COP 15 – A Watershed Moment for Nature and the Insurance Industry

Nature has reached a watershed moment. The Global Biodiversity Framework (GBF), a global framework for jointly safeguarding nature and securing our common future, is expected to be delivered at COP15 [1]. Signatories to the UN Principles for Sustainable Insurance (PSI) [2], along with other peers from the finance industry, have called on world leaders to agree on a global economic plan for halting and reversing nature loss during COP15. This article examines the role of insurers in achieving this goal, as well as the work that UNEP FI has done thus far to explain the links between nature and the risk management, insurance, and investment activities of the insurance industry.

The insurance industry, as risk managers, insurers, and investors, has an increasing responsibility to assess and raise awareness about nature-related risks and opportunities. It also has a significant role to play in incorporating environmental concerns into business decisions, as well as a high potential for innovation in risk assessment, risk reduction, and the development of new insurance products.

Since the inception of the Principles for Sustainable Insurance a decade ago, nature has been an integral part of UNEP FI’s insurance agenda.

The PSI has long supported the implementation of trailblazing global insurance industry guidance, such as: (a) the guide developed by the PSI, WWF, and UNESCO to protect World Heritage Sites. (b) The PSI’s guide to addressing the risks of plastic pollution, marine plastic litter, and microplastics, as well as exploring further work in specific insurance lines and/or asset classes. (c) The PSI and Oceana guide to combat illegal, unregulated, and unreported fishing; and (d) the global report on leveraging environmental pollution liability insurance for a sustainable economy.

During the pioneering webinar series “Nature-Positive Insurance: How the Insurance Industry Can Help Achieve the Global Goal of Nature Positive by 2030,” convened in 2021, the global agenda for Nature-Positive Insurance was set.

The series discussed the latest science on the state of nature, why nature and climate change are interrelated issues, the goals of the UN Convention on Biological Diversity, the UN Biodiversity Conference (COP15), why we need a Post-2020 Global Biodiversity Framework, and the links between the Task Force on Nature-related Financial Disclosures (TNFD) and the Task Force on Climate-related Financial Disclosures (TNFD) (TCFD).

Earlier this year, at the PSI’s 10th Anniversary Event, UNEP’s Executive Secretary, Inger Andersen, challenged the insurance industry to implement six key requests in order to drive progress toward a just transition to a net-zero and nature-positive economy and achieve a resilient and sustainable future for all.

During her intervention she highlighted that “insurers should commit to science-based nature-positive strategies and targets for their insurance and investment portfolios”. She also called for the PSI to “establish a Nature-Positive Insurance Alliance – just like the Net-Zero Insurance Alliance that it established in 2021 ­- particularly given the expected adoption of the Post-2020 Global Biodiversity Framework”.

Following these significant developments, the PSI intends to produce a White Paper on Nature-Positive Insurance, which will advance understanding of the links between nature and the insurance industry’s risk management, insurance, and investment activities, and will serve as the foundation for the formation of a Nature-Positive Insurance Alliance in 2023.

PSI members have also begun actively supporting and participating in the Taskforce on Nature-related Financial Disclosures’ development (TNFD). Over 40 global financial institutions are testing the current draught version of the TNFD framework with UNEP FI. The insurance sector is represented by five institutions from four different countries, each of which has assembled diverse teams from investment, climate risk, research, and risk management to integrate nature-related risks and dependencies into their internal risk assessment. The complementarity of these teams demonstrates the insurance industry’s deep understanding of risk management and prevention when tackling global challenges.

PSI signatories can benefit from their peers’ prior experience piloting the TCFD recommendations, as well as their experience with climate scenario analysis, in assessing and comprehending their own.

While all of these initiatives are gaining traction, the insurance industry needs to take more collective and urgent action. Biodiversity loss jeopardises our and future generations’ ability to live and thrive in a healthy, peaceful, and prosperous world. In the race to 2030, today is the most critical period for the world to achieve the goal of Nature Positive, and insurers, along with other non-state actors, will play a significant role in the implementation of the global Biodiversity Framework.

[1] The People’s Republic of China will preside over the UN Convention on Biological Diversity’s Biodiversity Conference (COP 15) in Montréal from December 7 to 19, 2022.

[2] Private Financial Sector Signatories of the COP15 Statement include Achmea, Allianz France, ASR Nederland, AXA Group, CNP Assurances, Hellenic Hull Management, MS&AD Insurance Group Holdings, Inc., SCOR SE, SOMPO Holdings, and Tokio Marine Holdings Inc.