Gimar special topic edition the impact of climate change on the financial stability of the insurance sector

5. MEASURES TO 
ADDRESS CLIMATE-
RELATED RISKS IN THE 
INSURANCE SECTOR
I
nsurers can take various actions to reduce 
or manage their exposure to climate-related 
risks. Supervisors have a role to play by 
monitoring and assessing the risks as well 
as by setting out clear expectations and 
recommendations for insurers. This section 
provides an overview of measures taken, or in 
progress, to address climate-related risks in the 
insurance sector. It mainly discusses actions 
related to insurers’ investments.
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5.1 PRIVATE SECTOR INITIATIVES
There is a growing number of industry initiatives 
aimed at improving the analysis and disclosures 
of climate-related risks and at supporting a 
sustainable transition. This section provides 
some notable examples.
5.1.1 Disclosures 
In June 2017, the FSB TCFD released the 
TCFD Recommendations and Supplemental 
Guidance (TCFD Framework), which provides 
a framework for private companies and other 
organisations to develop more effective 
climate-related financial disclosures. The 
recommendations are structured around four 
thematic areas: governance, strategy, risk 
management, and metrics and targets. The 
TCFD has now shifted its focus to support 
implementation by issuing guidance particularly 
around the disclosure of forward-looking 
climate related metrics and use of climate 
scenarios.
The number of financial institutions that 
have signed on to the TCFD has increased 
markedly since the introduction of the TCFD 
Framework. At the time of writing, more than 
2 000 organisations worldwide officially support 
the TCFD. Various governments and regulators 
are embedding the TCFD recommendations in 
policy and guidance, and some have moved 
toward requiring TCFD disclosures through 
legislation and regulation (eg the United 
Kingdom and New Zealand). 
While support for the TCFD continues to grow, 
further progress is needed in implementing 
TCFD-aligned disclosures. Disclosures vary 
across regions and disclosures by smaller 
companies are still lagging. Finally, companies’ 
disclosures of the potential financial impact 
of climate change on their businesses and 
strategies remain low.
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In September 2020, the International Financial 
Reporting Standards Foundation Trustees 
issued a consultation for comment to determine 
if there is demand for the development of global 
sustainability reporting standards. Feedback 
from the consultation confirmed an urgent 
need for these standards and support for the 
foundation to play a role in their development. 
The Trustees are therefore continuing their 
work to establish an international sustainability 
reporting standards board. A final decision about 
a new board is expected to be made before 
the November 2021 United Nations COP26 
conference. The IAIS has expressed support for 
this important initiative.
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