The countdown is on. In just twelve days, US president-elect Donald Trump will once again wield significant political power, potentially reshaping the global climate and sustainability landscape.
If someone had told me post-Capitol riots that I'd be writing these words, I wouldn't have believed it—but here we are.
For insurers, Trump's return raises pivotal questions about the future of environmental, social and governance (ESG) efforts. According to Kennedys, a global law firm, his administration is poised to roll back ESG policies, a stark departure from Biden's approach.
Kennedys' December ESG insurance report outlined potential delays in corporate emissions reductions, a shift of EU companies to the US for its lighter regulatory touch and increased private investment in climate technology funding.
Despite these changes, public companies and directors and officers (D&O) insurers were urged to remain vigilant in their climate and ESG disclosures, Kennedys' partner Greg Steinberg advised.
Trump's stance might not acknowledge the escalating impacts of climate change, but nature does not wait for political consensus. Most notably, California wildfires continued to pose a serious threat. Governor Gavin Newsom declared a state of emergency as the Palisades Fire and other blazes forced over 30,000 Los Angeles residents to evacuate.
Away from the infernos, insurers also started to face growing scrutiny over deep-sea mining.
This nascent industry has been excluded by some major reinsurers from coverage due to its environmental risks. Campaigners argue the industry's sustainability challenges outweigh its potential rewards.
In Europe, regulators continued to ramp up their focus on climate risks. Early in December, the Swiss Financial Market Supervisory Authority set out expectations for insurers and banks on managing climate and nature-related financial risks.
Meanwhile, the EU explored a public-private reinsurance scheme to bolster natural catastrophe coverage. In a joint paper, the European Insurance and Occupational Pensions Authority and the European Central Bank proposed complementing this scheme with an EU disaster financing fund.
These regulatory moves highlight an emerging trend, which I suggest in my outlook for the year: the direction of leadership is arguably shifting towards lawmakers. In light of this, insurers must navigate a growing patchwork of rules, presenting significant compliance challenges.
For example, on readiness for the EU's Corporate Sustainability Reporting Directive (CSRD), Deloitte's survey painted a mixed picture. While some insurers made strides, many still lag behind.
Further insights from December's UN Environment Programme Finance Initiative (UNEP FI) event were also revealed. Discussions ranged from Aviva's thoughts on nature risk as well as life and health insurers exploring underwriting emissions reductions.
Butch Bacani, head of insurance at UNEP FI, also spoke to InsuranceERM about the intersectionality of climate, nature and pollution with broader macroeconomic pressures. Addressing these challenges, he argued, was integral to solutions for energy and food security.
In other industry news, Olivia Brindle, a regular InsuranceERM contributor and noted insurance sustainability leader, was appointed head of sustainability at specialty re/insurer Canopius.
