Insurance companies will be disclosing to regulators and investors the financial risks they face from climate change, as well as actions the companies are taking to respond to those risks.
The National Association of Insurance Commissioners (NAIC) approved the aggressive measure, which is the world's first mandatory climate risk disclosure requirement-and it covers the largest global industry, says Ceres, a national network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability issues.
Ceres worked with NAIC and helped developed the disclosure framework approved Tuesday. Worldwide, insurers manage $16 trillion in assets.
To meet NAIC's new requirement, insurers must assess the climate risk of the companies they insure. They must also report on how they are altering their risk management in light of the challenges posed by climate change, and on the steps they are taking to engage and educate policymakers and customers on the risks of climate change.
Ceres also has been working with the Securities and Exchange Commission (SEC) to require all publicly traded companies to provide full corporate disclosure of climate-related risks, whether from physical impacts or regulatory impacts.