One uses as a starting point all license plates that are present in the portfolio on a specific reference date, while the other assumes the actual term of the policy. So how do you ever get one honest picture of CO2 emissions in the insurance sector, as the CSRD directive prescribes? Time for a conversation with Imeni Ferhani, sustainability reporting specialist at Ansvar Insurance Company and Nienke ten Hagen, sustainability lead at Nationale Nederlanden about the progress of the project to achieve an ESG standard for the sector. According to Ten Hagen, it is now a matter of deepening, "but soon this will be the way to make sustainability really transparent."
Ten Hagen and Ferhani are both chairmen of their own sector table that maps out the CO2 emissions for two insurance portfolios: motor insurance and business insurance (commercial lines). Ten Hagen is sometimes asked what this has to do with insurance? "The financial sector in particular plays a very important role in the major transitions of our time. Think of electrification or making buildings more sustainable. If you can't assess risks, you can't insure them. And without insurance, no financing. Then things come to a standstill." Ferhani sees it that way too: "Insurance is already sustainable at its core. It's about making risks manageable and creating safety. But the climate crisis is forcing us to broaden that. We have to make choices now that will make a difference later and slow down climate change and preferably stop it."
The pressure of new rules
The desire for a standard to be developed therefore comes mainly from the sector itself. But of course it is also dictated by regulations. Nienke ten Hagen explains that the CSRD directive requires companies from a certain size to report on sustainability. "There is a lot involved: You have to show what you do in your annual report. What impact you have and how you reduce it. Because even if you do nothing as a company, you also comply with the reporting obligation of the CSRD guidelines. It's serious work: all companies that have to report have gone through more than 1500 rules in order to be able to draw up a report." NN, together with a.s.r. and Achmea, is the only insurer that has to comply with the CSRD guideline because of their size. Then comes the CSDDD: a due diligence guideline that requires companies to improve their social impact. The CSDDD in particular really helps to put pressure. "And rightly so," emphasises Ten Hagen. "But that does mean that we have to organise this smartly as a sector."
Tables, teams and pace
The collaboration with insurers is currently taking place in two sector tables. Each table meets weekly for meetings of about two to three hours. Work is done in sprints, short, defined periods in which a team works intensively towards a specific goal. Ten Hagen: "First we collect information, then we compare methods and then we choose the best approach together." That sounds easy and clear, but in practice Ten Hagen and Ferhani experience a lot more unruly. For example, the three insurers that reported for the first time according to the PCAF method all turned out to make different choices. Ten Hagen: "We used the same calculation method, but we still came up with apples and oranges. Then you know: here we have to get on the same page as a sector."
Small differences, big consequences
Imeni Ferhani gives an example: "Take the calculation of CO₂ emissions from vehicles. Some insurers only charge with license plates that are active on December 31. Others calculate with the number of days that a policy is active. That makes quite a difference to comparability. Or take the data sources. We all use the same data sources, but sometimes provisional and sometimes final figures are used within these sources. And then, of course, you get very different outcomes."
The importance of one language
In short, within the teams they work on finding a common language. Because if everyone makes a slightly different calculation or makes different assumptions, then you can't compare anything. Ferhani: "And you can't draw any conclusions or see trends. That makes it difficult to improve." According to Ten Hagen, it is therefore important to look at which turns insurers make in their reporting. "Which databases do you use? How exactly do you calculate CO₂ emissions? In this way, we try to ensure that we use the same principles in broad terms, at least in the Netherlands." Ferhani emphasises the importance of small insurers. In addition to NN, a.s.r and Achmea, ZLM and Ansvar also participate at her table. "The standard to be developed must be clear and workable, even for small insurers. That's why we make sure the basics are simple enough to adopt. That is important, especially if smaller parties want to start reporting."
The power of collaboration
Ten Hagen calls the collaboration at the table intensive, but very instructive. "The great thing is that you notice: everyone really wants to move forward. Together we look for what works best," says Ten Hagen enthusiastically. Ferhani especially notices that the combination of large and small insurers works well. Large parties have a lot of data and expertise, while smaller parties look closely at the feasibility. That balance helps to arrive at a standard that is realistic."
During the weekly meetings, the differences in methods are often central. "Then we find out where those differences come from. Is it a conscious choice or by accident? Then we look for a joint approach. Sometimes we go back to our own organisation with a question like: why do we do it this way?" What works well is that the Association does the program management together with Association partner Deloitte. "They structure the process. This way we keep an overview and we can see where we are and are not on the same page for each part," says Ten Hagen.
From averages to customisation
Of course, data quality is important for the standard. A challenge here is that the data that is now available is based on sector averages. This means that the tables are based on averages for emissions per type of company or vehicle. The downside of this is that you can have a very green portfolio, but still score average on CO2 emissions. "Or the other way around. That is why we want to move towards data at company level in the long term. Then you really know how sustainable your portfolio is. But that is not yet feasible. Companies must first be able to properly measure and share their own emissions," says Ten Hagen
So there is certainly still work to be done. Ferhani: "But what we are doing together now is a first important step. Without measurability, you cannot develop a targeted policy, and without policy, structural improvement is lacking. We all share the same goal: to reduce emissions. Reliable figures are indispensable for this. And as a sector, we can really make a difference there together."
Surprising insights
Ten Hagen finds it surprising that during this process she finds out that at the beginning she thought: we all do this more or less the same, because we all use the same sum: the PCAF method. "But if you really start calculating and comparing, you find out how many details make the difference." Ferhani also runs into this in her table. "That even if we think we use the same sources, such as data from CBS or the RDW, there are still big differences in outcomes. For example, because one uses provisional figures and the other definitive figures. Or because you choose a different dataset." But also that some assumptions turn out to be wrong. Ferhani: "Like the example of CO₂ emissions over the whole year versus just December 31. That really got me thinking."
Deadlines and pressure
Both ladies indicate that they are on schedule with their sector tables. "There have been some minor delays, for example due to holidays. But in general, it is going well. The intention is that we will do internal coordination this year and have our approach in place before 1 October." They are both also realistic: if it doesn't work out for the 2025 financial year, it will be 2026. "But preferably earlier, of course. Because the sooner we have a standard, the faster we can improve," says Ten Hagen.
Towards a more sustainable 2030
When asked where they hope the sector will be in five years' time, the answer is unanimous: that the insurance sector has demonstrably contributed to achieving the Paris climate goals. And that this standard is the norm. Not only for large, but also for small parties. "And other sectors," adds Ten hagen. "I hope that by then we will be further than just CO₂. That we also look at circularity and biodiversity. And that we can translate sustainability into clear KPIs, so that it really becomes part of the business operations. Because if we do this well together, we can really make an impact as an insurance sector."
The power of simplicity
At the end of the interview, the question to both ladies is what else they would like to pass on to fellow insurers? Ferhani emphasises not to wait. "Get to work. It may seem complicated, but if you work together, you get much further than alone." "And keep it practical," adds Ten Hagen. Start measuring, even if it's not perfect yet. Because without measurement there is no insight, and without insight there is no movement."