World’s biggest insurance firms slammed for ESG blind spots

Pictured: The Lloyds of London building

Compiled by ShareAction, the analysis assessed companies across the property, casualty, life and health insurance spaces.

It looked at the strength of the companies’ overall governance structures and their engagement with clients on ESG-related topics. It also looked at whether each firm had a comprehensive plan to assess current and potential clients’ negative climate, nature and/or social impacts, and firm up exclusions.

In total, 30 metrics were assessed. ShareAction said performance “across the board” was “troublingly weak”.

Half of the companies assessed were given a grade of either ‘E’ or ‘F’ overall – the two lowest possible grades. The poorest scorers include Lloyd’s of London, Sony Financial Group and Nationwide Mutual Insurance Co. The median score across all insurers was just under 20%.

ShareAction’s head of financial sector research Claudia Gray said the findings show the insurance sector’s “abject failure to live up to its responsibilities to protect both people and planet”.

Climate loopholes

The analysis found that the majority (two-thirds) of property, casualty, life and health insurers have set long-term net-zero targets for their investments for 2050 or sooner.

However, many of these targets do not cover underwriting activities, and only one-quarter are explicitly stated to be aligned with a 1.5C temperature pathway. These kinds of loopholes were particularly common in the casualty and property insurance space.

Almost eight in ten of the companies did not have a climate target for 2030 or sooner relating to underwriting activities, and four in ten lack interim targets for investments.

Moreover, none of the companies have either updated their exclusions policies to eliminate investments in thermal coal and oil and gas, or have plans to do so. A small minority (5%) of the firms have stopped providing underwriting for these projects, which are misaligned with the International Energy Agency’s (IEA) recommendations for transitioning the global energy system to net-zero by 2050.

ShareAction’s Gray said that insurers “have both a moral duty and business opportunity to adopt responsible investments and underwriting activities.”

The assessment shows that few firms are primed to seize the business opportunity. Less than half show evidence that they are actively insuring and/or investing in low-carbon transition activities and fewer than one-third have published a climate transition plan.

ShareAction is calling on insurers to publish such a plan, aligned with net-zero by mid-century along a 1.5C pathway, as a priority. These plans should be water-tight against greenwashing pitfalls and grounded in climate science.

The NGO believes that if the industry fails to take this action of its own volition, policymakers and regulators should act to close the gap.

Earlier this week, the UK-based Transition Plan Taskforce (TPT) published sector-specific guidance for firms looking to produce transition plans. These materials build upon a general ‘gold standard’ framework published late last year. Click here for edie’s full story.

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