Insurers critical to net zero future

The UK will not achieve its environmental targets without the support of the insurance sector.

COP26 established a number of commitments to tackle climate change, while the UK government has pledged to decrease 1990 emissions levels by 78% by 2035.

However, to have any chance of achieving this the entire economy will have to shift. What that might mean for insurers was set out recently by the Association of British Insurers in its Climate Change Roadmap which highlights the critical role the industry has in three key areas: the financial structure necessary to develop a net zero society; building resilience among those impacted by climate change; and influencing customer attitudes around sustainability.


But if insurers are to do this then they too will need support from investors, who will need to understand the transformation taking place. For example, at the moment the Sustainability Disclosure Requirements encourage businesses to disclose and report on the sustainability measures they are taking; from next year they will be obligated to do this.

Will Sherwin, Senior Category Head, Procurement & Supply Chain, Household & Property, Direct Line Group, said, “I am a huge advocate of change, and it feels like we’re facing into a period of significant change relating to the environment. I believe the insurance industry has a key role to play. But it will require all of us to play a part.”

Great strides

Addressing delegates at the I Love Claims Home & Property Claims Conference, held at the CBS Arena, Coventry on 11 November, he explained how DLG is already making great strides forward in this regard, not least of which is signing up to the Science Based Target Initiative (SBTI), which means setting science-based targets to achieve net zero emissions by 2050 at the latest.

Will said, “Science-based targets is a five-step process: submit a letter establishing your intentions; develop an emissions-reduction programme; present your target to the SBTI for validation; communicate your goals to stakeholders; and regularly report progress.”


The first challenge though is understanding exactly where emissions come from, and DLG has established that a staggering 94.1% of its carbon footprint is generated by its downstream activities (excluding emissions relating to Investments).

Will said, “We’re a service-led industry so most of the organisations in our sector would probably find something similar. This means that in order to hit our targets we need collaboration from across the value chain.”

DLG has written to its highest emitting suppliers, who between them account for 80% of emissions, encouraging them to sign up to SBTI, and has also announced that it will be taking a sustainable approach to sourcing for all projects with a £1m spend – starting at five per cent and rising to 15% of score weighing.


Meanwhile, the company will tackle its own emissions through a number of internal initiatives including a move to digital assessments where appropriate, reducing travel, and switching to electric vehicles to make essential travel less impactful.

Will concluded, “There are tangible benefits to all this such as reputation, competitive advantage, resilience, investment and engagement, but that doesn’t mean it’s not complex. The implications for claims are not understood and setting out on this path is a shared endeavour that needs the right organisational culture behind it.

“But the insurance industry has the ability to shift an economy and a responsibility to the customer it serves up and down the value chain. Clearly there is uncertainty, but one thing we can agree on is that it’s better to be part of the pack than trying to catch up.”

ILC Home & Property division returns to the stage next year when it hosts the Environmental and Sustainability Specialist Conference on 31 March.

ILC’s Home & Property Claims Conference 2021 was supported by headline sponsor Synergy; Gold Sponsors – Catalyst, Dasa, LexisNexis, Perfect Group, Polygon and Sedgwick; Silver Sponsors – Belfor, Bdeo, CRDN, Farcroft and Gelder; and ILC Corporate Partners – Carpenters Group, CoreLogic, ICAB, ICAB Pod, and Innovation Group.


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