Global advisory, broking and solutions company Willis Towers Watson announced today the launch of Climate Transition Pathways (CTP), a new accreditation framework enabling providers of insurance and financing to identify companies with robust climate transition strategies.
Rowan Douglas, Head of the Climate and Resilience Hub at Willis Towers Watson said;
“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. 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.”
As countries, businesses and investors increasingly move towards more climate resilient models, financial institutions and insurance providers face growing pressures to adopt risk models that take account of the impact of the transition to a low carbon world on the companies and businesses that they engage with. Insurance company Allianz, for example, announced that it would no longer to provide insurance or financing to coal-based businesses after 2022, unless they present robust and credible transition plans.
Commenting on the establishment of the CTP, Mark Carney, UN Special Envoy for Climate Action and Finance and the Prime Minister’s Finance Adviser for COP26, said:
“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. 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. 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.”
Willis Towers Watson also announced the formation of a CTP Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. More committee, with members including ‘change agency’ consultancy Volans, and climate resilience-focused investment organization the Climate Bonds Initiative (CBI). Committee members will be responsible for creating industry-specific solutions, based on the Assessment for Low Carbon Transition (ACT) methodology, to develop an accreditation model to review business commitments consistent with the move to a net-zero carbon environment.
Sean Kidney, CEO, CBI said:
“Our climate and Environmental criteria consider how a company performs as a steward of nature. More 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 deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. More Committee which will pioneer Climate Transition Pathways and provide a standard which will help businesses move to a more sustainable future.”