Insurance Firms Invest Only 0.5% Assets on Low Carbon Investments


Got it covered? Insurance in a changing climate, a new report by the Asset Owners Disclosure Project (AODP) is scathing in its remarks about the insurance industry’s commitment to climate change. Because of this, UN’s Paris Agreement goals are unlikely to be met.

The report finds that less than 0.5% of assets invested by the world’s 80 largest insurers are in low-carbon investments that provide solutions to climate change, despite the insurance sector being highly exposed to its financial risks.

The report finds that only a handful of insurance firms in Europe are showing true leadership on climate change, and are actively managing the financial risks it poses in capital markets. However, nine out of ten investment strategies in the sector fail to align with the Paris Agreement goals, according to a new global assessment of the sector released a few weeks ago.

In terms of low-carbon investments in assets like renewable energy, AODP has calculated the aggregate allocation to be roughly $70bn, less than 0.5% of assets and dramatically shy of the $1.1trn needed per year by all parties in order to transition at pace towards a prosperous low-carbon economy.

It is now two years since the then UN Secretary General Ban Ki-moon urged the insurance industry to address climate risks by doubling sustainable energy investments while decarburizing existing portfolios and supporting the Sustainable Development Goals. AODP’s analysis found that only six to eight per cent of the assessed insurers have met all these challenges; the majority fail on all three of Ban Ki-moon’s challenges.

A full copy of the report

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