The United Nations-convened Forum for Insurance Transition to Net Zero (FIT) has launched the first-ever global guide on transition plans for insurance companies at the 2024 UN Climate Change Conference (COP29) in Baku, Azerbaijan.
Established last April, the FIT is a United Nations-led forum involving insurers, insurance regulators and supervisors, the scientific and academic community, civil society, and other key stakeholders to advance insurance strategies and practices that accelerate and scale up a just transition to a resilient net-zero economy. Chaired by the UN Environment Programme (UNEP), the FIT currently comprises close to 50 organisations from across the globe.
First deliverable
The FIT’s inaugural report, “Closing the Gap: The emerging global agenda of transition plans and the need for insurance-specific guidance”, launched on 14 November, is the first deliverable of the FIT Transition Plan Project. It assesses key features of insurers’ underwriting portfolios—across lines of insurance, the insurance value chain, and insurance actors involved—which need to be taken into account in transition planning, alongside relevant sustainability risks and opportunities.
The report also articulates the insurance industry’s triple role as risk managers, risk carriers and investors in supporting a just transition to a resilient net-zero economy, including addressing the interconnected, climate-related sustainability issues of protecting nature and biodiversity and preventing pollution via a circular economy.
The FIT report also outlines the existing typology of transition plans, the landscape of emerging policies and regulations relevant to transition plans, and the evolution of transition plan frameworks and guidance. A growing number of governments and insurance and financial regulators around the world are now requiring companies in the real economy and in the financial sector to disclose their climate-related impacts, risks and opportunities.
In the European Union, the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) already mandate corporate transition plans, and a growing number of countries and jurisdictions will soon require the preparation and disclosure of corporate transition plans as well.
Further deliverables
With a solid foundation set, the second deliverable of the FIT‘s Transition Plan Project will be to develop deep-dive guidance for underwriting portfolios to further support insurance companies in developing and disclosing credible transition plans.
Thereafter, the FIT will produce the third and final deliverable of the project—transition plan guidance that provides a holistic, total balance sheet and organisation-wide view that covers and links the underwriting and investment portfolios of insurance companies.