Bulk annuity insurers taking 'big strides' to up net-zero efforts

All eight UK bulk annuity insurers have set a net-zero target for their asset portfolio and almost all have disclosed interim targets on their pathway to achieving this, updated research from LCP has confirmed.

Previous research from the consultancy raised concerns that not all insurers were progressing on climate issues at the same pace, with particular concerns that insurers may be "behind the curve on stewardship".

However, the progress since has been highlighted as a demonstration of how insurers are treating climate issues as a high priority, after insurers took “significant action” to remain on the front foot when it comes to implementing policies to tackle climate risk.

In particular, the research found that all eight bulk annuity insurers have set a net-zero target for their asset portfolio, up from seven in September 2021, whilst seven of the insurers now disclose interim targets on their pathway, up from five in September 2021.

In addition to this, the research found that seven of the insurers now produce a Taskforce on Climate-related Financial Disclosures report, up from just four in September.

Commenting on the findings, LCP partner, Tom Farrell, stated: “It’s great to see bulk annuity insurers taking big strides on tackling climate change.

"In particular, all insurers have now set a net-zero target, and perhaps more importantly almost all have now disclosed interim targets showing that they are developing their plans for how they are going to meet their target.

“With climate risk rising up the agenda for pension schemes and many more members taking an increased interest, we are increasingly seeing trustees and sponsors considering insurers’ approach to ESG and climate risk when selecting an insurer and using their influence to drive change.”

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