AXA trims portfolio's 'warming potential', as company warns of climate costs

Insurance giant’s annual climate report warns the companies it invests in could lose over 10 per cent of their revenues by 2030 under a 1.5C scenario

AXA has today published its fourth annual Climate Report, detailing how its efforts to align its investments with the Paris Agreement have led to a reduction in the ‘warming portfolio’ of its portfolio over the past year.

The report reveals how at the end of 2019 the ‘warming potential’ of its investments stood at 2.8C – still well above the ‘well below’ 2C goal set out in the Paris Agreement, but a marked improvement on the 3C projection for the portfolio that was recorded at the end of 2018.

The company also highlighted how the 2.8C trajectory for its investments compares favourably with an industry average of 3.6C.

Thomas Buberl, CEO of AXA, said the report – which is in line with the French law on energy transition for green and ecological growth and the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) – provided “an essential tool for measuring the effectiveness” of the insurance giant’s climate strategy.

The company has recently pledged to ensure its investments are in line with a 1.5C warming scenario by 2050, and to support the goal it has committed to mobilising €24bn of green investments by 2023 and ensuring it has no coal assets in its portfolio by 2040.

However, Buberl acknowledged that the report “shows that we must collectively pursue our efforts to achieve the objectives of the Paris Agreement, notably in the context of the post-Covid 19 economic recovery.”

The report also reiterates AXA’s previous warning that “a 4C world is not insurable” and highlights the scale of the risks the company and the wider investment sector faces as climate risks escalate.

Specifially, the report calculates projected climate-related costs in 2030 under a1.5C warming scenario for the companies AXA invests.

“Our exploratory analysis also shows that, on aggregate, when using a 1.5C scenario, the companies we invest in may lose 10.2 per cent of their total revenues in transition costs, and eight per cent of revenues to physical costs, but this is partly offset by green revenues equivalent to 7.8 per cent of total revenues, thanks to integration of current green revenues and the results derived from forward-looking green patent investments,” the report states. “Ultimately, and according to this methodology, AXA’s net “company cost of climate” appears to be equivalent to an average 10.5 per cent of the turnover of the companies we invest in.”

The report calculates that the projected loss of revenues would translate into a 3.3 per cent reduction in AXA’s investment value, but it also warns that “this averaged figure necessarily smoothes out heterogenous impacts amongst market players: some will likely be far more impacted than others”.

It also notes that costs could be lower in 2030 under a 3C scenario, as businesses would face lower transition-related costs. But then physical climate risks would increase drastically later in the century under such a scenario as climate impacts escalate.

Original Source: businessgreen.com

One97 Communications Ltd (OCL), which owns payments and financial services platform Paytm, along with Vijay Shekhar Sharma, is set to acquire Mumbai-based private sector general insurer Raheja QBE. The acquisition is subject to customary conditions, including approval from the Insurance Regulatory and Development Authority of India (IRDAI).

Paytm, Vijay Shekhar Sharma

Vijay Shekhar Sharma, Founder of One97 Communications

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This strategic acquisition is through QorQl Pvt Ltd, a technology company with majority shareholding of Vijay Shekhar Sharma and remaining held by Paytm.

Started in 2009, Raheja QBE is a joint venture between Prism Johnson Limited and QBE Insurance Group, one of Australia’s largest insurers. The company said that all employees of Raheja QBE will continue working at Mumbai and other locations.

The acquisition will enable Paytm to innovate insurance products and services to accelerate its reach and adoption. In a statement, Paytm said, its mission is to drive financial inclusion for over half a billion Indians.

Amit Nayyar, President, Paytm, said, "It is an important milestone in Paytm’s financial services journey, and we are very excited to welcome Raheja QBE General Insurance into the Paytm family. Its strong management team will help us accelerate our journey of taking insurance to the large population of India with the aim to create a tech-driven, multi-channel general insurance company with innovative and affordable insurance products.”

Commenting on the development, QBE Australia Pacific Chief Executive Officer, Vivek Bhatia, said, “Today’s announcement marks both the continuation of QBE’s strategy to simplify our business and the beginning of a new and exciting chapter for our strong team at Raheja QBE.”

In March, One97 Communications said its wholly-owned subsidiary Paytm Insurance Broking Private Limited (PIBPL) secured a licence to sell life and non-life insurance from the Insurance Regulatory and Development Authority of India (IRDAI). At that time, Paytm also surrendered its 'corporate agency’ licence to obtain the brokerage licence. 

The company has tied up with around 20 of the leading insurance firms in India, and would integrate with 30 more companies over the next few weeks. 

(Edited by Megha Reddy)

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Original Source: yourstory.com

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