The industry-led Partnership for Carbon Accounting Financials (PCAF) is seeking input into the first global standard to measure and disclose greenhouse gas emissions associated with insurance activities.
The body has published a draft which sets the foundation for an upcoming standard – part of a series being created by the PCAF to help financial institutions understand the emissions for which they are responsible.
Under the draft, re/insurers will be expected to disclose absolute emissions, although reinsurers are asked to consider reporting emissions intensities “if these values are relevant to their business goals”. Scope 3 emissions should be made separately from Scope 1 and 2 because data is lower for the former, said PCAF.
PCAF has declined to provide guidance on avoided emissions – which compares the actual emissions of a zero- or low-carbon project to the hypothetical emissions of a high-carbon alternative – but signatories can choose to disclose the measure so long as they “comply with applicable laws”.
In its current version, the insured emissions standard will only apply to commercial insurance purchased by companies and personal motor insurance, and excludes life, health and accident insurance.
Stakeholders have until next month to provide input on the draft.
This week, Tommy Piemonte, the research head at German faith-based investor Bank für Kirche und Caritas, called for managers of catastrophe bond funds to conduct “their own engagement dialogue along their value chain with insurance brokers and reinsurers”, in what he termed “domino engagement”.
“It must be ensured that the insurance transactions underlying CAT bonds cover sustainable insurance purposes such as for residential property in the event of an incident and do not include insurance purposes that run counter to a sustainable development,” he argued.
“Unfortunately, the transparency and commitment of a clear sustainability orientation of the included insurance transactions, in the value chain of the asset class of CAT bonds, is not yet sufficiently present,” said Piemonte in a social media post.
Separately, PCAF is expected to issue a standard for facilitated emissions which measures the emissions arising from capital market activities, such as bond underwriting, in August. HSBC has pledged to publish its climate targets for this measure once the standard is finalised after coming under fire for excluding capital market activities from its climate targets earlier this year.