Summary of the Transition Plans Working Group Report, October, 2024

UNDP’s Sustainable Insurance Forum (SIF) released a pivotal report titled Supervisory Thinking on Insurance-related Climate Transition Plans. This comprehensive document offers valuable insights into the current supervisory landscape regarding transition plans and highlights the challenges in developing regulatory guidance for the insurance sector as it shifts toward a net-zero future.
The report outlines several key findings:
• Early-Stage Supervisory Thinking: Insurance supervisors are in the early stages of conceptual thinking around insurers’ transition plans. While these plans are recognized as essential components of risk management, specific requirements and guidance are yet to be established by most supervisory authorities.
• Complexity in Regulatory Development: The report identifies challenges in formulating supervisory requirements for transition plans. These include uncertainties surrounding the roles of financial regulators and supervisors, issues related to data adequacy and accessibility, and the absence of internationally standardized guidance.
• Support for Insurers’ Transition: It emphasizes that supervisors can facilitate insurers’ progress toward net-zero by providing clear guidance on metrics, enhancing capacity building, and improving access to relevant data.

The report also proposes essential next steps for insurance supervisors, which include:
• Enhancing coordination among authorities to share best practices and align frameworks.
• Advocating for the establishment of an international baseline and consistent global guidance.
• Assisting regulated entities in overcoming data-related challenges.
• Collaborating with the insurance sector to pool resources for capacity-building initiatives.