More metrics but still a wide range of disclosures

Last year, we undertook a study of the climate change disclosures of ten UK life insurers. We found that there was a wide range of disclosures reflecting the various stages that insurers were at in embedding climate change risks.

We have repeated the exercise based on 2020 reports and accounts and extra disclosures. Our key findings are:

  • More firms have disclosed climate related goals
  • Greater disclosure of climate related metrics

This blog discusses these findings:

Climate related goals

In 2019 reports, only two large firms made clear statements of climate related goals. This has significantly increased this year. Half of the firms make explicit statements of intent to support Paris Agreement or UK Carbon neutrality targets. A number have signed up to initiatives such as the United Nations Principles of Responsible Investment, Energy Savings Opportunity Scheme or the Science Based Target Initiative.  

New targets were disclosed in respect of the following:

  • Reducing carbon emission intensity
  • Reducing paper usage
  • Reducing total waste
  • Sourcing renewable electricity
  • Reducing travel emissions
  • Divesting from firms with significant coal extraction/burning
  • Commitment to planting trees

However, four companies still make no explicit statements of intents and two of the companies that commit to achieving high level goals don’t set out any explicit targets consistent with these goals.  

Climate related metrics

As you would expect, with an increase in measurable goals comes an increase in disclosed metrics.

Three new companies disclosed their carbon emissions and intensity (including two split by Scope) on top of the three doing this last year.  

Other metrics disclosed included:

  • Portfolio temperature alignment
  • Climate Value-at-Risk (VaR)
  • Paper / Water usage
  • Waste
  • Percentage of Green Assets

However, four firms still do not disclose any climate related metrics.

Other findings

  • Firms have changed little in terms of climate risk ownerships, with senior management still maintaining key involvement and oversight.
  • Greater detail can be found about firms’ risk frameworks
  • Scenario testing or modelling has not changed much, with many gearing up to the 2021 Bank of England Exploratory Scenario exercise. 

The ten companies reviewed were Aviva, Just, L&G, NFU, OneFamily, PIC, Rothesay, Royal London, Scottish Friendly and Wesleyan.

"It is clear that there has been significant progress made by a number of firms and that we are seeing more statements of intent and disclosure of climate related metrics. However, there is still a wide range of approaches within the industry, reflecting differences in strategy."

To discuss deriving the appropriate goals, metrics and risk management for your business, please contact any of our consultants or you can contact me below. 

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