More Insurers Invest In Climate-Friendly Companies

A growing number of global insurance companies associated with the ClimateWise trade body are making an effort to invest in businesses that are working to lessen their impact on climate change, new research showed Wednesday.

Of the more than 40 insurance companies that signed up for ClimateWise, 73% have complied with a set of principles and sub-principles which incorporate climate change in making investments, according to independent research done by PricewaterhouseCoopers. This is up from a compliance rate of 61% last year and 43% in 2008.

The results indicate an increasing effort on the part of insurers to address climate change. The review didn't name which insurers aren't complying and didn't measure how incorporating climate change affected investment returns. Still, the report was upbeat about the positive longer-term impact of a more conscious effort to help the environment.

Launched by Prince Charles in 2007, ClimateWise is a group of more than 40 insurers from around the world which is focused on reducing the risks of climate change.

The members are mostly from the U.K., including Prudential PLC (PRU.LN), Aviva PLC (AV.LN), Legal & General Group PLC (LGEN.LN) and 15 Lloyd's of London insurers.

Other members include Aon-Benfield from the U.S., Tokio Marine & Nichido Fire Insurance from Japan, Santam Ltd (SNT.JO) from South Africa and Tryg AS (TRYG.KO) from Denmark.

"The headlines continue to be dominated by financial instability and, sadly, a rise of so-called climate scepticism," Prince Charles said in the report.

"While insurers are not banks, I am pleased to see that business leadership in the insurance sector... has not used the financial crisis as an excuse to lose focus and there is emphasis on the continued importance of the climate change agenda," he said.

Paul Abberley, Chief Executive of Aviva Investors London, said: "There is a real opportunity for insurers to use their investor power to invest in opportunities that reduce global climate risk."

Abberley said Aviva has been supporting a mandatory requirement for large companies to report on their greenhouse gas emissions.

"We believe that where carbon emissions are a material commodity with a financial value, they should be properly defined, measured, accounted for, audited and reported," Abberley said.

Abberley told Dow Jones Newswires that good investments "can range from clean energy generation to the other extreme of more energy efficient household appliances."

In a case study, F&C Asset Management was cited for engaging with over 700 companies in 2009 and encouraging them to improve their operations and limit their businesses' impact on the environment.

Co-operative Insurance was also cited for engaging Australia's International Power, a company it invests in, on the use of carbon-intensive coal.

-By Vladimir Guevarra, Dow Jones Newswires; [phone], [e-mail]