Re/insurance broker Willis Towers Watson (WTW) has announced the launch of Climate Transition Pathways (CTP), an accreditation framework that helps insurers and financial institutions to identify which organisations have transition plans aligned with the Paris Agreement.
The CTP governance committee will work with independent third-party groups including Volans, a consultancy responsible for the Bankers for Net Zero initiative, and the Climate Bonds Initiative (CBI), a global investment organization committed to climate resilience.
In their role as committee members, they will be responsible for creating industry-specific solutions to be rolled-out over the coming months.
They will utilize the Assessment for Low Carbon Transition (ACT) methodology to review business commitments to climate targets in order to help companies move to a net-zero carbon environment.
Organisations meeting these principals and achieving accreditation will have the opportunity to access insurance capacity and capital to support their transition and help them meet low-carbon commitments.
“To achieve net zero we need a whole economy transition – every company, bank, insurer and investor will have to adjust their business models, develop credible plans for the transition and implement them,” said Mark Carney, UN Special Envoy for Climate Action and Finance and the Prime Minister’s Finance Adviser for COP26.
“As insurers take steps to align their underwriting activities with the transition, companies will increasingly need to display that they have the right plans or risk losing access to insurance,” he continued.
“Willis Towers Watson’s work to develop tools to assess companies’ transition plans is a valuable contribution to this process to ensure that every professional financial decision takes climate change into account.”
Rowan Douglas, Head of the Climate and Resilience Hub at WTW, also commented: “To ensure that organisations in high-carbon industries transition effectively, in line with what the science indicates is needed, they require robust transition plans and the ability to execute successfully against these.”
Douglas went on: “By incubating Climate Transition Pathways (CTP), we are helping lead the industry in ensuring these organisations are supported through an orderly transition and can continue to access insurance and benefit from a greater level of certainty around the future availability of risk capacity, helping them deliver a more sustainable future.”
Sean Kidney, CEO at CBI, added: “Our climate and environmental challenges are extraordinary. Responding to those, and to consumer and regulatory pressure, all businesses are reviewing their sustainable credentials. They need tools to help them do so.”
“We are delighted to be collaborating with Willis Towers Watson and be part of the Governance Committee which will pioneer Climate Transition Pathways and provide a standard which will help businesses move to a more sustainable future.”