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“Can insurers catalyse climate action?”

Aug 3, 2022

My latest blog for the Journal, Chartered Insurance Institute.

That the International Financial Reporting Standards (IFRS) finally overcame a big blind sustainability spot by inventing the ISSB (International Sustainability Standards Board) – in the hindsight – appears too good to be true.

“The ISSB needs to go back to the drawing board. I have seldom seen such a torrent of criticism about the inadequacy of proposals”, observes Professor Paul Watchman. “Torrent” is a really good description! It’s very difficult to keep up with all this feedback, adds Dr Raj Thamotheram.

Where is the big flaw? According to Bloomberg, “[ESG] ratings don’t measure a company’s impact on the Earth and society. In fact, they gauge the opposite: the potential impact of the world on the company and its shareholders.” Same is the case with the ISSB. One sided materiality.

“How can we reimagine our institutions and rebuild them so that they are truly effective for addressing the multiple existential threats we face?” I quote Ione Anderson. “Aligning the money-pipeline to investing for social and ecological returns” – as Bill Baue recently told me – deserves the highest rigour and vigour.

“I hope an independent journalist will help us analyse these comments”, wonders Dr Raj Thamotheram. Whatever that be – calls for a super-agile protocol not impeded by bureaucracy and analysis paralysis. Do we have that luxury, anymore?

Insurers cannot stay on the sidelines. They are the money pipeline, too. Catalysing climate action urgently beckons them to the mainstream. The stark warning from Vanessa Otto-Mentz and Marco Vet: “Picture a world that is uninsurable…” ought to be a wakeup call.

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