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CLIMATE CHANGE ROADMAP

 

 

ABI Roadmap: One Year On

The ABI published our Climate Change Roadmap in July 2021 – this set milestones that must be met by 2025 to keep our sector on track halving emissions by 2030 and reaching Net Zero by 2050.  

Our Climate Change Roadmap focuses primarily on our sector’s role in supporting the delivery of the UK’s Net Zero strategy and meeting its carbon budgets, identifying areas where the ABI’s diverse membership can collaborate to drive meaningful action.

Publishing the Roadmap was intended to be the starting point for raising the ambition of our own membership and our wider sector in addressing climate change. “The ABI has done great job in helping the insurance industry focus on climate change and the associated risks and keep abreast of regulatory expectations in this space.  This has included providing updates as consultations are published and coordinating the industry response.  The ABI working groups have been useful in moulding and shaping our knowledge and understanding to build on our strategy, in turn supporting the development of our disclosures and our sustainability story.  Particularly helpful are the regular one-to-one catch-up calls for informal discussions.

The ABI Climate Roadmap was developed by a Board sub-group of CEOs in 2021, with the intention that it would help the wider sector benchmark themselves against best practice. We are pleased that other ABI members have been able to use the Roadmap to develop their own strategies, including long-term savings provider Just and general insurance provider Ageas.

David Rorrison, Director of Enterprise Risk, Just Group plc said:

The ABI has done great job in helping the insurance industry focus on climate change and the associated risks and keep abreast of regulatory expectations in this space. This has included providing updates as consultations are published and coordinating the industry response. The ABI working groups have been useful in moulding and shaping our knowledge and understanding to build on our strategy, in turn supporting the development of our disclosures and our sustainability story.  Particularly helpful are the regular one-to-one catch-up calls for informal discussions. The ABI roadmap has played a key role over the past year demonstrating the industry’s commitment to play its part in seeking to mitigate the impacts of climate change. The roadmap helped us to align to science meaning that our published targets were seen as positive by external stakeholders.”

Adam Clarke, Chief Underwriting Officer and executive champion for ESG, Ageas said:

The ABI’s Climate Change Roadmap is something we wholeheartedly support and we’re proud that several of the recommendations within it are already well embedded in our operations here at Ageas. For example, our award-winning green parts programme is contributing to the circular economy through the reuse of parts, resulting in reduced demand for more plastic and metal parts to be produced. “Despite this we as a business and as an industry recognise that there is always more we can do. We’re therefore pleased that the ABI’s Climate Change Roadmap is an ever-evolving document, which seeks to push the agenda for further action on climate change.”

The ABI roadmap has played a key role over the past year demonstrating the industry’s commitment to play its part in seeking to mitigate the impacts of climate change. The roadmap helped us to align to science meaning that our published targets were seen as positive by external stakeholders.”

To coincide with our 2022 Climate Summit, we have published an updated version of our Climate Change Roadmap. These updates ensure that our Roadmap is aligned to the wider public policy agenda and the latest climate science. We hope that this will remain the first port-of-call for those within our sector looking to take action on climate change.

We also committed to providing an annual update on our progress in driving forward the work outlined in the Roadmap. We have provided updates on the progress made on each of our four pillars since the Roadmap was launched, and then identified the actions we want to see in the following twelve months.

We believe we have made meaningful progress in all four areas of our Roadmap. Some of the most important developments include:

  • Significant progress setting transparent Net Zero targets and joining the Race To Zero
    • amongst the marketshare represented by ABI members, c89% of the Long-term Savings market and c54% of the General Insurance market is part of the UN-backed ‘Race To Zero’ campaign.
    • This progress has been acknowledged with the ABI being granted ‘Race To Zero accelerator’ status by the campaign.
    • Of those not yet part of Race To Zero, a survey of ABI memers showed that 94% of respondents are currently considering becoming a ‘Race To Zero’ member
  • Across the whole sector, good progress is being made setting targets and preparing Transition Plans:
    • 27 out of 34 respondents (79%) have already set a Net Zero target that has been approved by their Boards
    • 30 out of 34 respondents (88%) already developing their Net Zero Transition Plan, well in advance of this becoming mandatory.
  • Development of Good Practice Guidance on engaging with industry supply chains to reduce emissions linked with claims handling and servicing customers
  • Further efforts to support resilience, building on industry initiatives such as Flood Re’s Build Back Better scheme

Even in the context of growing pressures on energy security and living costs, the risks of failing to tackle climate change are so severe that we have to stay focussed on delivering on the four pillars of our Roadmap.

 

 

 

How the Government can maximise the impact of our sector

The ABI and its members remain committed to working constructively with the Government to play our part in delivering its Net Zero strategy and helping meet the Chancellor’s ambition to make the UK the first Net Zero aligned financial centre.

The ABI will shortly be responding to the Government’s consultations on the Green Finance Strategy and the Transition Plans Taskforce. In the following updates, we have outlined a range of policy proposals, and we will be elaborating on these further when we respond to these consultations.

By delivering on these priorities, the Government has an opportunity to build on the enhanced reporting and disclosure framework it is developing through its Greening Finance Roadmap (including the Green Taxonomy, the FCA’s proposed investment labelling regime and the work of the Transition Plan Taskforce – all initiatives the ABI is actively supporting and contributing to).

We have identified five key actions for Government to maximise the impact our sector can have:

  1. Strengthen the industry’s role as key investors in Net Zero infrastructure: let us put more of our capital into green investments and ensure we are central to the conversation about how green infrastructure is developed and funded. Unlock the significant investment potential from the insurance and long-term savings industry through meaningful reform of the Solvency II regulatory framework, and bring investors into the heart of the decision making process on green infrastructure and technology development.

  2. Publish a strategy for delivering the required investment in reducing carbon emissions in homes and commercial buildings. The UK has a strategy to decarbonise the entire transport system – we need Government to set out the same clarity on targets for the UK’s building stock that delivers energy efficiency and low carbon heating without increasing any building safety risks. This can enable the sector to support not just lower emissions but lower bills and warmer homes.

  3. Improve the planning system to ensure Net Zero alignment, including by reducing development in high flood risk areas and ensuring new homes are resilient to climate risk. This must be underpinned by a long-term funding commitment to investing and maintaining the UK’s flood defence infrastructure.  

  4. Ensure all sectors produce consistent and quality data on carbon emissions. Businesses cannot accurately calculate progress towards Net Zero targets without consistency across the carbon emission data published across their full portfolio.

  5. Put the protection of the natural environment and our ecosystems into climate change policies. Net Zero targets alone are not enough. The Dasgupta Review sets out how we can achieve sustainable economic growth whilst ensuring the demands on Nature do not exceed its supply. We need Government guidance on how businesses should respond to this – customers and international regulators are asking us.

A summary of the four pillars and progress updates can be found below.

Pillar One: Meeting Net Zero by 2050

The UK Insurance and Long-term Savings sector is committed to
reaching Net Zero by 2050 and to the global target of a 50% reduction in emissions by 2030 – in line with the Intergovernmental Panel on Climate Change (IPCC)’s Paris Climate Goals.

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Pillar Two: Unleashing Investment Capacity

The industry has a key role in providing the scaled investment capacity that will be needed to phase out carbon-intensive activities and replace them with sustainable and renewable innovations.

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Pillar Three: Sustainable Industry Operations

The Insurance and Long-Term Savings sector aims to reach Net Zero within its own directly controlled operations by 2025. By 2030, we aim to have engaged pro-actively with suppliers to include supply chain emissions within the scope of the sector’s target of reducing overall emissions by 50%.

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Pillar Four: Helping Society Adapt

We can also play a wider role in helping the customers and stakeholders that we work with adapt to a changing climate – helping them take action to reduce emissions, mitigate the impact of temperature rises and become more resilient to the effects of a changing climate.

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