Net Zero ambitious targets at COP26

Ilias Tsakiris at UN Environment Programme’s Principles for Sustainable Insurance special series at COP26

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Ilias Tsakiris, CEO of AHHIC participated at UN Environment Programme’s Principles for Sustainable Insurance event on November 3rd, to support the aims of COP26 and raise climate ambition.

The “PSI COP26 Sustainable Insurance Series” is probably the most comprehensive and ambitious series of events for the insurance industry during COP26, spanning climate change mitigation/net zero and adaptation/resilience, as well as actions by insurance industry participants, insurance regulators and supervisors, financial policymakers, governments and other key stakeholders.

In his speech he underlined that as AHHIC is one of the newest members of the Net Zero Insurance Alliance, the company firmly supports the goal of achieving a transition of underwriting portfolios to net zero emissions by 2050.

Remarks by AHHIC’s CEO, Ilias Tsakiris at COP26 UN Environment Programme’s Principles for Sustainable Insurance special series.

Distinguished members of UNEPFI’s Principles for Sustainable Insurance and the Net Zero Insurance Alliance,

Distinguished delegates of COP 26,

Thank you for inviting me to participate in this special PSI COP26 Sustainable Insurance Series.

It is a privilege but also a duty to support the aims of COP 26 to secure global net zero and the Paris Agreement’s goals.

Climate change is the most important issue of our times and Sustainability should be in the forefront of any business’s thinking.

American Hellenic Hull Insurance Company is a Hull and Machinery Underwriter 100%-owned by the American P&I Club. We are exclusively a marine insurer.  The shipping industry provides an incredibly important service to the people of our planet but it is also an important contributor to greenhouse gas emissions. Shipping has a long and difficult path to decarbonize, and as a leading marine insurer we aspire to contribute to this journey. 

For us sustainability is a matter of ethos.

But we also believe that it is an intelligent way of doing business. It can be a commercial game-changer for players that lead the way. I believe that our focus on sustainability and our cooperation with like-minded partners has been beneficial for our business. 

Why?

Because it has encouraged greater discipline and perspective.

Because it gives us an advantage in a number of respects, such as recruiting young talent in today’s market.

Sustainability is a way of life for us and ESG issues have been reflected in our policies right from our inception in 2016. 

We were the first marine insurance company to join the UNEP Finance Initiative, Principles for Sustainable Insurance, in 2019 and since then we have developed an extensive network of international co-operations.

We believe that the Net Zero Insurance Alliance is essential for the insurance industry to contribute effectively to the battle against climate change.

As one of the newest members of the Net Zero Insurance Alliance, we support the goal of achieving a transition of underwriting portfolios to net zero emissions by 2050.

As underwriters, and key stakeholders of the international shipping value chain, we need to act now.

At American Hellenic Hull, we are encouraged by the co-operation between the UN convened Net Zero Alliance and the Partnership for Carbon Accounting Financials (PCAF).

The launch of a working group to develop the first global standard for the insurance industry to measure and disclose insured greenhouse gas (GHG) emissions is an important practical step.

It will provide underwriters with insights into the risk profile of underwriting portfolios and will hopefully stimulate innovative approaches to decarbonization.

The 2050 timeline is a very ambitious one for international shipping, which is a vital, capital-intensive service industry which is highly-fragmented as well as global.

Important ongoing initiatives include:

The enhanced Ship Energy Efficiency Management Plan (SEEMP) addressing the management system to achieve carbon efficiency,

The carbon footprint measurement through the Energy Efficiency Existing Ship Index (EEXI) addressing the technical efficiency of ships

The Carbon Intensity Indicator (CII) addressing the operational efficiency of a vessel

The  Energy Efficiency Operational Indicator (EEOI) and the Annual Efficiency Ratio (AER)

All these will be taken into consideration for insurance companies and will probably form part of their portfolio monitoring.

The insured Emissions Standard will fill a major gap in accounting for the total attributable emissions from the financial sector.

The Paris Agreement goals require action in a shorter time frame, and we have to adopt interim targets to protect our underwriting portfolios.

We aspire that Net Zero Insurance Alliance will act as global benchmark to disclose carbon intense activities, in accordance with international indices and protocols.

Let’s face the reality.

Within the next thirty years the shipping industry will face tectonic changes.

The less the shipping industry does to optimize the existing fleet during this decade, the deeper and more painful measurers will be needed in 2030-2040.

The regulations, guidelines, and initiatives to meet the net zero targets, along with new types of fuels, new ship and engine designs and more stringent ship recycling requirements – all these and more developments will affect the risk profile for marine underwriters and create new risks. These are still uncharted waters that the marine insurance community will have to navigate in the coming years.

At American Hellenic Hull, we have adopted a set of strict, sustainable underwriting criteria to meet the net zero targets and contribute to the Paris goals.

We aim to protect our clients and the overall quality of our underwriting portfolio. We will be introducing further pricing benefits for clients to reach the net zero targets.

We are about to launch an extensive sustainability survey encouraging our clients to share their climate action plans so that we can assess together current and future carbon intensity within our portfolio.

The data will remain confidential and will assist us assess risk as we approach this new era.

A key question going forward is whether we pay for pollution, or find a solution?

I am referring to carbon trading.

Imagine the tremendous impact of a voluntary shipowners’ carbon market, regulated by the international unions of shipowners.

Such a market could be based on the ‘cap and trade’ principle similar to the EU Emissions Trade System, although adapted to the realities of the international shipping industry.

Looking at experts’ projections for European Union Allowances prices in the next two to five years, it seems a smart move for shipowners to start building their compliance plans now.

We should encourage the shipping community to measure, implement, monitor, and transparently share all initiatives that aim to reduce or absorb emissions.

The Net Zero Insurance Alliance has a golden chance to play a pivotal role and develop an international roadmap.

A heatmap to identify risks and opportunities for underwriters to assist their clients to undertake this dramatic transition effectively.

We believe that the alliance – along with all the stakeholders of the maritime adventure, the IMO, the research institutes and universities, and the international regulatory authorities must work together to develop and fund an international Research & Development program to assist in the net zero transition, and hopefully go beyond that to net negative emissions.

Dear members of the PSI and Net Zero Insurance Alliance,

Dear delegates of COP 26,

Dear guests,

COP 26 will be a milestone towards achieving climate resilience.

I am optimistic that this UN Climate Change Conference will introduce practical steps for all the carbon intense industries, not least to mention the shipping industry.

We all face the same climate emergency and we must all contribute as much as we humanly can towards achieving the solution.

Thank you.

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