Let me begin by congratulating you on the ten years of the Principles of Sustainable Insurance Initiative, or PSI. This, the largest collaboration between the United Nations and the insurance industry, is very important.
The insurance industry acts as an early warning system for society and a risk manager by understanding, minimizing, pricing and bearing risks. The insurance industry and the broader financial sector have the ability and responsibility to drive progress towards a zero-economy and a sustainable future.
Over the past 10 years, we have seen real progress in the industry. Through PSI, we now have the best frameworks and guidelines designed to embed sustainability at the heart of the insurance business and achieve real-world impact. Recognizing the key role of insurance regulators and supervisors, PSI also helped create the Sustainable Insurance Forum in 2016. There is no excuse for any insurance company not to have a sustainability strategy for its core business.
Recently, an initial group of major insurers have embedded net-zero ambitions either in their core insurance business or in their investments — or both. Some major insurers have made promises and commitments that, if kept, could make a real difference. Today, PSI has more than 220 organizations, including insurance companies that account for a third of the global premium and $15 trillion in assets under management. We now have a global community of practitioners who can lead systemic change.
For all this, and so much more, thank you.
But now I will tell you what I said to my organization and Member States at the UNEP @ 50 celebration in March. I will tell you what I told world leaders at Stockholm +50 in June. I’ll tell you what I would say to anyone who is a milestone in environmental work: You haven’t done enough. None of us have it.
This is not my opinion. This is a statement of the truth. A statement of fact confirmed by what science tells us about the acceleration of the triple planetary crisis of climate change, loss of nature and biodiversity, pollution and waste.
The Intergovernmental Panel on Climate Change tells us that global warming is causing serious disruption to the natural world, human well-being and economic prosperity. Deaths and damages from floods, droughts and storms are increasing.
All this comes at 1.1°C of global warming. And there is a 50/50 chance that we will reach 1.5°C, at least temporarily, in the next five years. The United Nations Office for Disaster Risk Reduction recently predicted that there will be one large-scale disaster every day by 2030. It is clear that the risks posed by global warming are escalating. However, efforts to reduce greenhouse gas emissions remain elusive.
Is this sustainable?
The Intergovernmental Platform on Biodiversity and Ecosystem Services tells us that nature is in rapid decline, eroding the foundations of human health and prosperity. Up to 40 percent of the land is degraded. This decline affects nearly half of the world’s population and makes it more difficult to feed everyone. One million species are facing extinction. Primary tropical forests were destroyed in 2021 at a rate of ten football fields every minute.
Is this sustainable?
Pollution and waste kill tens of millions of people every year. One in six deaths is caused by pollution – from polluted air to toxic chemicals. Despite the growing momentum on plastic pollution, 11 million tons of plastic waste still fall into our oceans every year. Antimicrobial resistance is on the rise.
Is this sustainable?
These three crises add up to one planetary emergency, driven by the unsustainable way we produce goods and consume resources. A crisis that, if left unchecked, will destroy our health, communities, businesses and economies.
Is this sustainable?
The answer is no.
The anxious young people, the people who will be your customers for decades to come, are tired of our promises. Vulnerable societies less responsible for the damage done to our planet are tired of our promises. Honestly, I think we’re tired of our promises.
It’s work time. It’s time to end our addiction to fossil fuels. Bring nature back to its full glory. Make production and consumption sustainable. Transforming our food systems. Make our cities green, livable, low-carbon and disaster-resistant. and retooling the global financial system, including the insurance industry, to support a healthy and healthy planet.
You cannot do all this alone. But what you can do is implement ambitious actions in risk management, insurance and investment activities to help achieve the 2030 goal of halving greenhouse gas emissions. 2030 target to reverse the loss of nature. 2030 goal to achieve the sustainable development goals.
So, yeah, we’re here today to celebrate what you’ve done – and done a lot. But we’re also here to show you how to build on your accomplishments to get the job done. To that end, I’ve come here with six main requests.
First, the net commitment to zero
Insurers must develop and implement science-based net zero strategies and targets for their insurance and investment portfolios by joining the Net-Zero Insurance Alliance (NZIA) and the Net-Zero Asset Owner Alliance.
NZIA’s work with the Partnership for Carbon Financial Accounts to produce the first global benchmark for measuring greenhouse gas emissions associated with insurance underwriting portfolios by November 2022 is a good starting point.
NZIA’s work with the Science-Based Targets Initiative to develop the NZIA Targeting Protocol by January 2023 is another important step. This protocol will be used by NZIA member insurers to set interim, science-based five-year targets for their respective insurance portfolios, starting in July 2023.
Second, a commitment to positive transmission towards nature and pollution prevention
Insurers should build on the work of setting the PSI agenda to protect natural World Heritage sites, tackle plastic pollution, and combat illegal, unreported and unregulated fishing.
Insurance companies must adhere to strategies and objectives based on the positive nature in the field of insurance and investments. PSI should create a Nature Positive Insurance Alliance — just like the Net-Zero Insurance Alliance it created in 2021 — particularly given the expected adoption of the post-2020 global biodiversity framework later this year.
Insurers must also support the goals of the legally binding international agreement to end plastic pollution, which will be in place by 2024.
Third, commitment to resilience and adaptation to climate change
Protecting the most vulnerable and leaving no one behind is indispensable in the fair transition to net zero. Addressing loss and damage and building resilience should not be the forgotten component of climate action. Reducing disaster risk and closing the insurance protection gap is critical.
Insurers must commit to supporting the Sustainable Insurance Facility for the Group of Twenty Finance Ministers at Risk, which is hosted by PSI. This facility aims to provide insurance protection to micro, small and medium enterprises in the most climate-vulnerable countries in Africa, the Middle East, Asia and the Pacific, and Latin America and the Caribbean.
Fourth, life and health insurance companies must commit to sustainability.
Health is our greatest wealth. Life and health insurance companies must include sustainability in their core insurance business, not just in their investments, especially in a post-COVID world increasingly affected by climate change, loss of nature, pollution and social inequality.
Insurers should adopt the recommendations in the first-ever sustainability guide for the global life and health insurance industry, which PSI will launch this year.The tenth Anniversary event.
Fifth, a commitment to accountability, transparency and sustainable expertise.
The entire value chain of the insurance industry for insurers, reinsurers, brokers and agents—along with insurance associations and insurance regulators—must make sustainability an integral part of their decision making.
Insurers must implement the recommendations of the Task Force on Climate-Related Financial Disclosures, the Task Force on Nature Financial Disclosures, and the International Sustainability Standards Council – all of which are important steps to drive systemic change.
Moreover, all insurance professionals should develop expertise in the area of sustainability, rather than leaving it to a few people within the organization. Sustainability should be an integral part of an insurance organization’s culture, principles, values, strategies and core operations. In short, it should form part of every insurance decision.
Sixth, create sustainable insurance roadmaps
Insurance markets around the world should follow the California Insurance Commissioner to develop the world’s first sustainable insurance roadmap, an initiative supported by PSI. The California Sustainable Insurance Roadmap will be presented at this PSI event.
The Sustainable Insurance Roadmap is a comprehensive strategy and action plan to harness the insurance industry’s risk management services, insurance solutions and investments to accelerate the transition to resilient, inclusive, positive and natural societies and economies. These roadmaps will serve as foundational frameworks for insurance markets to support the global agenda of the United Nations Decade for Action.
I don’t want to belittle your achievements or view the insurance industry and the broader financial sector as backward. Once again, thank you for everything you’ve done over the past ten years. But like I said, neither of us has done enough.
See, people in general are not very good at looking forward. Most of us make short-term decisions based on the passage of days, weeks, or months ahead. But you are in the insurance industry not like most people. Your job is to look to the future, to understand, reduce, price and assume the risks. Risk management is your core business.
I am now asking you to look into the future and tell yourself what you see – what the future looks like for the planet, your business models, and everyone you care about will live beyond the next few years.
Then ask yourself what you are going to do about it.
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