Munich Re and other global insurers share successful climate change strategies to drive greater action and ambition

Fourteen global insurers including Munich Re worth over USD 3.5 trillion discuss how they manage the risks and opportunities of climate change in a new leading practice guide launched today by climate finance experts.

The interviewees provide peers with practical ways to navigate an increasingly complex environment marked by escalating climate risks and regulatory pressure for better disclosure across underwriting and investment portfolios.

The report by ShareAction/AODP, called ‘Insuring a low-carbon future: A practical guide for insurers on managing climate-related risks and opportunities’, explores current leading practice, identifies common barriers, and presents a framework of industry-tested building blocks relevant for other insurers of all types. It also offers wider recommendations for policymakers, customers, insurers and their investors to help drive the industry towards aligning with a successful low-carbon and climate-resilient transition.

Supported by over 60 practical examples, the guide reveals how insurers are better managing climate risks by connecting departments and business lines that have often worked separately. Proactive insurers are also found to be developing a new generation of climate-friendly products and services while educating customers and vulnerable communities more widely on climate risk.

The guide also explores how insurers are beginning to integrate forward-looking climate science into risk models that have typically depended on observed data. The recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) are also found to be supporting and guiding leading climate strategies not only in helping encourage connected thinking on climate issues, but also in driving stronger disclosure on climate risk management by insurers and the companies they insure and invest in.

On the investment side, proactive insurers are strategically increasing their low-carbon investments while engaging more forcefully and creatively with companies on climate issues across both listed equity and debt.