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As we continue to learn more about the human impact on the environment, and the effects of global warming become more widespread, it is necessary to consider how the insurance profession can evolve in line with these changing circumstances. The average global temperature has already increased by 0.8 degrees Celsius over the last century. This may not sound like much, but the scientific community is in almost unanimous agreement that an increase of two degrees Celsius is the point at which more than nine billion people will essentially be living on an ocean planet. Therefore, the question we must ask ourselves is what we can do as a profession to insure for an unsure future.
Sustainability is an increasingly important issue for many different industries, particularly manufacturing, but it can definitely be a relevant consideration for insurance, too. Though we don’t produce physical products, we certainly supply them in the event of a household or motor claim, giving us the enviable position of leveraging our suppliers to encourage sustainability.
In 2012, the UN Environment Programme agreed on key principles for sustainable insurance. These included such commitments as to work with government regulators to promote widespread action on environmental issues, to embed environmental wellbeing at the core of business decision making, and to work with clients and business partners to raise awareness of environmental issues.
Having agreed these principles, Swiss Re has since integrated environmental, social and corporate governance (ESG) benchmarks into its investment decisions, with commitments to giving specific considerations on matters such as animal testing, mining, nuclear non-proliferation, and oil and gas. This represents a clear message that business takes sustainability seriously, and an organisation as large as Swiss Re can be a real leader for change, and so I applaud them for their commitments, and am glad to see others following suit. The ripple effect of change can be seen in the launch of a guide for managing the environment specifically for the insurance industry, in March of this year at the Un-Allianz event, which is the first of its kind.
The profession has exhibited great initiatives to promote sustainability, such as creating tailor-made insurance policies specifically for businesses which support sustainable initiatives. Insurers are increasingly opting to implement policies restricting their investment strategies with a mindfulness to sustainability. This includes promoting investment in large-scale renewable energy projects for example, which has further ramifications as these industries continue to grow in prominence by the benefit of this investment. As a profession, insurers need to look at investing in sustainable assets and, in turn, they need to consider the importance of no longer investing in industries that may struggle to pass environmentally friendly criteria.
Environmental activism group Extinction Rebellion has gone to great lengths of late to make their voices heard, and the public at large are themselves starting to take more notice, to the point where they are closing down city centres as large as London with protests in defence of the environment. The consumer is making decisions with these considerations in mind, and as the wave of public awareness of these issues spreads wider afield, the way a company handles sustainability could become one of the most significant factors of their competitiveness.
It is clear that the insurance profession is taking sustainability seriously, and rightly so. It is important to remember that as a profession which manages assets of as much as $24 trillion, we have significant potential to act as a catalyst for social change, and we should seize this opportunity with both hands. Managing risks is at the heart of what the insurance profession does, and nothing should come before ensuring the safety of our planet. After all, even if a planet which is two degrees Celsius warmer can be made to be insurable, one which is three degrees Celsius warmer certainly cannot.
