While last year’s COP26 climate summit delivered new commitments such as combating deforestation, lowering methane emissions, and accelerating the phase-out of coal, the echoing consensus seems to be that the achieved progress was not enough, and the world still remains off track to counter the climate crisis. More action is therefore required from public and private actors in every sector of the economy to deliver a net-zero future.

Making credible commitments towards net-zero emissions

Last year, a team of non-profit organizations and research labs have set up the Net Zero Tracker to assess companies’ environmental commitments. It found that while 622 of the world’s 2,000 largest publicly-traded companies have technically committed to a net-zero strategy, the actual policies of many of them undermine real change at achieving zero-carbon operations. Often, that’s because they do not include significant upstream or downstream Scope 3 emissions, or because they depend on unreliable or unproven strategies to offset their carbon production.

The financial industry in particular has a driving impact on the decarbonization of other industries. Insurance companies may not have the most substantial direct carbon footprint, but have adapted to a changing climate and consider climate-related risks on their portfolios. As outlined by TCFD, these risks may range from physical risks from changing frequencies and intensities of weather-related perils, transition risks resulting from a reduction in insurable interest due to a decline in value, changing energy costs, or implementation of carbon regulation, and liability risks that could intensify due to a possible increase in litigation.

Benchmarking the insurance industry’s climate commitments and actions

Finch & Beak’s forthcoming benchmark study on insurance companies will provide a deep-dive into the status of 25 European insurance companies’ climate strategies and broader ESG performance. The research investigates among others whether the companies have set (science-based) targets for decarbonization if they have clear commitments for the phasing out and divestment of fossil fuels, and if they are reporting following the TCFD-recommendations.

Storebrand: net-zero greenhouse gas emissions across the investment portfolios by 2050

One of the featured companies is Storebrand, a leading player in the Nordic market for long-term savings and insurance. The company has put climate front and center of its investment approach and defined an updated climate policy for investments in summer 2020, emphasizing reducing emissions in the real economy.

A year earlier, in 2019, Storebrand was one of the founding members of the United Nations-convened Net-Zero Asset Owner Alliance. The members of the Alliance commit to transitioning their investment portfolios consistent with a maximum temperature rise of 1.5°C above pre-industrial temperatures, taking into account the best available scientific knowledge and regularly reporting on progress.

Tools used by Storebrand to achieve its commitment are investing in solutions, use of sustainability ratings, divestment and active ownership, and cooperation with other financial institutions to promote standards for measuring, monitoring, and reporting on climate risks.

Allianz’s three-tiered climate strategy

Another assessed company isAllianz. During its last materiality assessment, the company defined climate change, environmental and social products, and environment as its top 3 material topics. The company’s climate change strategy consists of three main priorities:

• Anticipating the risks of a changing climate
• Caring for the climate vulnerable
• Enabling the low-carbon transition

Allianz works towards these objectives through systematically considering climate and sustainability criteria in its insurance and investment business, providing sustainable solutions for customers (such as including insurance that supports renewables and energy efficiency), and strategic investments in low-carbon assets. 

Join the webinar on Tuesday 1 March

Diving further into this topic, Finch & Beak’s ESG Acceleration Webinar on Tuesday 1 March will provide insights into materiality activation for climate change. Marcus Bruns, Nordic Head of Sustainability at Storebrand, will present the company's climate strategy and how Storebrand is working to have net-zero greenhouse gas emissions across its investment portfolios by 2050. Click here to read more and sign up.

If you are ready to accelerate your net-zero ambitions or activate your materiality assessment to enhance your company’s sustainability strategy, get in touch with Johana Schlotter at johana@finchandbeak.com or call +31 6 28 02 18 80 to discuss how Finch & Beak can support you in meeting your ambitions.

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