Suncorp’s Climate Change Action Plan: plenty of detail but where are the outcomes?

Suncorp, a major Australian financial services company and general insurer, today released its Climate Change Action Plan. As expectations mount from investors and regulators that companies disclose the risks they face as a result of climate change and efforts to fight it, this is Suncorp’s first major attempt to convince investors they’re on top of the issue. So, are they?

Credit needs to go to Suncorp for actually explaining in detail how they’re going to tackle this important work. The recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (say that ten times fast) are comprehensive and require due consideration. This is especially the case for companies in the financial services sector that are exposed to just about every other aspect of the economy. Where climate risk exists in the companies and projects Suncorp is invested in, that risk is also borne by Suncorp.

The Action Plan breaks down tasks and outputs, attaches timeframes to them and identifies who is responsible for their delivery. As a result, you get a sense of the road map Suncorp plans to use and there are milestones that the company’s leadership can be held accountable to. This is miles ahead of the likes of QBE which, in response to shareholder and investor calls for climate risk disclosure, signed up to a statement of support but hasn’t made any actual commitments.

But there are some major drawbacks to Suncorp’s plan, largely around the absence of completion dates for some of the key outputs. The plan commits Suncorp to “commence modelling to assess the possible impacts of climate change risks and opportunities under difference climate change scenarios (including a 2º Celsius scenario) and the resilience of Suncorp’s business, strategy and financial planning” from July 2019. But there is no end date to this work, meaning shareholders and major investors could be left waiting for years before they have any idea how much additional climate risk they are exposed to.

 

Given that Suncorp has lost $2 billion of shareholder value in the past decade on natural hazard claims, it’s fair to expect investors will want to know sooner rather than later how bad this could get, and what Suncorp’s plan is for avoiding the physical risks of climate change.

Similarly, when it comes Suncorp’s investments and their climate impact, there is an open-ended timeframe. You could argue that tracking the carbon intensity of investments will need to be an ongoing process, which is fair enough. But the Action Plan stops short of a tangible outcome of this work, such as a target to reduce the carbon intensity of Suncorp’s investments, or a charter on what it will and won’t underwrite in future.

At last year’s AGM, Chairman Ziggy Switkowski suggested something far more impressive than what we saw in the Action Plan, as he made it sound like Suncorp was on a two-year path to divesting fossil fuels in their equity investments. Here’s that clip:

So to have to wait more than a year before we see Suncorp set targets to reduce its scope 1 and 2 emissions, and no commitment date to set a target for reducing its scope 3 emissions is a major disappointment.

Suncorp might feel it needs more time to set targets and publish material showing how the company stacks up against the impacts of climate change. But when it comes to setting targets, this is hardly a new expectation placed on companies. And it would be scary to think that an insurer, whose business it is to be across risk to the point of genius, needs more than a year before it is ready to even start modelling the impact of climate change.

So while Suncorp has definitely moved itself ahead of its major competitors IAG and QBE on its commitments to disclose climate risk, there are some gaping holes that will need to be plugged before we can be confident they will properly meet the TCFD recommendations.