23 January 2023 - The ClimateWise Principles Independent Review 2022 shows member insurance industry firms have made progress in disclosing their preparedness and response to climate change.
ClimateWise, convened by the University of Cambridge Institute for Sustainability Leadership (CISL) is in its fourteenth year of reporting against the ClimateWise Principles, which has been aligned with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations since 2019. The report indicates ClimateWise has built momentum across financial services by increasing its membership and securing a year-on-year rise in average member scores.
Nina Seega, Director of Sustainable Finance, CISL said: “The rapid expansion of the ClimateWise membership reflects the growing concern within the industry over the climate emergency. This year’s ClimateWise Principles report demonstrates the action members have taken in developing risk management solutions, integrating climate risk into operating structures, operationalising voluntary reporting, as well as demonstrating leadership at the highest global level on the importance of action on climate change. The focus for the industry now needs to move to insurers, reinsurers and brokers becoming long-term partners and essential enablers of enhanced climate financing, climate resilience building and climate solutions.”
The review indicates the size and diversity of ClimateWise membership is steadily growing - now standing at more than 40. Members continue to make progress against the Principles, with 2022 seeing a year-on-year rise in average member score from 68 per cent to 69 per cent. Top-performing members are consistently exceeding 90 per cent, demonstrating meaningful progress against the current set of Principles.
Kevin O’Donnell, President and CEO of RenaissanceRe and Chair of ClimateWise said: “As expert managers of risk and volatility, ClimateWise members are uniquely positioned to understand and mitigate the potential impact of climate change on society. In this year’s Principles Independent Annual Review, the ClimateWise membership continues to display the insurance industry’s focus on employing risk management expertise to drive forward the transition to a climate-resilient future and seek out opportunities to develop innovative product solutions.”
Following the success of the pivotal COP26 talks hosted in the UK, 2022 was a crucial year for firms to embed climate action. Florida’s hurricane Ian, the US heatwave, drought in Europe, and devastating floods in Pakistan are just four examples of severe climate impacts experienced across the world last year.
Against this background, the report outlines four key actions where the membership and the wider industry should continue to advance the long-term change required by its customers and society at large. These include the need to:
- Accelerate climate action and increase stakeholder engagement;
- Overcome implementation barriers and embrace decision making with imperfect information and lack of available data;
- Fully integrate ESG reporting frameworks and embed them into the business and long-term strategic plans;
- Increase broader understanding that climate change, nature loss and social challenges need to be addressed in a systemic manner in order to maximise potential synergies and cost efficiencies and avoid unintended consequences of tackling issues in isolation.
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.