On the road to COP30: Finding investment opportunities in countries’ climate plans – United Nations Environment Programme Finance Initiative (UNEP FI)

Report on the Insurance Industry’s Transition to Net-Zero and Alignment with Sustainable Development Goals

1.0 Introduction: A Strategic Framework for Sustainable Development

Global leaders from the insurance industry, regulatory bodies, and civil society have endorsed the United Nations Environment Programme’s (UNEP) Forum for Insurance Transition to Net Zero (FIT). The inaugural guidance on transition plans provides a critical framework for the sector to align its operations with global sustainability targets. This report synthesizes stakeholder perspectives, emphasizing the initiative’s direct contributions to the Sustainable Development Goals (SDGs).

2.0 Advancing Climate Action and Sustainable Energy (SDG 13 & SDG 7)

The primary objective of the FIT initiative is to mobilize the insurance industry in the global effort to combat climate change, directly supporting SDG 13 (Climate Action). Stakeholders universally acknowledge the urgency of this goal.

• Mitigation and Adaptation: Transition plans are identified as essential tools for incorporating both climate mitigation and adaptation strategies. This involves shifting underwriting and investment practices away from carbon-intensive activities and towards solutions that build resilience.
• Net-Zero Economy: There is a consensus that credible transition plans are the foundational step for the industry to contribute effectively to a net-zero economy. This includes ruling out coverage for new fossil fuel projects, thereby accelerating the shift to sustainable energy sources as outlined in SDG 7 (Affordable and Clean Energy).
• Risk Management: Insurers are positioned to manage climate-related risks, but the escalating crisis poses an existential threat to the sector itself. Proactive transition planning is framed as a necessary measure for long-term viability and societal risk management.

3.0 Fostering Economic Growth, Innovation, and Resilient Communities (SDG 8, SDG 9, & SDG 11)

The transition plans are designed not only to mitigate risk but also to drive sustainable economic opportunities and build resilient societies.

1. Just Transition and Economic Growth (SDG 8 & SDG 10): The guidance encourages the emergence of market practices aimed at a “just transition.” This ensures the shift towards a sustainable economy is inclusive, supports decent work, and reduces inequalities, aligning with SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequalities).
2. Innovation and Infrastructure (SDG 9): The framework enables insurers to support innovation in clean technology and resilient infrastructure. By providing insurance for clean tech, the industry can unlock lending and investment, fostering the goals of SDG 9 (Industry, Innovation, and Infrastructure).
3. Sustainable Communities and Financial Inclusion (SDG 11 & SDG 1): A crucial role for insurers is to close protection gaps and ensure affordable financial protection against climate impacts. This enhances the financial resilience of communities, particularly in developing nations, contributing to SDG 11 (Sustainable Cities and Communities) and SDG 1 (No Poverty).

4.0 The Power of Global Partnerships (SDG 17)

The structure and reception of the FIT initiative exemplify the importance of multi-stakeholder collaboration, a core principle of SDG 17 (Partnerships for the Goals).

• Diverse Coalition: The FIT convenes a wide range of actors, including insurers, reinsurers, regulators, civil society organizations, and academic institutions from across the globe.
• Shared Vision: Participants from Europe, North America, South America, Asia, and Africa have expressed support, highlighting a shared global vision for a sustainable future.
• Public-Private Dialogue: The forum is seen as a vital platform for renewing public-private relations to develop global solutions for mitigation and adaptation challenges.

5.0 Conclusion: A Roadmap for Actionable Change

The FIT’s guidance on transition plans provides the insurance industry with a clear, actionable roadmap. It moves beyond ambition to implementation, enabling insurers to integrate sustainability into core business strategies. By doing so, the sector can play a pivotal role in managing the triple planetary crisis of climate change, nature loss, and pollution, thereby making a significant and measurable contribution to achieving the Sustainable Development Goals.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article highlights issues that are directly and indirectly connected to several Sustainable Development Goals (SDGs). The primary focus is on climate action and the role of the insurance industry in the transition to a sustainable, low-carbon economy. The following SDGs are addressed:

• SDG 13: Climate Action

  This is the most prominent SDG in the article. The entire discussion revolves around the insurance industry’s role in addressing climate change through “climate mitigation and adaptation strategies,” developing “credible transition plans” to a “net-zero economy,” and managing “climate-related risks.” Quotes from nearly every contributor emphasize the urgency of climate action.

• SDG 17: Partnerships for the Goals

  The article describes the UN Forum for Insurance Transition to Net Zero (FIT) as a “multistakeholder platform” and “multistakeholder coalition.” It explicitly mentions the collaboration between “insurance companies, regulators and civil society,” as well as academic institutions, to find global solutions. This collaborative approach is the essence of SDG 17.

• SDG 9: Industry, Innovation, and Infrastructure

  The transition to a “low-carbon economy” requires significant innovation and changes in industry practices. The article mentions the need to insure “clean technology” to enable investment and lending, which is crucial for building resilient and sustainable infrastructure. This aligns with the goal of making industries more sustainable.

• SDG 8: Decent Work and Economic Growth

  The article discusses creating “long-term resilience and success” by seizing “emerging opportunities in a low-carbon economy.” This points towards decoupling economic growth from environmental degradation, a key aspect of SDG 8, by fostering a new model of sustainable economic activity.

• SDG 11: Sustainable Cities and Communities

  The article repeatedly emphasizes the importance of building the “financial resilience of communities” and strengthening “community resilience.” This is particularly relevant in the face of climate change impacts on infrastructure and livelihoods, which directly connects to making human settlements inclusive, safe, resilient, and sustainable.

• SDG 12: Responsible Consumption and Production

  The call for insurers to “rule out coverage for new fossil fuel projects” and transition away from “the most-emitting activities” is a direct link to promoting sustainable production patterns. The article also mentions addressing the “triple planetary crisis of climate change, nature loss and pollution,” which is central to SDG 12.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s content, several specific SDG targets can be identified:

• Under SDG 13 (Climate Action):

  • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters. The article directly addresses this by highlighting the insurance industry’s role in “supporting the financial resilience of communities and businesses” and the need for “adaptation strategies.”
  • Target 13.2: Integrate climate change measures into policies, strategies, and planning. The core subject of the article is the development of “transition plans” for insurers, which are corporate-level strategies to integrate climate considerations into business operations, aligning with this target.

• Under SDG 17 (Partnerships for the Goals):

  • Target 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships. The FIT is described as a “multistakeholder platform convened by the United Nations, insurance companies, regulators and civil society,” perfectly embodying this target.
  • Target 17.17: Encourage and promote effective public, public-private, and civil society partnerships. The article mentions the need for a “renewal of public-private relations” and bringing “civil society formally to the table” to drive transformational change.

• Under SDG 9 (Industry, Innovation, and Infrastructure):

  • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable. The article implies this by discussing the need to “mobilise capital towards the net-zero transition” and provide insurance for “clean technology,” which is essential for upgrading industries.

• Under SDG 11 (Sustainable Cities and Communities):

  • Target 11.b: Substantially increase the number of cities and human settlements adopting and implementing integrated policies and plans towards mitigation and adaptation to climate change and resilience to disasters. The focus on creating “community resilience” and offering “affordable and accessible financial protection” supports the implementation of local disaster risk reduction and climate adaptation plans.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article does not mention official SDG indicators, but it implies several practical metrics that can be used to measure progress towards the identified targets:

• For SDG 13 (Climate Action):

  • Development and adoption of transition plans: The number of insurance companies that “define and implement an appropriate transition plan” can be a key indicator. The article states, “All insurers should have a transition plan.”
  • Exclusion of fossil fuel projects: The extent to which insurers “rule out coverage for new fossil fuel projects” serves as a concrete measure of their commitment to mitigation.
  • Commitment to net-zero underwriting: Progress can be measured by the number of insurers adopting “net-zero transition plans for both the investing and underwriting sides of their business.”

• For SDG 17 (Partnerships for the Goals):

  • Participation in multi-stakeholder forums: The number and diversity of participants (insurers, regulators, civil society) in initiatives like the FIT can indicate the strength of partnerships.

• For SDG 9 and SDG 11:

  • Availability of affordable insurance: The ability of the industry to “offer affordable and accessible financial protection in the face of evolving climate conditions” is a measurable outcome of building community resilience.
  • Investment in clean technology: The volume of insurance coverage provided for “clean technology” can be an indicator of the industry’s role in facilitating the transition to sustainable infrastructure.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.

Source: unepfi.org