Line Hestvik will be one of the speakers of the Budapest Climate Summit, to be held on 7-8 October 2021.
Multinational financial services company Allianz not only takes care of people’s insurance protection but, as its purpose says, “securing the future” also means working for a sustainable future.
Sustainability, in every dimension, is one of Allianz’s top priorities. CEENERGYNEWS spoke with Line Hestvik, Chief Sustainability Officer, about the latest achievements of the group and the prospects for a net-zero future for the insurance industry.
Hydrogen is the hottest topic right now. Although today it is not used extensively, its demand will grow in the upcoming years. Together with this demand, also the demand for insurance will increase. What does Mrs Hestvik think about it?
“As a green alternative to fossil fuels, hydrogen solutions have the potential to morph from a niche power source into big business, helping many industries reduce their emissions,” begins Mrs Hestvik. “The jury is of course still out around the R&D for this energy source, but coming from Norway I know there is a lot of research going into this topic. For Allianz, the growth of the hydrogen sector, even more, the total green energy sector, therefore represents a step in our efforts to support society on the journey to a net-zero future.”
“As risk experts, our role will first and foremost be to develop detailed underwriting approaches to green energy including hydrogen projects while applying the same rigour in risk selection as we do in existing energy construction and operational business.”
Yet, hydrogen poses several challenges, including a lack of regulation, proper infrastructure and a lack of understanding among the end customers.
“As with any energy risk, fire and explosion remain the key perils from an insurance perspective,” underlines Mrs Hestvik. “Business interruption and liability exposures will also be important to mitigate, as will transit, installation and mechanical failure risks. These are complex industrial and energy risks involving prototypical technologies, which require high levels of both engineering expertise and insurance know-how in order to provide appropriate coverage.”
However, many of these risks are already well known to the company and together with its colleagues at the Allianz Global Corporate & Specialty (AGCS), they are currently tailoring existing product capabilities to this relatively new segment.
“I warmly recommend the recent AGCS risk bulletin for anyone wishing to learn more about hydrogen,” suggests Allianz’s Chief Sustainability Officer. “Allianz has been pioneering insurance for new technologies for hundreds of years. When the first aeroplanes came, the industry and the insurance companies had discussions leading to improved understanding of the risks, and the best way to insure them, including loss prevention.”
“The shift to green energy will pose both challenges but also business opportunities for the industries and the insurance companies which invest in competence, innovation and take the steps to move forward.”
What is Allianz’s general sustainability approach? At Allianz Group, sustainability is the commitment to make decisions based on positive long-term environmental and societal outcomes. The company sets itself clear steps towards achieving the 1.5-degree target of the Paris Climate Agreement. Sustainability is part of the insurance, investments and asset management business. Also, Allianz helps protect the environment by continuously finding new ways to reduce the company’s controllable carbon footprint. In 2020, it defined new emission-reduction targets for the business.
“We see cross-industry and international partnerships as important levers for tackling global challenges“, Hestvik explains.
Earlier in July, Allianz Group joined forces with seven other leading insurers to form the UN-convened Net-Zero Insurance Alliance (NZIA). A first of its kind net-zero network for the underwriting insurance business that underlines the importance of cooperation between leading governments and companies to mitigate the risks of climate change. Mrs Hestvik says to be very excited about the increased ambition on the insurance side.
“Having worked in the P&C industry since 1994 I am very proud that the industry steps up and takes a strong lead on climate,” she comments. “The target of the NZIA is to reach net-zero greenhouse gas emissions by 2050 which is in line with the 1.5-degree target of the Paris Agreement. This will require important changes, such as swift phasing-out of fossil fuels, as well as the continued development of underwriting approaches tailored to green business opportunities like hydrogen.”
Allianz is also one of the driving forces in the UN-convened Net Zero Asset Owner Alliance, which has the long-term commitment to achieving net-zero greenhouse gas emissions in its proprietary investment portfolio by 2050.
“This is now being delivered through the first intermediate target: we aim to reduce our greenhouse gas emissions in listed equities and corporate bonds by 25 per cent by 2025 compared to the 2019 level,” concludes Mrs Hestvik.
“All our real estate investments will be in line with scientific all. To achieve this we’re working with companies in every sector whose securities we hold in these portfolios. And we’re supporting them in carrying out their own net-zero greenhouse gas strategies, provided those strategies are persuasive.”
In its own business operations, the company in 2020 achieved its goal of reducing its greenhouse emissions per Allianz employee by 30 per cent worldwide compared to a 2010 baseline (it actually achieved 62 per cent).
“We’re aiming for a further 30 per cent reduction by 2025,” says Line Hestvik. “We’re also a part of the RE100 business initiative and aim for all of our entities’ electricity needs to be met from renewable sources by 2023.”
Due to the global pandemic, 2020 was a pretty challenging year for every business. For Allianz’s sustainability strategy it was a good year though. For example, the AOA gained momentum. Also, the company updated its coal policy around investments and insurance in line with 1.5-degree requirements earlier in May 2021. Furthermore, Allianz established a central sustainability team to drive sustainability in the organization.
In other words, Allianz wants to have a shaping role when it comes to sustainability in the insurance industry, a task not easy to reach but, according to Mrs Hestvik, a responsibility as one of the world’s leading financial service providers.
“We made sustainability a top priority in every dimension of our business and move from being a leader in the industry, which is proven by good rating results, to a shaper, which means, for example, that we created a sustainability structure and governance within the organization and we emphasized sustainability goals in compensation structures and incentive systems for managers,” she says. “One especially important shaping aspect of our sustainability strategy is to address climate change to meet the targets under the Paris Agreement. But ESG is not only around environmental and governance questions but also societal issues and we address them by delivering programs and products to cover risks for vulnerable members of society.”
In the future, Allianz wants to continue the implementation of its sustainability strategy expressed in targets and performance data.