Responsible Investor

COP26: rendezvous in Glasgow

Climate change requires rapid and radical interventions to deliver on the commitments made in Paris in 2015. Generali’s strategy for climate protection responds to the need to rethink the insurance sector’s contribution to mitigate risks and protect the economy and society

The 2021 United Nations Climate Change Conference (COP26), scheduled from the 31st of October to the 12th of November in Glasgow, is an important event for the future of our planet. Since the first Conference of the Parties to the United Nations Framework Convention on Climate Change in Kyoto in 1997, climate change has evolved from a marginal issue to a global priority and most experts agree on the extraordinary and urgent nature of the meeting. The UK – as co-chairs of the meeting with Italy – has worked extensively with each country to reach an agreement on how to tackle climate change.

The commitments made in Paris in 2015 are nowhere near adequate to limiting global warming to 1.5 degrees. The representatives of more than 190 countries expected at the Glasgow summit will therefore be called upon not only to reaffirm these goals, but also to go above and beyond, as the window for achieving this target is closing and much more is needed to keep hope of hitting the goal alive.

It is well known that climate change has forced a serious review of business models and corporate policies, with inevitable repercussions on various sectors, not least the insurance industry.

More frequent natural disasters are causing record amounts of damage, putting entire food systems at risk, and insurance companies around the world are increasingly concerned that these are no longer individual catastrophic events, but interactions between the global climate and human systems.

Generali’s strategy for climate protection

Increasinly frequent natural catastrophes, combined with evolving regulatory requirements, pose a threat to corporate business models and make the insurance of certain risks unsustainable for customers or unfeasible for insurers. There is, therefore, a need for insurance solutions that go beyond traditional risk transfer and explicitly address risk mitigation. Insurers should seize this moment to test their exposure to climate risk, rebalance their portfolios and use their understanding of risk to help organisations mitigate and adapt, thus protecting a greater share of the global economy.

With its Strategy for climate protection, updated last June, Generali plans to:

  • allocate between 8.5 and 9.5 billion dollars in new green and sustainable investments over the 2021-2025 period, in line with the previous target of 4.5 billion euros set between 2019 and 2021, which was exceeded one year early
  • define a roadmap for the complete exclusion of investments and underwriting activities in the thermal coal sector, aiming to completely eliminate issuers operating in OECD countries by 2030 and those active in the rest of the world by 2040
  • gradually decarbonise its investment portfolio to become "carbon neutral" by 2050, consistent with the Paris Agreement's goal of limiting global warming to 1.5 degrees compared to pre-industrial levels and the commitment made as part of the Net-Zero Asset Owner Alliance.

As an interim goal for 2025, Generali also plans to reduce carbon emissions for its corporate portfolio (corporate bonds, listed equities) by 25% and to align its real estate portfolio to the 1.5 degrees target. The strategy, an updated and extended version of the Group's existing plan approved in February 2018, commits to executing significant actions related to investment and underwriting activities, the Group's core business, and to a climate-friendly future.