Insurance firms failing to report climate change risks

7th August 2018

Web ukcash shutterstock 1040664052

Related Topics

Related tags

  • Reporting ,
  • Fossil fuels ,
  • Investment


Faten Al-Attar

Three British insurance companies have been reported to the Financial Conduct Authority (FCA) for failing to disclose climate change risks in their annual reports.

Admiral, Lancashire Holdings Limited and Phoenix Group Holdings could now all face fines as a result of the complaints, while the regulator may also decide to publicly censure the insurers.

Stephanie Morton, insurance lawyer at ClientEarth, which reported the firms to the FCA, said companies were legally obliged to disclose the “myriad of climate change-related risks” they face.

“Without this information, how can investors make a fully-formed investment decision?” she continued.

“We think the law is quite clear on this, and by omitting financially material climate risks from their annual reports, these companies are not giving the full picture. “

ClientEarth highlighted how insurance companies are exposed to physical, transitional, reputational and liability risks.

Physical threats are likely to result in more claims and a fall in asset values, while transitional risks are caused by new technologies, changing consumer behaviour, and government policy.

If losses are suffered as a result of climate risks, insurance companies could also find themselves on the hook for third-party liability claims against their corporate customers.

These firms face additional reputational damage, with insurers coming under increased pressure from environmental groups to stop underwriting the fossil fuel sector.

The FCA recently published a list of steps it is taking with regard to climate change-related disclosures, saying firms must report how these affect valuations and how they are managed.

“The FCA has moved swiftly this year in understanding the risks that climate change presents to the economy,” Morton continued.

“This is an opportunity for the FCA to send a strong market signal that climate disclosures are essential for enabling investors to assess climate-related financial risks.”

Image credit: Shutterstock


Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.

Transform articles

Weather damage insurance claims hit record high

Weather-related damage to homes and businesses saw insurance claims hit a record high in the UK last year following a succession of storms.

18th April 2024

Read more

The Scottish government has today conceded that its goal to reduce carbon emissions by 75% by 2030 is now “out of reach” following analysis by the Climate Change Committee (CCC).

18th April 2024

Read more

The Science Based Targets initiative (SBTi) has issued a statement clarifying that no changes have been made to its stance on offsetting scope 3 emissions following a backlash.

16th April 2024

Read more

While there is no silver bullet for tackling climate change and social injustice, there is one controversial solution: the abolition of the super-rich. Chris Seekings explains more

4th April 2024

Read more

One of the world’s most influential management thinkers, Andrew Winston sees many reasons for hope as pessimism looms large in sustainability. Huw Morris reports

4th April 2024

Read more

Alex Veitch from the British Chambers of Commerce and IEMA’s Ben Goodwin discuss with Chris Seekings how to unlock the potential of UK businesses

4th April 2024

Read more

Regulatory gaps between the EU and UK are beginning to appear, warns Neil Howe in this edition’s environmental legislation round-up

4th April 2024

Read more

Five of the latest books on the environment and sustainability

3rd April 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close