Still more to do for climate change: AODP

Although many insurance companies in Japan are aligning towards strengthening their capacities against climate change, their progress seems slow owing to investment strategies that are still not subscribing to the Paris Agreement goals.

In a report by the Asset Owners Disclosure Project (AODP), part of responsible investment organisation ShareAction, titled Got it covered? Insurance in a Changing Climate, examines 80 of the world’s largest insurers, with USD15 trillion worth assets under management (AUM), including 11 of Japan’s largest insurers, with USD3 trillion AUM, on their management of material climate risk.

AODP recorded improvement in the rating of Japanese insurers since the last assessment in 2017, driven by their transparency on climate-related risks. Over a third of assessed insurers have jumped to a higher rating band, with Tokio Marine joining the leaderboard as the only non-European insurer. In fact, four Japanese insurers even ranked higher than the highest-ranked US insurer, according to a report in the Japan Today.

Results show that, out of the eleven Japanese insurers, Tokio Marine comes out on top. In terms of low-carbon investments in assets like renewable energy, only two Japanese insurers have invested or committed to invest one per cent of their assets.

Pavel Kirjanas, AODP Project Manager at ShareAction and report author, says: “This year, AODP has put the insurance industry in the spotlight. We applaud the leading and innovative approaches taken by the sector’s leaders. Unfortunately, there is no time to celebrate. While the world is being shaken by climate-induced catastrophes, the world’s largest insurers keep pressing the snooze button. U.S. insurance companies seem complacent about portfolios that put us on a disastrous six-degrees pathway.”