Insurers and long-term savings providers face increasing risks, such as flooding, due to the decline in nature
Insurers and long-term savings providers face increasing risks, such as flooding, due to the decline in nature. In response, the Association of British Insurers (ABI) has launched a comprehensive guidance to help these industry players become "nature positive" and address the nature decline in the UK. This initiative coincides with the ABI's annual Climate Change summit, where progress towards Net Zero will be evaluated among its members.
Nature, encompassing biodiversity, geology, water, climate, and other components of our planet, is experiencing a severe decline. Global wildlife populations have plummeted by 70% since 1970, and in the UK, a quarter of mammal species are at risk of extinction, while 84% of rivers suffer from poor ecological health. Alarming statistics place the UK in the bottom 10% of countries for biodiversity. Climate change, land use changes, pollution, and invasive species like Japanese knotweed contribute to this concerning trend.
The guide highlights several compelling reasons for the industry to take action:
Risk exposure: Nature loss exposes homes and businesses protected by ABI members to various risks, impacting markets and financial performance.
Economic dependence: Studies estimate that around half of the global Gross Domestic Product, totaling US $44 trillion, is highly to moderately dependent on nature.
Health impact: The connection between physical and mental health and healthy ecosystems affects the business models of long-term savings providers, life insurers, and health insurers.
Consumer pressure: Firms failing to address nature loss face reputation risks, as evidenced by a 2021 poll where 94% of respondents expressed the desire for more local biodiversity.
Synergy with net-zero goals: Achieving net-zero emissions requires incorporating nature, as it absorbs carbon and provides resilience. Carbon credits and offsets must consider nature.
To guide firms, the ABI's resource helps assess risks, identify opportunities, and develop action strategies. Key steps include leveraging external organisations, tools, and best practices, creating heatmaps to estimate impacts and focus areas, learning from early movers in the sector, and establishing internal working groups to define guiding principles, governance, and accountability. The ABI plans to support its members through collaboration, sharing best practices, offering consumer advice on "nature positive" behaviours, and utilising fraud-tackling expertise to combat environmental crimes like illegal deforestation.
Additionally, the guide urges the government to take a leadership role in prioritising nature at the core of climate adaptation, which would assist firms in planning their strategies. By embracing this guidance, insurers and long-term savings providers can play a vital role in addressing the decline in nature and its associated risks.
Hannah Gurga, the Director General of the ABI, emphasised the urgency of addressing nature loss as one of the most crucial issues our planet faces. She expressed concern that the significant decline in nature not only poses a threat to life but also holds the potential to harm businesses and impede economic growth.
Gurga acknowledged the challenges many businesses face in assessing their reliance on nature and recognizing its importance within their business strategies. In response, the ABI has developed a guide to help its members better understand the issue, identify the associated risks and opportunities, and truly embrace a "nature positive" approach.
During the upcoming climate change summit, the ABI will conduct a comprehensive review of the progress made on their Climate Change Roadmap, which marks the halfway point between its launch in 2021 and the deadline for the first set of milestones in 2025.
The summit will feature an annual update on the Roadmap, showcasing the progress made by ABI members. Currently, 84% of members have already set targets and commenced the development of transition plans, even before it becomes mandatory. The ABI is confident that the majority of its members remain on track to meet the 2025 milestones. However, they also emphasise the importance of maintaining momentum to ensure the successful achievement of these goals.
In conclusion, the decline in nature poses a significant threat to our planet, with far-reaching consequences for both life and businesses. The ABI's Director General, Hannah Gurga, highlights the importance of recognizing the risks and opportunities associated with nature loss and the need for businesses to become truly "nature positive." The launch of the ABI's guide aims to help members better understand these issues and take appropriate action.
As the ABI reviews progress on its Climate Change Roadmap at the halfway point between its launch and the 2025 milestones, there is optimism regarding the progress made by members. With a majority already setting targets and developing transition plans, the ABI remains confident in their ability to meet the upcoming goals. However, it is crucial to maintain the momentum and ensure continuous efforts to address climate change and nature loss.
By addressing the decline in nature and integrating sustainable practices into their strategies, businesses can contribute to environmental preservation while also safeguarding their own interests. The ABI's commitment to supporting its members, collaborating on best practices, and advocating for nature-focused policies reinforces their dedication to creating a positive impact on our planet.
Ultimately, by embracing the challenges posed by nature loss and taking proactive measures, businesses can contribute to a more sustainable future, protect against risks, and foster long-term economic growth.