This week, the Insurance Council of Australia (ICA) released a climate change roadmap to help insurers achieve net zero emissions for their operations by 2030 and across their activities by 2050. “Towards a Net Zero and Resilient Future” received strong support from Australia’s insurers, including Allianz, Zurich, and Suncorp.
“By using this roadmap, insurers can play their uniquely important role in limiting the consequences of climate change, at the same time reaping the rewards of the massive economic shift that’s taking place right now and that will only grow in coming decades,” said ICA CEO Andrew Hall.
But does the roadmap go far enough?
Some global firms have set stronger targets. Last year, Ernst & Young Global Limited, commonly known as EY, the London headquartered multinational professional services company, committed to net zero by 2025.
“We believe that combatting climate change is a vital element of building a better working world,” said Carmine Di Sibio, EY global chair and CEO.
Read more: ICA releases net zero roadmap for insurers
In October, EY released its fourth Global Climate Risk Disclosure Barometer. The Barometer provides a snapshot of climate-related disclosures by more than 1500 companies around the world, including more than one hundred from Australia.
“The world remains far from where we need to be in terms of allocating capital to the processes of decarbonisation and resilience,” said Terence Jeyaretnam (pictured above), EY's APAC leader and partner for climate change and sustainability services.
What does Jeyaretnam think of the ICA’s roadmap? He suggested that the roadmap is a positive start that could be falling short.
“The insurance industry, I think, has a much bigger role in terms of advocacy, and advocacy around policy and customers, which I think the sector is starting to do well, and the roadmap does commit to doing more in that space,” said Melbourne-based Jeyaretnam.
The climate change specialist said there are “essentially” four targets in the roadmap.
“There’s an operational net zero target of 2030, and others including supply chain, underwriting and investments latest net zero by 2050,” he said. “I think that's in line with where we need to go, but I would like to see ICA members being as bold as possible within the 2050 construct, given that the sector is at the pointy end of climate risk.”
Jeyaretnam encouraged insurance industry companies to aim for net zero by 2043.
“For Australia, if we look at our trajectory, we need to be net zero, for example, in the financial sector, by about 2043,” he said. “It would be good to see ICA members follow Net Zero Insurance Alliance trajectories for Australia.”
The ICA’s roadmap suggests various measures to help insurers achieve net zero for their operations by 2030, including investing in energy efficiency, rooftop solar for office buildings and transitioning corporate fleets to electric.
The roadmap also outlines a pathway for insurers to undertake the more difficult task of reducing emissions associated with underwriting activities, the claims supply chain, and investments to achieve net zero by 2050.
“As a financial service focused on risk, insurance is already bearing the cost of worsening extreme weather driven by climate change,” said Hall. “The total cost of these extreme weather events is forecast to be unlike anything we have experienced, with climate-related extreme weather events expected to cost $39.3 billion a year by 2050.”
Allianz Australia welcomed the ICA's climate change roadmap.
“At Allianz, our purpose is to help secure the future for our customers, employees, and the community,” said Jodi Fullarton-Healey, chief general manager of the corporate governance and legal division at the firm. “Allianz supports the ICA's climate change roadmap as an excellent step in ensuring our industry is working towards clear goals.”
Zurich Financial Services Australia (Zurich), which has been carbon neutral since 2014 and is one of the founding members of the Net Zero Insurance Alliance, also welcomed the announcement.
“Zurich has had ambitious net zero targets for some time and we are proud of the progress we have made,” said Shaneen Marshall, head of strategy and sustainability at Zurich Australia and New Zealand. “This transition requires significant collaboration and partnership, so joining forces with our industry to support the ICA climate change roadmap is an important step.”
Suncorp Group (Suncorp) offered similar sentiments.
“The ICA climate change roadmap is the insurance industry's signal that we are determined to play our part in enabling the transition of our economy towards net zero,” said Suncorp Group CEO for product and portfolio Lisa Harrison.
