Engage don’t shun firms causing high emissions, insurers told

Insurance companies that are committed to sustainability and net zero goals should think twice about refusing to underwrite policies for high emissions companies, a climate advocate has said.

Tony Rooke (pictured), the executive director and head of technical, net zero planning for the Glasgow Financial Alliance Net Zero (GFANZ), said it was sometimes better to remain engaged with companies producing high carbon emissions than to walk away from them.

He was speaking at  Intelligent Insurer’s Climate Risk & Sustainability Europe 2023 conference, being held in London today (June 7).

He said refusing to invest in or underwrite for the companies could mean that they would end up on the outside of the debate and would do business with entities that did not care about climate change. "You need to engage with them and find policies to reduce emissions in a just way," he said.

Rooke was speaking on "The Year of the Transition Plan - What it Means for Insurers" at the conference.

He said climate change presented great opportunities as well as great risks, but it was important for businesses who had not already begun the transition to net zero to start planning now.

He said those planning the transition needed to model for uncertainty and to set clear goals that were shared throughout the organisation.

GFANZ had developed a transition framework which included setting clear goals.
For example, he said Aviva had said it wanted to be the leading insurer for renewable energy and everything the company was doing towards sustainability flowed from that.

He also said it was critical for the transition plan to make clear who was accountable for making it happen.

What was most important was to get started on the process and not to let the perfect be the enemy of the good - waiting to build the perfect model was impossible, he said.

"This is an exponential change, not a linear change," he said, adding that a company might start by focusing on its links with the oil and gas industry or energy plants and then realise it was leaving other parts of the economy out.

That was acceptable, he said, suggesting the plan would certainly be adjusted. The important thing was to get started.

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