The financial stress testing analysis by 2° Investing Initiative provides information on the exposure of businesses to different future scenarios, which securities are driving the climate risk exposure of their investment portfolios, and will help insurance companies apply the recommendations of the Financial Stability Board's task force on climate-related financial risks (FSB-TCFD) chaired by Michael Bloomberg.
"California was one of the first jurisdictions in the world that recognized the importance of insurers managing and disclosing their climate risk. To advance climate leadership and action, the California Department of Insurance (CDI) became one of the first insurance supervisors to join UN Environment's Principles for Sustainable Insurance Initiative (PSI), and then became the founding Chair of UN Environment's Sustainable Insurance Forum for Supervisors (SIF)," said Butch Bacani of the United Nations, who leads the PSI, the largest collaborative initiative between the UN and the insurance industry, and who co-led the creation of the SIF. "This pioneering work by CDI on scenario analysis to assess transition risk in insurers' investments is yet another testament to California's commitment to promote climate risk transparency and sustainable insurance markets, in line with the aims of the Financial Stability Board's climate risk disclosure recommendations, the Paris Agreement on Climate Change, and the Global Climate Action Summit in California this year. This is leadership in action."