Some insurers recognize the significance of not only climate risk mitigation, but acting as proponents of change. Sustainable insurance leaders, like Manulife, have enacted specific climate-targeted agendas as part of their business models and products. Manulife’s Impact Agenda aims to affect change through its initiatives for lower emissions and sustainable business practices.
According to the United States Environmental Protection Agency (EPA), greenhouse gas emissions, which trap heat and warm the planet, have increased over the past 150 years – mainly due to human activities and the burning of fossil fuels. Carbon dioxide (CO2) is the primary greenhouse gas that humans emit; CO2 accounted for 79% of all the U.S. emissions from human activities in 2020, and the excess of CO2 in the atmosphere is altering the carbon-life cycle, and further warming the planet, as reported by the EPA.
Reaching a net zero emissions economy would mean removing an equal amount of CO2 from the atmosphere that is released into it, and Manulife supports the transition to a net zero economy by reducing its own emissions – the company plans to reach net zero emissions by 2050 and reduce absolute scope 1 and 2 emissions by 35% by 2035.
For its short-term goals, Manulife is actively working to certify, by 2023, that 100% of eligible Manulife Investment Management farmland is sustainably managed. The company is also reducing its paper consumption by 35% by 2025 and uses paper from verified sustainable sources.
“Sustainability is really baked into our DNA. As a life and health insurance company and an asset manager, we are invested in the health and people and our customers,” says Sarah Chapman, Chief Sustainability Officer of Manulife. “Climate change, sustainability and our broader aspects of the impact agenda absolutely drive both our business and what we believe to be the real ways that we can have a positive impact on not just on society, but through our business.”
In the insurance industry, reinsurers play just as important of a role in accelerating a sustainable future. Martin Weymann, head of the Sustainability, Emerging and Political Risk Management team at Swiss Re Group, says, “Reinsurers are risk knowledge companies, which have the capabilities to not only aggregate all the risks around the world and support and free up capital for primary insurers by reinsuring them, but have a vast knowledge across the different lines of business.”
Many of the biggest reinsurers have taken action towards addressing climate change, Weymann notes, but we are now seeing even more reinsurance companies building sustainable practices into their business’ framework.
“I would say the biggest five to 10 reinsurers are absolutely picking that up and also have sustainability related teams, but it’s now in a phase where this really gets more and more embedded into the business units,” Weymann states.
Reinsurers, too, have the ability to act as proponents of change for sustainable business practices, according to Weymann.
“Combining the risk knowledge and the ability to set a price to the risks presented by climate change, and other sustainability matters, is an important function of reinsurers. The other part, I think, is really organizing themselves into working groups to start to be able to measure certain topics, which has been a very long tradition on the physical risk side,” says Weymann. “Reinsurers, in particular, are probably the avant-garde when it comes to natural catastrophe modeling and understanding the risk since decades. But under transition risk, this discipline is much, much younger… And so the role of reinsurers and the insurers here is really to develop the methodologies on how to define and measure sustainability in the business and as well in the underwriting part, but also on the asset side.”