ABI publishes guide to sustainability risk

In the latest indication that sustainability risk is being taken seriously by the (re)insurance market, the Association of British Insurers (ABI) has published guidance which it claims will help insurers and long-term savings providers tackle the decline in the UK’s nature.

Nature loss is exposing homes and businesses that insurers protect to a wide range of risks, such as flooding.

The ABI said nature, together with geology, water and climate, is in serious decline: has been a 70 per cent drop in global wildlife populations since 1970; and in the UK, a quarter of mammals are at risk of extinction, with 84 per cent of rivers in poor ecological health.

ABI said the UK ranks in the bottom 10 per cent of countries for biodiversity and drivers for this loss include climate change, changes in land use, pollution and invasive species, such as Japanese knotweed.

From a commercial perspective, nature loss is exposing homes and businesses that insurers protect to a wide range of risks, such as flooding.

The ABI said action needs to be taken by insurers and providers now because of the following:

  • Nature loss exposes the homes and businesses that ABI members protect across the UK to a wide range of risks, which in turn will impact markets and financial performance.
  • There is a clear link between physical and mental health and healthy ecosystems. This impacts on the business models of long-term savings providers, life and health insurers.
  •  There is a clear reputation risk to firms not seen to be addressing nature loss.
  • Net zero cannot be achieved with innovation and new technologies alone. We need nature to absorb carbon from the atmosphere and provide resilience. So, carbon credits and offsets must inevitably incorporate nature.

The ABI said its guide will help firms begin to assess the risks and opportunities such as identifying external organisations, tools and best practice examples for expertise and guidance; developing a heatmap as an initial estimation of possible impacts and identifying focus areas; learning best practice from ‘early movers’ in the sector; and setting up internal working groups within firms, leading the agreement of guiding principles, including governance and accountability.

The guide also calls for the government to provide a strong lead to place nature and the centre of climate adaptation, which will help firms plan their strategies.

“Nature loss is one of the most crucial issues facing our planet,” said Hannah Gurga, director general at the ABI. 

“Its shocking decline not only threatens life but will harm businesses and prevent economic growth. Yet many businesses have not found it easy to assess their reliance on nature, or to recognise its importance to their business strategies. Our guide will enable our members to better understand this issue, the risks and opportunities it poses to them and their customers, so that they are truly ‘nature positive’.”