United Nations Secretary-General António Guterres urged insurance companies to align their underwriting and investment practices and policies with global climate goals, in a speech Tuesday at the Insurance Development Forum’s Summit 2021.
“As insurers and as investors, the insurance sector has a key role to play. Every country, city, financial institution, and company needs to adopt plans for transitioning to net-zero emissions by 2050. That means taking decisive action now.”
As countries, businesses and investors increasingly move towards more climate resilient models, financial institutions and insurance providers face growing pressures to adopt risk models that take account of the impact of the transition to a low carbon world on the companies and businesses that they engage with. Insurance company Allianz, for example, announced that it would no longer to provide insurance or financing to coal-based businesses after 2022, unless they present robust and credible transition plans.
Guterres called on insurers to take part in the global transition to a net zero economy through the introduction of net zero pledges in their underwriting practices, particularly regarding fossil fuels, and to help bring about an end to coal:
“I encourage more to join collective efforts and ensure asset owners send a strong signal across the investment chain. We need net zero commitments to cover your underwriting portfolios, and this should include the underwriting of coal — and all fossil fuels. COP 26 must signal the end of coal. I support the G7 commitment to end all public international support for coal by the end of this year. Your industry needs to follow suit.”
“Your investments should not be contributing to climate pollution but should be directed towards climate solutions. Invest in renewables, low- and zero-carbon transport and climate resilient infrastructure.”
Commenting on the UN chief’s speech, Peter Bosshard, Global Coordinator of NGO coalition Insure Our Future said:
“Today’s call to action from the UN Secretary General and the recent 1.5C report by the International Energy Agency leave insurance companies no hiding place. They have to accept the scientific evidence and immediately stop insuring coal, new oil and new gas projects or abdicate their pretensions of climate leadership.”