SUSTAINABLE INSURANCE: Climate Change and Financial Reporting by Insurers nick robins, Co-director, UNEP Inquiry IAIS Global Seminar, windsor, 30 June 2017

SUSTAINABLE INSURANCE Sustainability factors – notably climate change – are increasingly material for insurance firms and supervisors are starting to respond The Sustainable Insurance Forum is the new platform for supervisors to share experience and work together Climate risk and disclosure has emerged as a priority theme The FSB’s Task Force on Climate-related Financial Disclosures (TCFD) provides a market-based framework Supervisors have a role to play to promote high-quality disclosure

SUSTAINABLE INSURANCE Sustainable Insurance: A strategic approach to ensure that activities across insurance value chain are conducted in responsible and forward-looking way Achieved by: identifying, assessing, managing and monitoring the risks and opportunities associated with environmental, social and governance issues Supervisory Relevance: safety & soundness in the transition to sustainability MARKET ACTION POLICY LEADERSHIP UN-PSI INQUIRY The four principles: Global sustainability framework for insurance industry 100 organizations: major global insurers, supporting institutions > 20% of world premium volume, US$14 trillion in assets under management Several insurance supervisors have signed the principles in support Global research and policy initiative for sustainable financial systems Supporting collaboration at national and international levels (i.e. G20) Special focus on role of insurance in promoting sustainable development 2016: ‘FROM MOMENTUM TO TRANSFORMATION’

INSURANCE SUPERVISORS ARE TAKING ACTION FRANCE: Requirements for investors (including insurers) to disclose information on climate risks & alignment with energy transition goals UK: Assessment of the impacts of climate change on the UK insurance sector, now advancing a bank-wide strategy on climate and green finance NETHERLANDS: Survey of carbon asset exposures to support assessment of energy transition risks; integrating climate factors into stress testing CALIFORNIA: Mandatory requirements for insurance companies’ disclosure of investments in fossil fuel enterprises (coal, oil, gas and utilities) MOROCCO: Implementing a National Roadmap for Sustainable Finance including the insurance sector, considering climate factors BRAZIL: 2016 survey of insurance firms to understand the management and strategic perception of environmental issues, including climate change

THE SUSTAINABLE INSURANCE FORUM Global network of insurance supervisors and regulators working together to strengthen their response to sustainability challenges Objective: platform for international collaboration among supervisors, facilitating knowledge sharing, research, and uptake of policy innovations Launch: December 2016, San Francisco, USA – Brazil, California, France, Ghana, Jamaica, Morocco, Netherlands, Singapore, the UK, and IAIS Six-track work programme: Disclosure Access & Affordability Sustainable Insurance Roadmaps Climate Risks to Investments Disaster Risk Reduction Capacity Building for Supervisors

FINANCIAL STABILITY BOARD’S TASK FORCE: AN INDUSTRY-LED REPORTING FRAMEWORK Source: FSB TCFD, 2017

SUPERVISORS & CLIMATE DISCLOSURE February 2017: SIF joint response to the FSB TCFD report consultation draft Motivation: Role of supervisors to ensure safety and soundness of firms and markets, including through market discipline Supporting uptake of TCFD recommendations Promoting awareness of the recommendations among regulated firms Building capacity & sharing tools for scenarios and metrics Incorporating climate disclosures into supervisory activities Integrating climate disclosure into Sustainable Insurance Roadmaps Endorsing the recommendations, considering mandates and objectives

SUSTAINABLE INSURANCE FORUM - NEXT STEPS 2ND SIF Meeting: July 1st, UK Special focus on Climate Risks to Investments and Reserves: Sharing knowledge and lessons from current practice Response to FSB TCFD Final Recommendations Forthcoming paper: “Sustainable Insurance: The Emerging Agenda for Supervisors and Regulators” 3rd SIF Meeting: alongside IAIS Annual Meeting, Kuala Lumpur Delivering Practical Outputs: Best practice guidance on risk assessment, design of sustainable insurance roadmaps, as well as capacity building for supervisors.

CONTACT AND INFORMATION www.unepinquiry.org/sif www.unep.org/inquiry/ @fininquiry NB: PRESENTER TO PERSONALISE THIS SLIDE Nick Robins, Co-Director Nick.Robins@unep.org Jeremy McDaniels, Programme Manager Jeremy.Mcdaniels@unep.org Mahenau Agha, Head of Outreach mahenau.agha@unep.org