The UK insurance industry is making “significant” progress in embedding sustainability across investment, underwriting, and risk frameworks, a report from Pensions for Purpose has suggested.
The report, ‘Insurers for Purpose — Navigating sustainability integration across the insurance sector’, highlighted that leadership commitment, risk management, and regulatory evolution have played “decisive roles” in embedding sustainability as a business priority.
As a result, boards and CEOs are now directly engaged through sustainability committees and governance structures that integrate climate risk alongside financial risk.
Pensions for Purpose head of impact lens, Bruna Bauer, said: “Insurers play a central role in a resilient financial system.
“As risk managers, they have extensive experience integrating climate considerations into stress tests and risk registers.
“However, they are now seeking clearer guidance and stronger incentives to embed sustainability into their asset allocation, including nature-positive and transition assets.
“Their ask is clear: clarity on fiduciary duty, incentives for transition investments, reduction of reporting burdens, actionable scenario insights and consistent benchmarking.”
Additionally, interviewees argued that, while Solvency UK ensures prudence and stability, it is currently neutral between high and low-carbon assets.
In their view, this creates a “regulatory blind spot”, where capital requirements protect balance sheets, but fails to differentiate between projects that accelerate the transition and those that lock in fossil fuels.
Insurers seek clear, principles based guidance from regulators, including clarity on fiduciary duty, incentives for transition investments, reduction of reporting burdens, actionable scenario insights and consistent benchmarking.
All of this would help translate sustainability ambitions into effective investment practice, and support the investment case for sustainability-positive assets.
tom.dunstan@ft.com
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