Blog

Jo Ball – Political Risk and Credit, and Sustainability Officer

It has never been more important for businesses to step up and take account of their environmental impact. We are proud to say that ASL has become a Carbon Neutral Business, working with Carbon Neutral Britain to offset our carbon footprint.

We have achieved this through the Carbon Neutral Britain Climate Fund™ offsetting our Carbon Footprint by contributing to global renewable projects such as the Burgos Wind Farm in the Philippines, Hydroelectric Power in the Amazon, Brazil, and Rice Husk Power in Cambodia.

The insurance industry in general, and the Political Risk and Trade Credit sector in particular, have been taking steps to move this issue up the agenda; so what other initiatives are they carrying out at the moment?

The Industry

The drive for sustainability is an opportunity for the insurance industry to align itself with insureds and to influence corporate behaviour. Climate change will inevitably result in more frequent and severe losses, so the impetus to counteract climate change is a win:win for the planet, insureds and of course insurers.

We have all seen the Climate campaigners outside Lloyd’s spilling ‘oil’, and the underground network flung into disarray in an attempt to draw attention to the cause. Never has the industry been more alive to the risks that can come from insuring activities which could be harmful to the planet.

Insurers are influential investors – they can have an outsized impact on the transition to a low carbon economy if they channel their investments accordingly and consider long term growth and development.

The sector is increasingly supporting low-carbon technologies that will contribute to achieving climate neutrality and help to tackle environmental and social issues.

It is encouraging to see insurers taking such positive steps in a variety of ways, ranging from their own investments and approach to projects and customers, to accounting for direct emissions, and the responsibility of their providers.

Swiss Re, for example, have introduced strict ESG criteria for their own investment portfolio, with processes designed to reduce CO2 emissions on the assets and liabilities sides of their balance sheet to “net zero” by 2050, now expected to be achieved by 2030.

Political Risk and Trade Credit

The Political Risk and Trade Credit sector is focussing on ESG and in particular, paying close attention to Responsible Investment.

Insurer, Aspen, has launched an ESG integration strategy for its credit and political risk portfolio through “Project Leaf”, an 18-month collaboration, whereby the team has committed to maintaining 66% of CPR premiums originating from transactions with a favourable ESG classification by 2026.

As announced during COP26, Aspen and Brokers, ​BPL Global, are amongst several partnering on the launch of a new company that will guarantee climate bonds issued on the London Stock Exchange.

Another Broker, The Texel Group, is the first specialist credit & political risk insurance broker to become a signatory of the United Nations Principles for Sustainable Insurance Initiative.

These are but a few examples of climate friendly initiatives being taken in the market.

Conclusion

Sustainability is on the up and likely to determine our behaviour in the future. Insurers can leverage their unique position both as underwriters and as investors to address sustainability issues and make the world a better place. Every contribution helps, and we are pleased to be doing our bit and to be part of this resourceful industry[1]. The challenges can be unique to each insurer, but the key is to understand the issues, identify the risks and opportunities, and work to implement innovative solutions.

[1] Through the Carbon Neutral Britain Climate Fund™, we’ve offset our Carbon Footprint by contributing to global renewable projects Certified via the Verra – Verified Carbon Standard (VCS), the Gold Standard – Voluntary Emission Reductions (VER) and the United Nations – Certified Emission Reductions (CER) programmes.