Biodiversity loss and associated risks to be addressed in new study by UN-convened Sustainable Insurance Forum
Geneva and New York
Insurance supervisors from the Sustainable Insurance Forum (SIF) are to undertake a landmark scoping study on the financial risks of biodiversity loss and analyze how insurance supervisors and insurance companies are responding to these risks.
The SIF, who will carry out the scoping study, is the global network of insurance supervisors and regulators established by the UN. The SIF partners with the International Association of Insurance Supervisors (IAIS), the global standard setting body for the insurance sector, to provide guidance to insurance supervisors on how to address sustainability and climate change challenges.
Climate change and biodiversity loss are widely seen as the two leading environmental threats with a potential to undermine humankind. In response, sustainable finance has become a mainstream priority and multi-trillion-dollar agenda, attracting some of the best innovation in the financial world.
The threat of biodiversity loss and ecosystem degradation has sharply moved to centre stage, especially in the past 12 months. Initiatives examining biodiversity finance have proliferated, and many have taken a systemic view of the changes needed to align the financial system with the needs of a healthy planet. In September, an Informal Working Group of which the SIF is a member, was formed to explore the establishment of a Task Force on Nature-related Financial Disclosures (TNFD).
Yet until now, the links between the global financial system and its dependence on nature or risk exposure from its degradation have not yet been analysed in this detail by a global supervisory initiative.
Commenting on the new scoping study, Geoff Summerhayes, Chairman, SIF and Executive Board Member at the Australian Prudential Regulation Authority (APRA): “SIF member organizations such as De Nederlandsche Bank have begun such explorations at a national level, publishing a study on biodiversity loss in mid-2020. However, internationally representative bodies have not produced supervisory material on this topic, and it is an area of developing understanding both within insurance firms and supervisors and regulators. Noting this has led to the decision by the SIF to undertake a scoping study on the financial risks of biodiversity loss and how insurance supervisors and insurance companies are responding to these risks. It is our intention that this work should also support of the work of the Informal Working Group exploring the establishment of a TNFD.”
Mahmoud Mohieldin, UN Special Envoy on Financing the 2030 Development Agenda: “The COVID-19 socio-economic crisis has emphasized our fragile relation with nature. We commend the work being undertaken by the Sustainable Insurance Forum and the International Association of Insurance Supervisors to better understand the interrelation and dependence of our financial system with nature as the bedrock of our societies and economies. This initiative is a much-needed step towards building more resilient societies and a financial system that better prices nature-related risks and helps unlock and redirect capital to finance the 2030 Agenda.”
Jonathan Dixon, Secretary General, International Association of Insurance Supervisors (IAIS): “The risks of a changing climate impacting the insurability of assets and insurers’ operations have been well established by the SIF. Building on this work and as the economic damage of biodiversity loss is better understood, it is relevant for forums like the SIF to explore the ways in which biodiversity loss can translate into financial risks for the insurance sector. Insurance regulators and supervisors will increasingly work to understand and respond to the insurance risks and the threats to financial stability that biodiversity loss can pose, with this scoping paper a positive first step.”
The scoping study is supported by the UN Multi Partner Trust Fund for Building A Strategy for Financing the 2030 Agenda.
About the Sustainable Insurance Forum (SIF)
Established by the UN with the support of the International Association of Insurance Supervisors (IAIS), the Sustainable Insurance Forum (SIF) is a global network of 30 insurance supervisors and regulators working together to strengthen responses to sustainability and climate change challenges facing the insurance sector. Launched in December 2016, the SIF provides a platform for international collaboration among supervisors, facilitating knowledge sharing, dialogue, and uptake of policy innovations.
About the International Association of Insurance Supervisors (IAIS)
Established in 1994, the International Association of Insurance Supervisors (IAIS) is the international standard setting body responsible for developing principles, standards and other supporting material for the supervision of the insurance sector and assisting in their implementation. A voluntary membership organisation of insurance supervisors and regulators from more than 200 jurisdictions, the mission of the IAIS is to promote effective and globally consistent supervision of the insurance industry in order to develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders and to contribute to global financial stability.
For more information please visit www.sustainableinsuranceforum.org.
For all SIF related queries, please contact Sarah Zaidi, SIF Coordination and Networking Manager at Sarah.Zaidi@un.org.