ICMIF has been involved with the G20/B20 since 2014. Several ICMIF members have been involved in various B20 Task Forces over the years and we have had some notable successes, including setting up the first G20 Insurance Summit (pictured) under the Argentinian presidency in 2018 with great support from our Argentinian members. In the recommendations for the B20 Finance Task Force in Turkey (2015) and China (2016), we had specific mentions for ICMIF initiatives. But, in the long run have any of these made a real difference? I don’t, in all reality, believe they have; but sometimes it is the journey and connections you make along the way and where we collectively end up.
Upon reflection, when I attended my first G20 Summit in Australia, I was the only person to mention sustainability in a broader sense. Whilst I got some approving nods for being politically correct, the assembled global business leaders ignored it and, to my mind, maintained a staunch capitalist viewpoint.
Roll forward to this year’s Italian G20/B20 presidency, however, and it is ALL about sustainability and embedding the SDGs!! So, my statement earlier that it is about the journey is true and the B20 have finally joined the party in recognising that business needs to play a major part in the climate change battle by being more sustainable.
So, the 120 Task Force members in the B20 ‘Finance and Infrastructure’ group have come up with four recommendations which ICMIF and its members can all easily support. I can’t claim credit for this, but someone had to start the journey and it appears we have all arrived at the same place, at the same time.
The recommendations are good, but they are just that, recommendations not actions. The global business community is moving on to action-orientated initiatives so I have added in the initiatives that ICMIF and its members are involved in that would also assist the B20 recommendations in actually achieving their targets. This should be the G20/B20’s next job to do.
Sustainable Finance and Financial Inclusion – Promote efforts to scale up sustainable finance and financial inclusion by supporting the development of ESG and impact investing, accelerating the adoption of global sustainability reporting and measurement standards and by fostering access by individuals and micro businesses to affordable financial products and services.
- Policy action 1.1: Policymakers should work towards the harmonization of regulations, metrics and reporting standards of dedicated impact investments, including the development of impact measurement methodologies, to ensure market integrity and enhance transparency. These efforts should be aimed at capturing external impacts of investments with a clearly articulated impact objective in a manner than can contribute to improving investor decision-making, with the aim of scaling up flows of capital towards impact investment opportunities that can address pressing social and environmental challenges. MDBs and governments could provide incentives and other financial mechanisms to encourage private sector investments, launch specialized impact funds to mobilize private savings toward impact investments and support Public and Private frameworks for the adoption of results-based financing solutions.
- Policy Action 1.2: The G20 should give a clear mandate to international institutions to work towards the definition of common sustainable finance and circular economy taxonomies and the alignment of ESG disclosure frameworks, ensuring consistent implementation. The G20 should support current initiatives to rationalize the global system for reporting sustainability-related information and it should ask authorities involved in these efforts to develop a harmonized global framework. In parallel, the G20 should encourage national governments to design mechanisms to support the transition of key economic sectors toward sustainable models as well as a proportional implementation of ESG requirements by SMEs and unlisted firms.
- Policy Action 1.3: The G20 should help to create the conditions to improve financial education and access to financial services, including insurance, to currently “unbanked” and “uninsured” individuals and facilitate the financing of micro businesses by supporting the introduction of new technologies, digital innovations and an enhanced use of data in the financial sector, thus promoting financial inclusion.
The initiatives that we are working on with members and global partners that will deliver on all three of the above policy actions include: The ICMIF 5-5-5 Mutual Microinsurance Strategy which also helps financial education; the ICMIF partnership with United Nations Office for Disaster Risk Reduction (UNDRR) which focuses on seven mechanisms in the move from protection to prevention; the Sustainable Development Goals (SDGs) calculator that we are working on in partnership with Swiss Re will drive sustainable accountability; the TCFD requirement we are working on in partnership with Accounting for Sustainability (A4S) is soon to be a regulatory requirement; The Net-Zero commitments being made via the UN Environment Programme Finance Initiative Principles of Responsible Investment (UNEP FI PRI) work through the UN-convened Net-Zero Asset Owner Alliance will focus on investible assets and impact investing.
- Infrastructure Financing – Enhance infrastructure financing by incentivizing investments in sustainable infrastructure projects, implementing infrastructure as an asset class, supporting cross-border planning & investing, and by fostering projects of urban and suburban regeneration.
- Policy action 2.1: The G20 should help create ad-hoc and market-ready financial instruments to facilitate Public Private Partnerships (PPPs) for co-investments by institutional investors in sustainable infrastructures, while governments should promote “Smart Infrastructures” brought by technology to improve environmental and economic sustainability and enable new services such as remote healthcare and smart mobility.
- Policy action 2.2: The G20 should help implement sustainable infrastructure as an asset class and standardize its taxonomy, while regulators and policymakers should review the regulatory treatment of infrastructure finance to incentivize sustainable infrastructure investing and their long-term financing.
- Policy action 2.3: The G20 should ask for the establishment of frameworks and platforms to facilitate international planning and joint cost-benefit analysis to foster cross-border investments in large-scale infrastructure, while governments could facilitate the rollout of recovery measures to support and accelerate infrastructure projects, which are crucial for a more robust economic recovery after the Covid-19 pandemic.
- Policy action 2.4: Governments and MDBs should create investment-ready projects to facilitate participation of private institutional investors in urban and suburban regeneration investments, focused in particular on increasing infrastructure resilience and improving access to affordable healthcare and transport, while policymakers could improve regulations and request impact reporting related to investments in these projects to accelerate the achievement of environmental and social priorities.
The ICMIF partnership with UNDRR which focuses on the seven mechanisms in the move from protection to prevention focuses on insurance organisations (mutual in our case) creating investment ready projects as noted in 2.4 above. This is currently under the pilot stage of our partnership.
Growth Engines – Support sustainable economic growth by fostering SMEs access to capital, promoting open innovation ecosystems with customer data subject to common protections across sectors, accelerating digitalization and innovation processes in the financial sector, and by increasing the efficiency of Global Value Chains (GVCs) and, on a more regional level, of Integrated Value Chains.
There are four policy actions under this point. Many ICMIF members are developing ecosystems for their members and the SDG calculator initiative will begin to highlight the need to manage supply chains when reporting on the SDGs.
Global Regulatory Environment – Review the financial sector regulatory framework to ensure that it can support economic resilience during, and recovery after, the Covid-19 crisis by addressing climate-change, systemic and pandemic risks, improving prudential measures and NPL regulations, and by constructively reviewing non-bank financial sector’s regulation.
- Policy Action 4.1: The G20 should promote an appropriate policy environment to foster innovative solutions, also promoting the cooperation between Public and Private sectors in order to support the parties affected by catastrophic events and reduce the economic burden of responses to catastrophes on public budgets.
- Policy action 4.2: Policymakers should continue a review of the existing prudential regulatory framework in the context of the experience through the Covid-19 pandemic, to assess to what extent it may affect the ability of financial services, including insurance, to support economic recovery and to reduce the risk of procyclical effects, while the FSB should continue working to reduce the fragmentation of financial regulations to support financial stability and economic growth and allow a consistent level of flexibility across financial markets.
These two policy actions are relevant to insurance and are being worked on through the TCFD work, plus the UNDRR partnership to reduce risks and focus on prevention mechanisms. Our work through the Insurance Development Forum (IDF) is a unique public private partnership arrangement that is focused on this area as well as recommendation 1. The coalition that ICMIF Supporting Member Aviva Investors has pulled together titled ‘International Panel for Climate Finance (IPCF)’ is very focused on this area and highlighting what insurance can do to assist as we move closer to the COP26 event which is due to take place in Glasgow (UK) later this year.
The B20 taskforce recommendations to the G20, which were agreed in early July, are yet another key source of political momentum towards business playing its part in the climate challenge which was outlined in the Intergovernmental Panel on Climate Change (IPCC) Report published earlier this week. The direction of travel is very clear from all of society but talk is cheap; it is now about the actions and accountability that we, as sustainable citizens and businesses, implement. We, as ICMIF members have been on this journey since the beginning and, as you can see from the initiatives that we are focused on, are already in the action mode. If you want to know more about the initiatives please contact me.