Net Zero Underwriting: A Future-Ready Approach to Emissions Reporting
Snapshot
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Insurers have much to gain from taking a best practice approach to emissions reporting in their underwriting portfolio.
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Regulatory change is requiring insurers to report on Scope 3 emissions, but this data is also becoming increasingly important for access to capital.
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Despite a challenging backdrop, insurers have made considerable progress in recent years towards consensus on carbon emissions reporting standards and methodologies.
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Across Asia Pacific (APAC) and other global regions, regulatory change is making emissions reporting a critical capability for all sectors, including insurance. For the industry to report consistently and accurately on Scope 1, 2 and 3 emissions, an approach that considers the emissions footprint for companies they underwrite, as well as emissions coming from their own assets and activities is required.
In our latest insights article, we explore:
Importance of Scope 3 Emissions
Scope 3 emissions can represent up to 90 percent of an insurer’s emissions footprint and includes those from their underwriting and investment portfolios.
Regulatory Landscape
Regulatory changes across APAC are making emissions reporting increasingly critical, with some jurisdictions beginning to mandate Scope 3 disclosures.
Net Zero Underwriting
This approach involves measuring and managing GHG emissions in underwriting portfolios, aligning with global sustainability goals and investor expectations.
Challenges in Reporting
Insurers face hurdles in establishing consistent methodologies for Scope 3 emissions reporting, especially post the breakdown of the Net Zero Insurance Alliance.
Role of Technology
Utilising AI and machine learning can enhance data accuracy and support effective emissions reporting, aiding insurers in their net zero goals.
Next Steps for Insurers
Insurers should understand their reporting requirements, familiarise themselves with the Partnership for Carbon Accounting Financials (PCAF) standard, and address data challenges to improve their emissions reporting practices.