The issue of climate change has become a global imperative that requires urgent and decisive action. Rapid decarbonization and Net Zero emissions are crucial to keep 1.5C in reach. The insurance industry can play a crucial role in achieving this goal. Speaking at the 18th Annual Gulf Insurance Forum, Vivek Tripathi, CEO of Olive Gaea, explained how the insurance industry can quickly and effectively reduce carbon emissions.
Tripathi emphasized that reaching net-zero emissions is not only a climate necessity but also a business one. The current fuel shortages and price hikes, which have caused hardship for millions of people globally, have prompted some public and private sector leaders to consider returning to old assets such as coal. This regression must be prevented to avoid the worsening effects of climate change and meet the targets set by the Paris Agreement.
Reaching net-zero emissions will require old assets in nearly every industry to be repurposed, sold, or scrapped in favor of low carbon, clean-tech solutions. Globally, this transition will require up to $150 trillion in investment. The insurance sector, which has assets under management (AUM) of approximately $40 trillion (35% of total global economic output) and Insurance Premiums (Life or non-life) reaching $8 trillion (~7% of total global economic output), plays a crucial role in achieving a net-zero global economy.
While some insurers have taken measures to improve their energy efficiency and reduce their operational emissions, the importance of extending climate action to their portfolio of investments cannot be overemphasized. Several initiatives in this context are already underway, including the Principles for Sustainable Insurance (PSI) and the Net Zero Insurance Alliance (NZIA).
The latter includes a group of 30 leading insurers representing approximately 15% of world premium volume globally, committed to transitioning their underwriting portfolios to net-zero greenhouse gas (GHG) emissions by 2050, consistent with a maximum temperature rise of 1.5°C above pre-industrial levels.
To support these efforts, the NZIA has collaborated with the Partnership for Carbon Accounting Financials (PCAF) to develop the first global standard to measure and disclose emissions attributable to insurance underwriting portfolios, or “insurance-associated emissions”.
As a result of these initiatives, and pressed by stakeholders’; expectations and regulatory changes, there is a growing interest from regional and global insurance players to assess their carbon footprint and set net-zero targets.
Olive Gaea has been pivotal in supporting this important endeavor of a growing number of insurance firms in the MENA region over the past year. “It is heartening to see more and more insurance players assessing their carbon footprint and setting net-zero targets. It is essential that the industry continues to take swift and decisive action to reduce carbon emissions to meet the targets set by the Paris Agreement, and we are happy to help players through this journey with our hands-on-approach” concluded Tripathi.
To know more about Olive Gaea’s solutions for the Insurance industry, get in touch with us at
info@olivegaea.com
