CarbonPool’s Post

Good read to kick off 2024, on #climatechange and #insurance - topics that I continue to resonate with greatly. Many thanks to the authors Jeffery Yong Felicia Khoo for the work and summary! In particular, the emphasis on "consumers potentially facing a catch-22 situation whereby they would need greater insurance protection in the face of climate change and yet less insurance is likely to be available" is indeed a very apt one. "To break this catch-22 chain, consumers will need to take risk #adaptation measures and insurers will need to recognise such measures in the pricing and underwriting of relevant insurance products." Such measures are not new to insurers - for instance in the non-life insurance space, where insurers promote good fire and security measures, while providing property insurance coverage. Similarly in the life insurance space, where insurers promote useful health and wellness benefits, while providing health insurance coverage. Avoiding the insurability tipping point - nicely summed up in its title indeed.

🚨 New white paper release! CarbonPool and Renoster have released a new white paper, titled "Buffer pools: Why the carbon market needs a new approach to permanence and how insurance can help." The white paper sheds light on how registry buffer pools - the carbon market's main mechanism to secure carbon credit permanence and mitigate against reversals - risk failing to deliver on their promise in the long-term--and how risk mitigation solutions like insurance can do what buffer pools can't, including ensuring carbon credits' permanence for 100+ years. The report is released in tandem with our upcoming webinar on July 22 at 4pm CEST / 10am EST, where CarbonPool co-founder and COO Nandini Wilcke will discuss this topic further with Elias Ayrey (PhD) from Renoster, Dr. Kirti Ramesh from BeZero Carbon, and Injy Johnstone from the University of Oxford. Link to the report page and the webinar are in the comments below. For anyone interested in building a mature carbon market where investing in carbon removal projects is safe and secure, and can scale to meet our global climate goals, this report and webinar are for you.

In nascent markets, a lesson I learned at Milvik Bima was to look to tangent industries to solve the big problems you're having. For BIMA it was to re-design insurance with a pay-as-you-go mobile lens. For carbon markets, to solve for permanence (that carbon dioxide that is captured stays permanently stored), we need to look to insurance as the final back-stop. Insurance should play the role of creating the global excess or surplus investment in carbon dioxide removals or reduction that is used when things go wrong - because, as we saw this year, boats can run into bridges. At CarbonPool we put together a piece explaining why the current market model - a valiant start when the insurance industry was absent - is now failing and needs regulated in-kind insurers to enter the market. Read it here 👇

Water risk is becoming a top concern for investors worldwide. Check out Fitch Ratings' latest report on the materiality of water issues for economies and entities to learn more about the importance of water risks in credit relevance. #WaterRisk #InvestmentDecisions #ESGConsiderations #FitchRatings

Whether driven by the rapidly changing business and #regulatory landscape, spurred by rising climate-related losses or sustainability commitments, #insurers are increasingly taking steps to understand the #emissions associated with their #underwriting portfolios.    Introducing Moody’s Insurance Associated Emissions (IAE) Solution in this blogpost [https://lnkd.in/gifS5bt7], my colleague Shaheen Razzaq will walk you through how #Moody's is bringing ease and clarity for insurers, providing the ability to effectively identify, manage, and understand #insurance-associated emissions, in line with #PCAF recommendations.

📈 With escalating climate-related losses and a rapidly evolving business and regulatory environment, (re)insurers face increasing scrutiny regarding contributions to greenhouse gas (#GHG) #emissions from their #underwriting portfolios, with the ability to effectively identify, manage, and understand insurance-associated emissions becoming paramount. Firms struggle to operationalize sustainability commitments around emissions reporting, and this slow adoption of #PCAF standards can be attributed to multiple technical and data challenges. 💡 Recognizing that successful navigation of the complexities of emissions reporting and management in the #insurance industry demands sophisticated, cutting-edge solutions, Moody’s has leveraged the Intelligent Risk Platform™, with ExposureIQ™ at the forefront, to develop the Moody’s Insurance Associated Emissions (IAE) Solution. 👉 Read a new #blog from Shaheen Razzaq as he examines the many challenges the insurance industry faces around emissions reporting for underwriting portfolios, and introduces the Moody’s Insurance Associated Emissions (IAE) Solution here: https://lnkd.in/gifS5bt7 #riskmanagement #insurancenews #climaterisk

US Real estate insurance costs (expressed as a share of income receivable) have doubled in the last five years as a consequence of increased climate risk! Data source: MSCI Inc. #climaterisk #realestate #realestateinsurance #esg #sustainablefinance

The Task Force on Climate-Related Financial Disclosures (TCFD) was developed by the Financial Stability Board (FSB) to set out recommendations on what companies should disclose so investors can better assess and price risks related to climate change. Although the TCFD framework is not mandatory, it is widely recognised and adopted in the European market. In this study, we analyse the level of maturity of European insurance and reinsurance companies’ climate change reporting by comparing the climate and sustainability disclosures of 20 companies against #TCFD requirements and up-coming Corporate Sustainability Reporting Directive (#CSRD) ones. Read the study here: https://lnkd.in/eGse_8XA If you are interested to here more about these topics, please do reach out. #climatechange #sustainability #riskmanagement #insurance #milliman #millimanuk

Nandini Wilcke co-wrote an excellent paper on why in-kind carbon insurance is far superior to buffer pools as the mechanism to ensure permanence of carbon removals and carbon credits. There are numerous offers in the market today that purport to offer “in-kind” insurance or guarantees, including the registry buffer pools, but none of them are actually in-kind insurance because none of them have carbon capital to absorb unexpected outcomes and losses. As the carbon markets mature and become regulated, the only way to manage in-kind insurance for carbon is as a regulated insurer with carbon capital. Beware if you are buying a “guarantee” that has no carbon capital - it has no ability to deal with unexpected carbon outcomes. And if the ultimate payout is cash based then it’s just normal insurance and not in-kind carbon insurance, good luck converting that to your carbon outcome!

The core infrastructure of the voluntary carbon market is on shaky ground. For anyone who cares about building a matured carbon market that can help drive our global net zero goals and scale to climate relevant levels, read this new and urgent report by Nandini Wilcke at CarbonPool and Elias Ayrey (PhD) at Renoster.