The Association of British Insurers is calling on UK financial regulators to improve the availability of data on renewable energy projects to boost investment in clean power projects.
ABI, which is the voice of the UK insurance industry, said a shortage of high-quality and consistent data throughout the financial system on what it calls environmental, social and governance assets makes it difficult for investors to either manage exposure or identify the best opportunities for green investment.
“Some insurers are developing their own approaches and specialist teams but it’s feared a piecemeal approach will take an unnecessarily long time,” the association said.
Instead, there is a role for the regulators to help improve the availability and consistency of data relating to the firms and initiatives insurers may want to invest in, it added.
ABI is also proposing more is done to take sustainability factors into account when considering assets.
“Enabling this should be a key focus of the Solvency II 2020 review which is just getting under way, and is something the UK could take steps on independently once we leave the EU,” it said.
Current rules focus on a one-year solvency measure that does not “adequately reflect the long-term nature of insurance”, ABI added.
“The Solvency II rules effectively disincentivise insurers from investing in the kind of long-term, sustainable projects that could help mitigate the impacts of climate change,” the association said.
ABI made the comments in a consultation response to the Prudential Regulation Authority (PRA).
ABI head of prudential regulation Steven Findlay said: “Insurers are more aware than most of the increasing threat posed by climate change, given they are in the business of identifying future risks and working out how best to mitigate them.
“When extreme weather events happen, they are at the forefront of picking up the pieces. As a sector which holds over £1.8 trillion in invested assets, they are also in a unique position to be able to seriously boost new, greener technologies and energies.
“They want to be able to do more of this, and it is very encouraging that the PRA shares these goals.
“Those responsible for managing assets need to be able to demonstrate to their boards and their shareholders that greener investments are good for their balance sheet, not only the planet.
“The industry, through initiatives like the recent ClimateWise Transition Risk Framework, is already taking positive action; regulatory changes to give insurers more freedom to invest in sustainable assets would also be a step in the right direction.”