October 6, 2023 / by eduardovalencia
New Business opportunities and a positive impact on the environment in the Claims Journey
Sustainability is now a required regulation for businesses, evidenced by the EU Corporate Sustainability Reporting Directive (CSRD) taking effect in the 2024 financial year. CSRD applies to large companies in Europe or listed on EU-regulated markets, requiring them to report on the environmental and social impact of their corporate activities, including audit obligations.
In the past 18 months, the U.S. regulatory landscape has swiftly evolved with numerous new ESG initiatives led by the SEC, and state-level regulations. Insurance firms must align with TCFD reporting by November 2022 as part of the NAIC Climate Risk Disclosure Survey. In global sustainability reporting, Asia-Pacific’s top 100 companies set the pace, with 89% disclosing information a 40% higher than a decade ago.
In today’s rapidly evolving landscape, sustainability has become a central focus for the motor insurance industry. Beyond just measuring direct emissions (Scope 1) and emissions from purchased energy (Scope 2), it’s now imperative to measure Scope 3 emissions. These emissions, including those from vehicle manufacturing, maintenance, and disposal, have far-reaching implications for both insurers and the environment.
- Environmental Impact: Scope 3 emissions often make up the lion’s share of a motor insurer’s carbon footprint. Understanding and reducing these emissions can significantly contribute to a greener future.
- Risk Management: Measuring Scope 3 emissions enables insurers to assess the environmental risks associated with their policies, helping them make informed decisions and adapt to changing regulatory landscapes.
- Competitive Advantage: Insurers that proactively address Scope 3 emissions demonstrate their commitment to sustainability, attracting eco-conscious customers and gaining a competitive edge.
- Cost Reduction: Identifying opportunities to reduce Scope 3 emissions can lead to cost savings through improved efficiency and resource management.
- Sustainability Targets: Meeting sustainability targets, including carbon neutrality, is increasingly vital for brand reputation and stakeholder trust.
In conclusion, measuring Scope 3 emissions in the motor insurance industry is not just a necessity; it’s an opportunity for insurers to lead in sustainability, manage risks, and drive positive change.