Risk managers need to be aware of how their organizations’ net-zero transition plans and environmental impact are being considered by insurance companies, a brokerage executive said during a thought-leadership session at the Risk and Insurance Management Society Inc.’s Riskworld conference Monday in Atlanta.
A large group of insurance companies have committed to having zero emissions in their insurance portfolios by 2050, said Amy Barnes, London-based head of climate and sustainability strategy at Marsh LLC.
While several insurers have pulled out of the UN’s Net-Zero Insurance Alliance, many remain committed to having net-zero emissions in their portfolio by the 2050 goal and have said they will begin reducing them significantly by 2030, Barnes said.
“Insurers who are part of the alliance have said they will reduce the carbon footprint of their insurance footprint by between 36% and 60% by 2030. That̵7;s really significant,” she said.
Insurance companies will start counting that information, Barnes said.
“While you may have less input into how your business reduces carbon, it’s a story that you need to know and need to understand because it will start to influence risk selection,” she said.
While companies in some sectors such as oil and gas will initially be more affected by insurers’ attention to climate change plans, financial services companies could also be affected, and “there is an opportunity for risk managers to make sure they are engaged now,” she said.
The move by several insurers to pull out of the Net-Zero Insurance Alliance makes it a little more difficult to navigate how insurers will implement their carbon emissions plans, she said.
“Three weeks ago I could have told you what rules the insurance companies were following. Now that the insurance companies are going their own way, there may be some real benefits to that, but it’s going to be a lot harder for us to communicate to you exactly what the expectations are” , Barnes said.