US Insurers Make Strides in Climate Disclosures but Significant Gaps Remain

Large U.S. insurance companies are making progress in sharing information about their climate-related risks and strategies, but significant gaps and inconsistencies persist. According to a recent report by Ceres, only 29% of insurers disclosed metrics and targets related to climate risks, highlighting the need for more comprehensive transparency in the industry.

The report, following the Task Force on Climate-related Financial Disclosures (TCFD) framework, revealed improvements in several areas. 94% of insurers disclosed their risk management processes, 86% outlined their strategies, and 81% detailed their governance structures. However, only 26% provided disclosures covering all four TCFD pillars: governance, strategy, risk management, and metrics and targets.

The Ceres report examined large U.S. insurance companies, evaluating their climate-related disclosures and strategies. The report was published on June 19, 2024, and reflects data from 2022 and 2023.

Insurers play a crucial role in managing climate risks, and their ability to disclose comprehensive and transparent information impacts stakeholders, investors, and policyholders. Improved disclosures can lead to better risk management practices, enhanced investor confidence, and stronger regulatory compliance. However, the persistent gaps highlight the need for continued efforts and improvements in climate risk reporting.

The report provides best practices and recommendations for insurers and regulators, including establishing common methodologies for scenario analysis, setting clear board and management oversight for climate issues, investing in tools to measure greenhouse gas emissions across all scopes, and engaging constructively on climate policy and regulatory development.