The insurance industry is “perfectly positioned” for “action” to support global carbon dioxide removal and the transition to a net zero economy by following a three-pronged “theory of change” model, according to Swiss Re.
The first pillar of three-stranded strategy is de-risking operations, for example by engaging in long-term CO2 offtake agreements.
This type of de-risking can utilise nature-based solutions – such as planting trees and land management – or technical solutions, like air captured CO2 or bioenergy.
Insurers can support the de-risking process for other industries by looking at insurance covers and engaging in more novel lines of business, such as climate liability or stored carbon.Mischa Repmann, senior risk manager Swiss Re
Second pillar is financing, so investing in suppliers and providing grants, for example. Although this is the smallest of the three areas where insurers can have an impact, this pillar is still important because it can plug a current investment gap.
The last pillar of strategy is buying. This includes buying “carbon removal services” and “carbon avoidance certificates”.
Investors are reluctant towards new technologies – there are technical risks. There are commercial and market risks.
The reason why the insurance sector be so impactful in driving the transition to a net zero economy is because it can participate in all three of these areas.
Other industries aren’t that well positioned and can maybe do buying, maybe a little bit of investing – but the insurance sector can really do all three.
by Yana Keller