Driving Change: Key Insights from Our Recent Roundtable on Claims Emissions Accounting
Last week, practitioners and thought leaders united to address a critical topic in the insurance industry. The roundtable, led by Accenture, Allianz, Aviva, and Claims Carbon, focused on motivating sustainability leads to contribute to a standard for claims emissions accounting.
Directional carbon footprint profile of a typical P&C insurance company indicating the importance of claims emissions.
The event aimed to align insurers' understanding of methodologies and provide food for thought to organizations central to standards development, like the Partnership for Carbon Accounting Financials (PCAF).
The Need for a Standardized Approach
Claims emissions account for about 2% of global CO2e emissions. As sustainability becomes central to business strategy, insurers must manage these emissions to reduce their carbon footprint and build stakeholder trust.
In addition, with the EU’s Corporate Sustainability and Responsibility Directive (CSRD), insurers will need to include claims-related emissions in their annual reports going forward.
There was consensus among the roundtable participants that Scope 3 emissions are material and should be disclosed, but developing a specific standard remains challenging.
Key Areas to Consider in Standards Development
The roundtable identified four critical areas needing clarity:
Definition of Claims: Understanding whether claims are integral to the insurance policy or services provided through a supply chain is vital for accurate emissions modeling.
GHG Emission Categories: Determining which Scope 3 categories, such as “use of sold products” or “purchased goods and services”, are most relevant is crucial for proper classification and reporting.
Cash Settlement Treatment: There is a need for consensus on how cash settlements should factor into emissions modeling, potentially using weights for levels of “control” or “influence”.
Data Quality and Modeling: Transitioning from spend-based to activity-based emissions models can enhance accuracy. However, balancing data specificity with precision is challenging.
Conclusions
The roundtable underscored the urgency of developing a standardized approach to claims emissions accounting. Such a standard would ensure compliance with regulations and provide strategic advantages by enhancing transparency within the industry.
Further discussions are needed within the insurance industry to align on metrics and methodologies while recognizing the complexity of creating a claims emissions model. The importance of collaboration can not be understated as the understanding of climate change impact evolves.
Claims Carbon invites all stakeholders to collaborate in developing these standards, driving meaningful change towards a sustainable future. For more information on how you can contribute, visit our website or contact us at contact@claimscarbon.com.