Insurers can show clients way to tackle climate change

In every crisis, there comes a moment when you have to stop wondering how other people are going to deal with the situation and start asking yourself what you can do about it. That’s as true for businesses as it is for citizens – and on the issue of climate that moment is now.

The sixth Intergovernmental Panel on Climate Change report was published in early August against a backdrop of extreme weather events ranging – in Europe alone – from wildfires to extreme flooding events. If ever there was a sobering backdrop to a news event, this was it.

The report served as a “code red for humanity” as the UN secretary general António Guterres described it and hammered home the message that the climate crisis is real.

Thankfully, most people now accept that the climate crisis is of a scale that is incomparable with any challenge the world has faced before.

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For those of us in the insurance business, the evidence of this has been increasing dramatically over the past decade. The rising incidence of extreme weather events including fires and floods have impacted most dramatically on the communities involved but the insurance industry has seen first-hand the huge cost of these events. We are also dealing with the growing challenge of how to insure against supposedly once-in-a-generation events when they begin to become more frequent.

In that context, Axa globally has taken an increasingly proactive approach on this issue. This is not something we can do alone so we are working with other companies, partner organisations, our employees and customers to help move to a low-carbon future.

Science-based targets

All Axa entities have drawn up a climate roadmap and the group is chairing the net-zero insurance alliance (NZIA). We are committing to transition our underwriting portfolios to net-zero greenhouse gas (GHG) emissions by 2050 and will set science-based intermediate targets every five years, and independently and publicly report on their progress on an annual basis. This builds on the pioneering work that has already begun with the group’s investment portfolios in line with a net-zero transition pathway.

The group is also funding research into climate change through the Axa Research Fund, including research to help anticipate and prepare for more extreme weather events. So far we have provided funding for over 230 research projects focusing on the climate and the environment.

In Ireland, Axa has signed the low carbon pledge to reduce the environmental impact of our business as much as possible as we transition to a more sustainable way of working.

In shaping our local climate roadmap, we researched the attitudes of our Irish customers and found a marked interest on the issue. Some 59 per cent of respondents said they were proactively reducing their own carbon footprints and 77 per cent of respondents said Axa should treat climate change as “a high or top priority”.

In response, we have launched a new initiative to offset the carbon emissions produced by all new and existing car customers here in Ireland for the coming year; over 600,000 customers across the island. This is a €6 million investment which will provide €2 million to finance the planting of 600,000 trees across 200 hectares around the country. Today, less than 2 per cent of Ireland is covered by native woodland and, as well as having a huge impact on the environment, the creation of new woodlands will help to protect and restore important eco-systems while creating public spaces we can all enjoy for years to come.

Impact of driving

A further €4 million will be used to purchase carbon offsets around the world using wind, hydro and solar clean-energy projects.

Carbon offsetting is a way to balance the environmental impact of CO2 emissions produced through different processes, in this case driving, by compensating for it elsewhere. This represents one of the largest carbon offset programmes ever undertaken in Ireland.

One of the questions we have been asked was whether it was right for us, a business, to finance carbon offsets on behalf of our customers. In contrast, some other companies invite their customers to purchase carbon offsets on an individual basis as a secondary purchase when buying that company’s product or service.

From our perspective, we felt it important in the current phase of the response to lead and fund the investment in the first year. That also allowed us to achieve things which would have been impossible for individual customers to do – like ensuring the native tree-planting programme builds sustainable amenities which can be used for the benefit of local communities. Individuals don’t have the ability to structure programmes of scale like this so it’s right that companies should take the lead.

However, we have also introduced a calculator to our customer portal which will allow individual customers to estimate the amount of carbon which their car will produce in the next year. It will help educate people about the impact of their own activities on the climate

The insurance industry in Ireland is dealing with a number of challenges and has a job of work to do to improve consumer confidence in our commitment to serving the community and key stakeholders. Helping our customers do the right thing on the climate issue is one area where we can demonstrate that we do want to be good corporate citizens. We are willing to use our power and resources to help move this issue forward and make a real difference.

Philip Bradley is chief executive of Axa Ireland