Large U.S. insurance companies are improving in sharing information about their climate-related risks and strategies, but many gaps and inconsistencies persist; for instance, only 29% disclosed metrics and targets related to climate risks, according to a recent report by Ceres.
The survey follows the framework developed by the Task Force on Climate-related Financial Disclosures (TCFD), which includes four pillars: governance, strategy, risk management, metrics and targets.
While reporting on metrics and targets remains low, the report reveals that 94% of insurers disclosed their risk management processes, 86% outlined their strategies, and 81% detailed their governance structures.
However, only 26% of insurers provided disclosures that covered all four pillars of the TCFD framework.
Compared to last year, there was a slight improvement in how insurers are integrating risk management, identifying climate risks and opportunities, and reporting greenhouse gas emissions.
On the other hand, there has been a decline in reports detailing management’s role in assessing climate risks and setting targets to manage these risks and opportunities.
Additionally, while the use of climate scenario analysis is growing, it remains low, with only 22% (116 insurance groups) using this type of forward-looking assessment in 2022.
The report highlights best practices from insurers and provides recommendations for companies and regulators. These include establishing common methodologies and scenario analysis frameworks, setting clear board and management oversight for climate issues, investing in tools to measure greenhouse gas emissions across all scopes, and engaging constructively on climate policy and regulatory development.
