Sustainable insurance involves a strategic approach where all activities in the insurance value chain, including interactions with stakeholders, are conducted in a responsible and forward-looking manner. This is achieved by identifying, assessing, managing and monitoring risks and opportunities associated with environmental, social and governance (ESG) issues. The global insurance sector has a pivotal role in the transition to a lower emissions, resilient and sustainable global economy, both in terms of the risks it covers and the investments it makes. The UNDP SIF is a global network of insurance supervisors and regulators working together on sustainability challenges facing the sector, including the importance of accurate, informative and timely disclosures.
The SIF, through its outlining of supervisory and regulatory practices in this paper, is supporting the UN Climate Change Conference (COP 26) objectives for private finance reporting: to improve the quantity, quality and comparability of climate-related disclosures by implementing a common framework built on the Taskforce for Climate-related Financial Disclosures (TCFD) recommendations.
The TCFD is a global industry-led initiative established in 2015 by the Financial Stability Board (FSB) to help identify the information needed by investors, lenders and insurance underwriters to appropriately assess and price climate-related risks and opportunities. The Task Force developed recommendations on climate-related financial disclosures, covering the core elements of governance, strategy, risk management, and metrics and targets. The recommendations apply voluntarily to all financial sector organizations, including banks, insurance companies, asset managers and asset owners.
