Fidelis MGU is committed to reaching net zero Insurance-Associated Emissions (IAEs) by 2050, in line with science-based pathways to limit global warming to 1.5 degrees as per the ambition of the Paris Agreement.
As an initial step towards this, we are setting a first interim target for our underwriting portfolio, covering all emission scopes across the energy and aviation industries. To be consistent with climate science as laid out by the Intergovernmental Panel on Climate Change (IPCC), an emissions reduction in the range 26-49% is required between 2022 and 2030.[1]
Richard Brindle, Group Chief Executive Officer and Chairman, said: “This is a meaningful step forward in our climate change strategy: we now have not only a long-term net zero goal but also a near-term target and a plan of action to get us there. We look forward to engaging with all our stakeholders as we make progress on this critically important issue.”
Addressing the carbon footprint of our underwriting portfolio
Our 2022 IAEs totalled 1.2 million tonnes of CO2 equivalent for our in-scope portfolio, with the portion covered by our 2030 target accounting for c.40% of this. Our calculations follow the PCAF methodology and have received limited assurance from Crowe UK LLP.[2]
While we do not yet have sufficient basis for consistently assessing transition plans, it is clear what data we need to assess the trend of actual emissions. As an immediate next step, we will therefore start systematically requesting emissions data for the insureds we support. This will enable us to start building a view of whether insureds are delivering on decarbonisation commitments. Over the coming years, the frameworks and guidance around assessing transition plans will mature, allowing us to integrate a forward-looking perspective into our approach. Information about both elements – actual emissions and transition plans – is essential for us to be able to assess the commitment of clients to addressing climate change. We will seek to focus our portfolio on insureds who can demonstrate this commitment.
We note that we have an existing guideline in place which requires oil & gas clients to have a commitment to reducing emissions, in line with the ambition of the Paris Agreement. This guideline will come into force from January 1st 2024 and will support achievement of the 2030 target.
We expect that over time, the emissions of most of our insureds will reduce significantly. We will increasingly engage with insureds over the coming years to encourage them to transition, and to expect stronger underwriting action only where we see no willingness to commit to transition. We are also exploring new products to support the transition to a greener economy and meet the emerging needs of our clients.
We note that the implementation of our net zero strategy will evolve over time, along with the PCAF methodology and best practice guidelines for insurance transition plans. We will be as transparent as possible as this evolution progresses, not claiming to have all the answers up-front but also not shying away from taking action. We will continue to follow climate science and look to independent expert opinion to make sure our requirements are robust but also realistic.
Tackling climate change issues across our business
Fidelis MGU already uses its underwriting capabilities to support risks with positive climate and environmental impacts. We write a significant amount of renewable energy business, backing 46 gigawatts of power generation across construction and operation of wind and solar farms. Our property and reinsurance businesses help improve resilience in the face of climate change, while some of our political risk products assist governments in their broader environmental efforts (such as Ecuador’s debt-for-nature Galapagos conservation bond).
We track our operational carbon emissions including a full assessment of Scope 3 categories, and we offset more than 100% of this using high-quality carbon offsets certified by Plan Vivo. For 2022, our operational carbon footprint of 11.8 tonnes of CO2 equivalent was offset at 110%.[3] In doing so, we supported the CommuniTree reforestation project in Nicaragua, the Yaeda-Eyasi project conserving land in Tanzania, and the Trees for Global Benefits project in Uganda.
While Fidelis MGU does not currently manage an investment portfolio, the portfolio held by Fidelis Insurance Group is managed in a manner that is consistent with Fidelis’ sustainability principles. This includes screens against holding securities of any issuers involved in thermal coal and oil & gas (if issuers derive more than 20% of their annual revenues from oil & gas).
Fidelis MGU became a member of ClimateWise in 2022 and will publish its first comprehensive climate report later in 2023, consistent with TCFD principles.
[1] Scenario C1, AR6 WGIII (Working Group III contribution to the 6th Assessment Report of the Intergovernmental Panel on Climate Change)
[2] Note this methodology involves some assumptions and estimates, and there is potential for restatement if the PCAF Standard evolves in future.
[3] This covered the combined operations of Fidelis MGU and Fidelis Insurance Group in 2022.