Insurers' investments in the carbon transition - report

Asset owners are at the forefront of the move to decarbonise the economy – and perhaps the most telling evidence of that is the growing membership of the Net-Zero Asset Owner Alliance (NZAOA).

Launched in September 2019 by six institutions including three insurers, today the alliance counts 60 members, including 31 insurers with a combined $10trn.

But if the force lies in the numbers, the challenges insurers face to play their part in curbing climate change has not receded. On the contrary, from decision to action the journey is still a long and hazardous one, and the playing field is far from level, as this report from J.P. Morgan Asset Management and Insurance Asset Risk highlights.

The report highlights different geographical understandings of the risk posed by climate change, which implies different responses across Europe, North American and Asia Pacific. It also emphasises how small firms may struggle, compared to larger insurers with greater resources, to get up to speed on the topic of climate risk and to find ways to decarbonize their portfolios.

Beyond these divisions, this report highlights common challenges for insurers across the world: how to stress test efficiently? How to handle data's availability and quality? And how to partner up? And with whom to partner – as this is no longer about the simple risk/ return equation, but digs deep into the investment philosophy of a company as a whole?

Produced by Insurance Asset Risk and J.P. Morgan Asset Management, the report is free to download.

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