and two of its members, Howden and MS Amlin, have developed two of the first nature-related financial opportunities use cases. They highlight the essential role of natural assets in fostering financial resilience and protecting biodiversity.
Daniel Fairweather, Director of Food Systems and Biodiversity, Climate Risk and Resilience, Howden, said:
Coastal communities and marine ecosystems are intrinsically linked, with severe weather and climate events causing disruption to both. This report identifies a role for insurance in building resilience in coastal communities and the marine ecosystems supporting them. Access to insurance and finance can incentivise environmental stewardship and risk management to help build both climatic and financial resilience, supporting those communities and livelihoods most exposed to climate change. This report should help inform investors, insurance practitioners and risk managers about the importance of ecosystems and nature in protecting and supporting economic activity in some of the most climate exposed regions and sectors.
For those looking to upskill their teams or enhance their own understanding of sustainability and ESG you may be interested in CISL’s latest self-paced online course, Sustainable Finance Foundations: Banking, Investment and Insurance. The course features six comprehensive modules covering the why, what, and how of sustainable finance. With contributions from global experts and senior leaders, you'll benefit from their enthusiasm and deep expertise, making for a truly engaging learning experience for a global audience.
Citing this report
University of Cambridge Institute for Sustainability Leadership and Howden (CISL and Howden), 2024. Nature-related financial opportunity use case: The role of mangroves, coral reefs and seagrasses in supporting and protecting near-shore fisheries in Bolinao, the Philippines. Cambridge, UK: University of Cambridge Institute for Sustainability Leadership.
