Members of insurance sector sustainability group ClimateWise have reported their first scores since the framework was updated last year. Programme director Sid Miller discusses progress and challenges with Joshua Geer
The pressure is mounting in the world of sustainable insurance disclosures. Firms must navigate a rapidly shifting regulatory landscape, ensuring compliance amid a complex mix of evolving standards.
Key frameworks include the EU’s Corporate Sustainability Reporting Directive (CSRD) and the International Financial Reporting Standards Sustainability Standards 1 and 2 (IFRS S1 and S2). Additionally, there are increasing expectations surrounding nature-related disclosures and transition planning.
To keep pace with these developments, ClimateWise updated its principles last year. These revisions were designed to ensure the initiative remains aligned with the latest global sustainability standards.
Originally launched in 2007 and previously championed by King Charles III, ClimateWise has today published its 2024 independent review, detailing how its members are adapting to these updated principles, the progress made and the challenges still ahead.
InsuranceERM examined the review and spoke with programme director, Sid Miller, to discuss key findings.
ClimateWise is a global network comprising mostly re/insurers, but also brokers, loss adjusters, and industry associations.
The initiative helps shape the insurance industry’s response to climate risks and aims to enhance the financial sector’s understanding of climate-related challenges.
It is based around four principles of “Steering Transition”, “Engaging Stakeholders”, “Enabling Transition” and “Disclosing Effectively”. These are underpinned by sub-principles with guidelines for compilation, reporting templates and scoring criteria.
The ClimateWise principles are closely aligned with major global sustainability frameworks. They are fully in line with the Task Force on Climate-related Financial Disclosures (TCFD) and over 70% aligned with other significant regulatory frameworks, such as the Bank of England’s SS3/19, IFRS S1 and S2, and the US Securities and Exchange Commission’s climate and nature regulations.
Currently, ClimateWise has 37 members (see full list at the end of this article).
With the introduction of ClimateWise’s enhanced principles, members’ average scores dropped around 20%.
However, Miller told InsuranceERM this was expected due to the heightened expectations and expanded scope of the revised framework.
“This is the third time we have brought in a much more comprehensive suite of disclosures. Each time there is a clear trend of a drop in scores, followed by improvement again,” Miller said.
The revised principles now incorporate evolving global regulations, including CSRD, IFRS S1 and S2, and the Taskforce for Natural-related Financial Disclosures. The report highlighted the new requirements raise the bar for disclosures, particularly concerning nature-related risks.
High-scoring firms distinguished themselves by embedding sustainability into their core business strategy, ensuring a mature and structured approach to reporting.
The review found early adoption of nature and biodiversity considerations was more advanced than expected. It said several members have already started integrating biodiversity risk management into their governance and risk frameworks.
“We really did not expect people to submit too much [on nature] this year … it was surprising a number of organisations are already thinking in that space, which was very positive,” Miller said.
The ‘Steering Transition’ principle encourages firms to take a top-down strategic approach to managing climate risks. This includes governance, strategy and risk management.
The review highlighted strong governance practices across members. Companies like Convex were praised for their reporting clarity, while Conduit Re and Liberty Specialty Markets demonstrated robust climate governance policies.
Another notable initiative was Axa XL’s sustainability-linked employee compensation, which has helped align internal incentives with sustainability objectives, the review said.
On strategy, firms such as Allianz and Beazley conducted thorough double materiality assessments, ensuring climate risk was integrated into their business decision-making.
Meanwhile, NFU Mutual factored biodiversity impacts into its transition plans.
While firms demonstrated competence in identifying climate risks, the review noted many struggled with detailing mechanisms for managing these risks.
“This reflects the increased challenge of management and ‘action’ relative to identification,” the review noted.
However, Miller observed a shift towards a more forward-looking approach, with firms moving beyond retrospective assessments.
“They are showing us what they are actually doing and providing some great case studies,” he said.
Challenges remain for some in formalising governance structures, expanding training beyond leadership and integrating nature-related risks into risk assessments, the review added.
This principle focuses on how members engage with stakeholders within their operations and across the insurance value chains.
The review found many firms have taken steps to reduce operational emissions, with several implementing science-based targets and emissions reduction plans.
For instance, NFU Mutual has integrated biodiversity protection into its estate management, while Aviva has encouraged employees to set personal sustainability goals as part of their annual objectives.
However, while members are making strides, some have yet to formalise their approach to target setting, validation and evaluating reduction options.
Engagement across the value chain – a more complex challenge – varied, the review found.
Firms were generally able to identify climate risks within their insurance and investment activities. A standout example was Esure, which demonstrated “best-in-class” Scope 3 emissions and nature impact measurement and reporting. The firm has also actively worked to decarbonise its supply chain.
Nonetheless, understanding emissions beyond direct operations remains a challenge, the review found.
The review also explored how firms are engaging to ensure innovation and advocacy. It noted the Association of British Insurers, and broker Howden were among the organisation who had helped contribute to industry understanding. However, the review noted advocacy activity still appears to be relatively unstructured and not strongly tied to members’ strategies.
Miller said one of the targets for ClimateWise in the future is to broaden its sector research beyond just insurance, and start looking at “cross-system research” on public policy, investment and nascent technologies. Such an approach “resonates with members”, Miller added.
This principle looks at how insurers support the transition to a low-carbon economy through underwriting and investment activities. The review found firms increasingly leveraging their influence to shape industry-wide transition efforts.
The review said the score firms received on investments was highly correlated to members’ approach to investments: those with in-house investment activities achieved noticeably higher scores. Engagement with outsourced investment managers remains an area for improvement, the review said.
On underwriting, it found a broad spectrum of approaches: some have not yet considered using their underwriting to support decarbonisation, while others have a detailed approach highly integrated into the pricing and product development.
As Miller explained: “It varies depending on which sector and the maturity of the organisation and where they are on their journey.”
Within this principle, ClimateWise also introduced recommendations on transition plans. Organisations were not required to disclose transition plans in 2024 but will be from this year.
However, Miller said some have started to submit transition plans or work on this, emphasising it will be a “big change” coming in.
This principle encourages members to put in place robust approaches to calculating metrics, setting targets and reporting sustainability information.
The review found a growing trend of firms aligning their climate disclosures with financial disclosures, helping improve transparency and standardisation.
“It was impressive to see the high standard of reporting that makes use of a variety of tools to explain information, including innovative visualisations that support readers’ understanding,” the review said.
Notably, QBE and Aviva published comprehensive data books, outlining methodologies, assumptions and trend analysis, the review highlighted.
However, it suggested firms should further formalise their reporting procedures and address nature-related reporting gaps. The review added some had still yet to report scope 3 greenhouse gas emissions, and advised they should to fully understand environmental impacts.
With regulations continuing to evolve, ClimateWise’s principles will require periodic adjustments. However, Miller indicated that any near-term changes will be minimal.
He noted: “Transition planning is already a big change coming in for members this year.”
On membership, ClimateWise has gained and lost some members over the past year. He described the group’s membership and growth as “sustainable”. Since 2023, insurers Ascot, MS Amlin and The Hartford, and the broker Marsh have quit.
However, Miller noted some firms eventually outgrow ClimateWise as they develop internal sustainability expertise. “In a way, [firms leaving] is a bit of a success at times,” he remarked.
Despite this, he said ClimateWise maintains relationships with past members and continues to drive industry-wide research and engagement.
Members of insurance sector sustainability group ClimateWise have reported their first scores since the framework was updated last year. Programme director Sid Miller discusses progress and challenges with
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