IN SHORT

• Insurers can help the world limit global warming to 1.5°C by advising their clients, investing in clean energy and other carbon-reducing innovations, and adopting net zero business models.
• The coal, oil and gas industries are the major causes of greenhouse gases, and insurers need to move out of insuring and investing in these sectors as quickly as possible.
• The insurance industry can be an incredibly powerful force in the drive for net zero, but it requires action and courage – especially from the market leaders.

The COP26 climate summit concluded in Glasgow last month with a consensus from almost 200 countries to accelerate action on meeting their Paris Agreement commitments.

Despite the grounded flights, closed factories and empty highways in 2020 and 2021, COVID-19 hasn’t stopped the countdown to 2050. In fact, the pandemic delayed the date we’ll reach 1.5 degrees of warming by only three weeks. 

According to Net Zero Tracker, 138 countries have committed to carbon neutrality by 2050, but even if all of them achieve their objectives, we can still expect a temperature rise of 2.5 to 2.8°C by 2100, more than a degree higher than scientists say is the tipping point for irreversible climate impacts.

To have any chance of limiting global warming to 1.5°C, the world needs to halve greenhouse gas emissions by 2030 — giving us just eight years to make significant changes to how we live and work.

According to Michelle McPherson, a director of the Australian Sustainable Finance Institute and chief financial officer at IAG, insurers have a unique understanding of the risks associated with climate change, not only through their core underwriting practices, but because they see firsthand the devastating impacts that more severe and more frequent natural disasters are having on their customers. 

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