Investor network Ceres has published its second annual report assessing major US insurers’ climate risk strategies, identifying unequal progress and persistent challenges. Evaluating responses by 516 insurance firms to the Task Force on Climate-related Financial Disclosures-aligned (TCFD) National Association of Insurance Commissioner’s climate risk disclosure survey, Ceres concluded that while some insurers had made strides in integrating climate-related risks and opportunities into their business operations, there remained “significant gaps and disparities across the sector”. A total 94% of the assessed firms reported on climate risk management, 86% on strategy, 81% on governance and 29% on metrics and targets. “The overall low performance in the metrics and targets area emphasises the continued challenges insurers are experiencing as they grapple with developing and adopting risk measurement and management processes,” Ceres said. Only 26% reported on parameters across all four of the TCFD categories, the report noted. Ceres identified improvements in some sub-areas, such as how insurers are reporting on Scopes 1-3 emissions but said disclosures declined in others – such as describing the role that management plays in assessing and managing climate-related risks and opportunities. Nonetheless, the increasing adoption of climate scenario analysis by insurers is encouraging, Ceres said, as it demonstrates that firms understand the importance of assessing the potential long-term negative impacts of climate change on their financial performance. Between 2017 and 2023, 137 billion-dollar disasters cost over US$1 trillion in damages, Ceres noted.
