Landmark principles create United Nations-backed global insurance industry initiative to support the development of a green economy and resilient communities.
Rio de Janeiro - Close to 30 leading companies from the insurance industry, worth over USD 5 trillion in total assets and representing over 10 per cent of world premium volume, together with insurance associations from different regions around the world, have joined a UN-backed process to promote a set of Principles for Sustainable Insurance that aim to green the sector and provide insurance tools for risk management in support of environmental, social and economic sustainability.
The Principles provide a holistic approach to managing a wide range of global and emerging risks in the insurance business, from climate change and natural disasters to water scarcity, food insecurity and pandemics. They represent the first-ever global sustainability framework tailored for the insurance industry that takes into account the fundamental economic value of natural capital, social capital and good governance.
The Principles also aim to position the insurance industry as a lever for a green economy and sustainable development. Signatory companies will publicly disclose their progress in implementing the Principles for Sustainable Insurance on an annual basis.
The Principles are a result of a six-year global development process carried out by the UN Environment Programme’s Finance Initiative (UNEP FI), a strategic initiative involving the UN Environment Programme (UNEP) and financial institutions worldwide. In 2006, UNEP FI created a working group of leading insurers to study the impacts of a wide range of environmental, social and governance issues on the insurance business and sustainable development. This group was initially co-chaired by AXA and Insurance Australia Group and is currently chaired by Munich Re.
UN Secretary-General, Ban Ki-moon, and UNEP Executive Director, Achim Steiner, lauded the Principles as a historic initiative and a major contribution to the aims of the Rio+20 Conference, which seeks to advance good governance and environmental, social and economic development. The Green Economy in the context of poverty alleviation and sustainable development is a major Rio+20 theme.
Ban Ki-moon, said, “For years, insurers have been at the forefront of the corporate world in alerting society to the risks of climate change and, more recently, threats such as the loss of biological diversity and the growing pressures on forests, freshwater and other essential ecosystems. Insurers are also increasingly recognizing the need to develop products and services that address the needs of a rapidly changing world, including inclusive insurance that caters to low-income communities, people with HIV/AIDS or disabilities, and ageing populations.”
“The Principles for Sustainable Insurance provide a global roadmap to develop and expand the innovative risk management and insurance solutions that we need to promote renewable energy, clean water, food security, sustainable cities and disaster-resilient communities. The United Nations looks forward to working with all sectors of society towards the global embrace of this important new initiative as we shape the future we want,” the UN chief stressed.
The Principles were unveiled by the UN and insurance leaders at a major global event attended by hundreds of CEOs and senior executives. The event was co-hosted by the International Insurance Society and the Brazilian Insurance Confederation (CNseg).
Achim Steiner, said, “Over the past six years, the UN Environment Programme’s Finance Initiative has been exploring the possibility of establishing sustainability principles for the global insurance industry that can catalyze and amplify transformational change. Principles that tailor to the needs and aspirations of the insurance industry and the clients and citizens it serves.”
“Seven billion people, rising to over nine billion by 2050, are not going to stand still and wait for the future they want. We need to green our economies, build resilient communities, deliver wider ranging social outcomes, and better conserve our forests, freshwaters and other critical ecosystems.”
“The Principles for Sustainable Insurance are a foundation upon which the insurance industry and society as a whole can build a stronger relationship – one that puts sustainability at the heart of risk management in pursuit of a more forward-looking and better managed world,” Steiner concluded.
The launch of the Principles marks the start of a United Nations-backed insurance industry initiative that would promote the adoption and implementation of the Principles globally.
Nikolaus von Bomhard, CEO of Munich Re, which currently chairs the UNEP FI group of insurers that led the multi-stakeholder development of the Principles, explained, “The insurance industry plays a vital role in developing our economy and society. By managing and carrying risks, our industry protects the welfare of society and fosters innovation. Our industry gives its clients the promise that we will always fulfill both our short-term and long-term obligations assumed under insurance contracts. Therefore, our industry has a duty to act in a responsible and forward-looking manner. The Principles for Sustainable Insurance will contribute significantly to the sustainability of the insurance industry and society as a whole.”
“It is now time to turn the Principles into practice. I invite my peers in the global insurance industry to support this landmark initiative and bring the Principles to life through their commitment,” he added.
The Principles emerged out of a pioneering global, inclusive and consultative process, involving over 500 senior representatives from the insurance industry, governments, regulators, inter-governmental and non-governmental organizations, industry associations, academia and the scientific community.
With the world’s leading insurers backing the Principles for Sustainable Insurance, it is expected that the Principles will be quickly and widely adopted by the global insurance industry.
The Principles for Sustainable Insurance build on the Principles for Responsible Investment (PRI), which were conceptualized and delivered by UNEP FI and the UN Global Compact for the investment industry, and launched in 2006 by the UN Secretary-General together with some of the world’s largest institutional investors.
To date, over 1000 investors from 50 countries, representing over USD 30 trillion in assets under management, have adopted the PRI and are building sustainable capital markets and a green economy by implementing the PRI across all asset classes and geographies.