Environment - Call to action - Industry climate policies struggle

As the PB Sentiment Survey showed last month, the issue of which is the 'greenest' insurer in the UK is considered as a bit of a joke for brokers. At the moment, nobody is blazing a trail. Despite chastising the government for a lack of funds over flood control (see p. 30), the industry has yet to take any significant action to rectify the existing and impending threat of climate change, despite readily admitting that it is happening.

ClimateWise was an initiative that was set up in September 2007 to great fanfare; no less a man than HRH Prince Charles gave the opening address. The group has 39 members, including broker Benfield and reinsurer Swiss Re. Peter Hubbard, former chief executive of Axa, was chairman of the organisation and, after his departure from Axa, the reigns are set to be handed to Andrew Torrance, chief executive at Allianz, on 6 June. Torrance said: "The challenge is ... to drive home the need for companies and their customers to practice climate-friendly behaviour and help them to adapt to changes in the climate that are already becoming apparent."

Trevor Maynard, manager of Emerging Risks at Lloyd's, which operates in over 200 countries, claims that his organisation is leading the way in implementing the ClimateWise principles. Each member of the initiative is meant to report by the end of the second quarter and Lloyd's has published a list of actions on its website already; the underwriter has also launched the 360 Risk Project, which analyses emerging risks such as climate change. Maynard added: "Some of these activities include the public discussion of the subject championed by Lord Levene and other Lloyd's representatives: sharing of research; work on managing its own carbon footprint; and announcing the intention to appoint a voting overlay manager for central fund equity investments." Despite the voluntary nature of the arrangement, Maynard believed that progress is being made: "Everybody is pretty committed to this. Each company is responsible for its own back. We would welcome greater engagement from the broker community."

Zurich is studying its own emissions through a carbon footprint study, which is being carried out by the University of California, although Lindene Patton, climate product officer at Zurich, admits that the results will not be ready until March 2009. Patton said: "We have already taken steps to revise our global travel policy and want half of our meetings to be conducted via conference calls." Patton's team has already been proactively promoting disaster-resilient property, property and casualty products for alternative energy providers and hybrid cars.

Aviva said that it has been working in this area for ten years and that it has been carbon neutral since 2006, as well as being members of the CBI Climate Change Taskforce, which has called for more government funding for green technologies.

Many brokers are taking action already and would like more support from insurers. Clive Galbraith, co-chief executive at Hastings-based Green Insurance Brokers, said: "Being based near the coast, we are perhaps more aware of climate change than most. Working with insurers on the issue is like banging your head against a brick wall, although one or two are working with us, such as Arista, which creates pdf documents to send to clients. We are moving towards a scanning solution as well."

As the Stern Report suggested, it is in the interests of business to pursue climate policies now to avoid significant adverse economic impact in the future. The success of the ClimateWise initiative will be an industry litmus test watched closely by brokers, customers and the government alike, not least because it has been influenced by our future king.

The ClimateWise principles

1) Lead in risk analysis

2) Inform public policy making

3) Support climate awareness among our customers

4) Incorporate climate change into our investment strategies

5) Reduce the environmental impact of our business

6) Report and be accountable.