Cambridge Institute for Sustainability Leadership (CISL)
Closing the protection gap: ClimateWise Principles Independent Review 2016
December 2016 – The ClimateWise Principles Independent Review 2016 of the six ClimateWise Principles finds a second year of improved scores for members of the insurance industry leadership group. Members have demonstrated their ongoing support for the zero carbon, climate-resilient transition yet the report finds a need for the industry to do more within its investment activities.
The ClimateWise Principles guide members’ contribution to the societal transition to a zero carbon, climate-resilient economy and integrate a response to the climate risk protection gap – the growing divide between economic and insured losses - across their business activities.
Part of ClimateWise membership obliges members to report annually on their individual progress. The annual, independently audited assessment provides private individual ranking allowing members to benchmark progress against their peers. An annual, public review highlights the overall progress being made by the ClimateWise community.
Findings
The 2016 review finds that ClimateWise members are, overall, improving their response to climate change, and their role as risk managers within the communities with which they are embedded. This year saw a continued rise in the average member score, rising to 59 per cent, up from 56 per cent in 2015. Four members have now exceeded the 80 per cent mark, compared with one last year.
A particular emphasis in this year’s review has been on informing public policy making and influencing the climate change agenda more broadly. This is unsurprising given the industry’s heavy involvement in the Paris climate negotiations in December 2015. Members have also shown marked improvements in undertaking research, improving data quality on climate risk, and using the outputs of these activities to inform business decision-making and strategy. Members have also improved their ability to disclose their efforts and provide clients with the information and tools they need to help them assess their own risk exposure.
However, despite increases in overall average scores, a third of members still remain below the 50 per cent threshold. They are struggling to embed suitable responses to climate change across their business activities and efforts must be made to support this group.
More broadly there was a notable decrease in members’ reported efforts to evaluate the implications of climate change across their investment activities. This requires broader advances to be made within the financial sector to help fully understand the impact of climate risks to investment portfolios and the role insurance can play to inform this.
The ClimateWise Principles Independent Review 2016 provides a valuable insight into how a group of insurance industry leaders are positively and collectively responding to the challenges they, and society more broadly, face from the climate risk protection gap.
Citing this review
Please refer to this review as University of Cambridge Institute for Sustainability Leadership (CISL). (2016). Closing the protection gap: ClimateWise Principles Independent Review 2016. Cambridge, UK: Cambridge Institute for Sustainability Leadership.
