The Insurance Council of Australia (ICA) has released a roadmap for the industry to achieve net zero emissions amid forecasts for worsening natural catastrophe impacts from climate change.

The roadmap, launched at the ICA annual conference last week, sets out actions insurers can take to achieve net zero emissions in their operations by 2030 and across underwriting, claims supply chains and investment decisions by 2050.

“In addition to advocating for better protections against extreme weather, we also need to play our role in addressing the reason these events are actually worsening,” ICA President Nick Hawkins told the conference.

“The roadmap we’ve put in place provides a best practice pathway for how insurers can drive down emissions and how the industry can leverage its foundational role in the Australian economy to accelerate our transition to net zero.”

Mr Hawkins, also IAG CEO, says insurers are already taking action to reduce emissions in ways including setting a shadow carbon price to ensure investment portfolios are aligned with the transition underway, building electric vehicle charging infrastructure and underwriting clean energy technology.

“As major investors, insurers can steer substantial amounts of capital into transition-related assets and technologies,” he said. “And of course, we can also factor climate risk into underwriting decisions and engage with businesses to reduce emissions across our extensive supply chains.”

Insurer members backing the roadmap include Allianz, Axa XL, IAG, Lloyd’s, QBE, Suncorp, Youi and Zurich.

Allianz Australia says the roadmap reinforces work insurers and reinsurers are doing to tackle emissions and identify goals to continue to deliver on climate action, in line with steps being taken around the world.

“Allianz supports the ICA’s climate change roadmap as an excellent step in ensuring our industry is working towards clear goals,” General Council and Chief GM of the Corporate Governance and Legal Division Jodi Fullarton-Healey said.

The document, authored by Boston Consulting Group for ICA, says measures insurers can take in their operations include investing in energy efficiency, rooftop solar for office buildings and transitioning corporate fleets to electric.

On underwriting, ICA highlights global work on a measurement and disclosure standard being developed by the UN-backed Net-Zero Insurance Alliance (NZIA) and the Partnership for Carbon Accounting Financials, as well as work by other alliances that can assist underwriters in developing strategies.

ICA says it will join the NZIA and actively participate in alliances. It says insurers can look at exploring innovative products and services to help households and businesses lower emissions and strengthen underwriting capabilities in low-carbon activities.

CEO Andrew Hall says reinsurers, investors, regulators and customers increasingly expect insurers to play a role in the transition to net-zero, improve transparency around insurance-associated emissions and demonstrate they understand and are managing climate risk.

“This action will need to be matched by governments, including through setting strong national emissions reduction targets and implementing a comprehensive set of policies to decarbonise key sectors,” he said.

Suncorp Group CEO Insurance Product & Portfolio Lisa Harrison says the net-zero transition is a challenge that can only be achieved through collaboration.

“The ICA Climate Change Roadmap is the insurance industry’s signal that we are determined to play our part in enabling the transition of our economy towards net-zero,” Ms Harrison said.

See Analysis.