33 insurers representing 80% market share join Hong Kong’s first insurance industry climate charter

The Hong Kong Federation of Insurers (HKFI) rolled out an Insurance Industry Climate Charter (Climate Charter) on 29 February 2024. Referencing leading global insurance climate charters, this Climate Charter shows the strong commitment of the industry to respond to climate risks.

The Climate Charter details a set of climate principles and objectives which signatories agree to meet. Signing up to the Climate Charter is voluntary, and the initiative has been joined by 33 HKFI member companies as signatories that represent approximately 80% of insurance market share in Hong Kong, including AIA, AXA, Manulife and Prudential.

Key Climate Charter Commitments & Reporting Logistics

The Climate Charter has five core climate principles and objectives: Business Operations & Governance, Investments, Claims Management, Products & Underwriting, Societal Engagement, and Reporting & Disclosures.

(1) Business Operations & Governance

Supporting responsible and sustainable business processes by improving energy efficiency, reducing carbon emissions and offsetting any remaining emissions.

(2) Investments

Supporting sustainable investment and taking a significant, active role in transforming the economy and contributing to a just transition. Aiming to achieve carbon neutral greenhouse gas emissions in investment portfolios by 2050.

(3) Claims Management, Products & Underwriting

Advancing the integration of sustainability criteria in underwriting guidelines and claims management practices. Facilitating sustainable decision-making of policyholders and working with clients to decrease emissions arising from business and industrial risks.

(4) Societal Engagement

Working with government regulators and other key stakeholders to promote environmental awareness and action. Committing to support the efforts of the Green and Sustainable Finance Cross-Agency Steering Group’s Centre for Green and Sustainable Finance in capacity building and improving data availability for the financial industry.

(5) Reporting & Disclosures

Setting and publishing incremental targets for 2030 for emissions along with initial action plans towards the Paris Agreement and the Hong Kong Climate Action Plan within two years of becoming a signatory to the Climate Charter. Reporting Climate Charter implementation progress to the HKFI every two years after publishing incremental targets.

Deloitte’s Comments on the Climate Charter

Deloitte China supports the Climate Charter and its efforts to drive forward collective insurance industry efforts to combat climate change. Across the globe, achieving net zero emissions in investment portfolios by 2050 is a common goal of many financial institutions, with some leading firms seeking to achieve net zero even earlier.

For Societal Engagement, signatories can consider areas including community incentives, infrastructure and real estate investment to enable socially and environmentally positive outcomes. Net Zero Underwriting is a relatively new topic, but can be initiated by measuring emissions in underwriting portfolios before determining the integration of sustainability criteria into underwriting guidelines and claims management. Incremental targets should be set realistically considering overall net zero targets and goals, particularly for reducing Scope 3 emissions. This will require careful consideration by the signatories.

We welcome the Climate Charter’s ambition for signatories to go beyond climate action related to their own operations and the operations of their clients, and to ensure the insurance industry plays an enabling role in economy-wide efforts to achieving climate action plans and carbon neutral targets.

For details of the Climate Charter, please visit this website.

If you have any questions, please contact our professionals:

Dhiran Dookhi
Partner, Actuarial
+852 9500 9681
ddookhi@deloitte.com.hk

Eric Luk
Director, Assurance - Climate & Sustainability
+852 2109 5299
eluk@deloitte.com.hk

John Sayer
Executive Director, Deloitte CarbonCare Asia
+852 9332 7166
josayer@deloitte.com.hk