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Insurance Giant Allianz Targets Climate Change Risk: Expending “Unavoidable Emissions”

09 Wednesday Jul 2014

Posted by Aman Singh in CSRwire, ESG

≈ 1 Comment

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allianz, barclays, biodiversity, carbon offsetting, climate change, CSRwire, deforestation, energy, Environment, ESG, greenhouse gas emissions, impact investing, insurance, Nonprofits, Philanthropy, redd, regulation, renewable energy, social enterprise, Social Enterprise, Social Entrepreneurship, Social Impact, Sustainability, sustainability, wildlife works


Picture_Martin_EwaldAfter chatting with Barclays’ Director of Citizenship Jillian Fransen on the financial institution’s allegiance to carbon offsetting and how she is leveraging the increasingly popular mechanism to not only offset its unavoidable carbon footprint, I turned to insurance giant Allianz who has also chosen to use carbon offsetting to target deforestation and reduce its environmental footprint.

Excerpts from my conversation with Martin Ewald, Head of Investment Strategy and Renewable Energy/Infrastructure Equity with Allianz Global Investors.

—————-

Describe your emissions reduction program and goals.

Allianz has set itself the target of avoiding, substituting and reducing its own CO2 emissions and is 100 percent climate-neutral since 2012. This means that all remaining emissions are being neutralized – in particular through direct investments in climate protection projects.

By 2015, Allianz aims to reduce its carbon footprint per employee by 35 percent compared to 2006.

What are “unavoidable emissions”?

Unavoidable emissions are CO2 emissions that are intrinsically linked to our business activity, like business travel, that we cannot always avoid or only avoid at very high expense. These emissions are still harmful to the climate. Corporates can take a leadership role in offsetting emissions related to their business activity by investing in responsible sustainability projects – this is not required by regulation in our sector.

But it is responsible behavior and makes good business sense. In fact, we have identified climate change as one of the three most critical sustainability challenges for Allianz (alongside demographic change and access to finance).

Where does offsetting fit into your sustainability strategy?

In addition to our carbon reduction target, being a carbon neutral business is the second pillar of our commitment and contribution to achieving a low-carbon economy.

In 2012, 175,000 credits, each accounting for one metric ton of carbon avoided, were sourced and retired from projects we support – retiring credits means that CO2 certificates, each representing one ton of avoided emissions, are taken off the market. Our remaining carbon footprint was neutralized by credits bought from the carbon market, which underwent a stringent sustainability screening to ensure they met the same high standards as the credits from projects we invest in.

The quality of the underlying projects determines the value of each and every credit in the voluntary sector, and REDD+ rate amongst the highest valued carbon credits.

Why did you choose REDD+ as one of the preferred offsets?

Our investment in REDD+ is consistent with our strategy of supporting effective climate projects in emerging and developing countries. We have invested in forest protection in Kenya with Wildlife Works, one of the leading developers of REDD+ projects. These projects don’t simply protect threatened forests; they also involve the local population and provide them with a source of livelihood.

REDD+ will also raise awareness of how to deal with resources in a responsible manner, besides helping preserve the habitat of the local population. Due to the considerable impact generated, we plan to continue investing in the REDD+ sector.

How has supporting REDD+ benefitted your company – and its stakeholders?

For the CO2 stored by the forests we receive certificates, which we can then use to offset business-related CO2 emissions. This way we ensure our climate neutrality and at the same time make a worthwhile investment. For us the yield also includes enhancing climate protection and biodiversity. We may also benefit from positive branding, but it is too early to tell since 2012 was the first year that we were carbon neutral.

As a financial institution, what is Allianz’s most challenging source of carbon emissions?

Ninety eight percent of our emissions stem from energy, travel and paper. So, the focus is on reducing CO2 emissions in these three areas.

In times of growing business, this is a challenge but we managed to reduce emissions across all three key areas in 2012, i.e. by sourcing lower-carbon energy or by making better use of video conferencing rather than traveling to business meetings.

How are these programs hallmarks of “responsible corporations”?

Since our business activity is not very carbon intensive, investing in REDD+ and similar projects today allow us to lock-in emission reductions over many years. We consider this to be responsible corporate practice: leveraging our capital base to build up the low-carbon infrastructure of tomorrow – be it forest protection or renewable energy, railways or electricity grids. This strategy also pays off, which is important to meet the expectations of our clients and shareholders. And this is a good basis to expand on our sustainable leadership agenda.

What role do you prescribe to Allianz in addressing climate change globally and locally?

We have introduced a group-wide strategy, which commits us to play a lead role in addressing climate change. For us it is about addressing the risks, e.g., the uptake in insurance loss from natural catastrophes, and making use of the opportunities. We have invested about EUR 1.7 billion in renewable energy projects, for instance, and set up a renewable energy fund, which has already attracted significant financial interest from our clients.

Moreover, we offer around 130 green products and services to our customers, including renewable energy home insurance, advisory services related to renewable energy and insurance premium discounts for drivers of electric/hybrid cars. The aim is to integrate climate change into our business  model, step by step building the business case for a climate friendly economy.

How can the private sector play an important role in reversing/addressing climate change? 

By understanding the climate issue as an investment case. Protecting forests is the cheapest way of saving carbon. To speak bluntly: if we first cut down the forest and then try to reduce the same amount of carbon we emitted, it would be much more expensive than just avoiding deforestation.

But as stated before, the most distinguishing factor about REDD+ is the opportunity to carry out investments that help improve social livelihoods and support local communities as well. Therefore supporting projects like the pioneering activities of Wildlife Works are appropriate activities that corporations need to support.

As long as there is no internationally binding climate protection agreement and as long as national regulation lacks teeth, the REDD+ market allows us to participate in voluntary projects around the world to address climate change. Consequently we have just carried out an additional REDD+ transaction in Indonesia.

What do you expect from policy makers to help expand your clean investments?

We stand at a critical juncture. We can continue business as usual with a small but dynamic niche of renewable energy projects and a reliance on fossil fuels for the big chunk of our economy. But this will not prevent dangerous levels of global warming.

Or we embark on a trend change, as we hopefully are seeing right now in Germany.

For this, we need a clear and reliable regulatory framework that gives investors appropriate incentives and the necessary regulatory certainty to finance clean technologies rather than coal or oil.

Originally written for and published on CSRwire’s Commentary section Talkback on September 5, 2013.

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Translating Business Responsibility: An interview with Warner Bros. CEO & Chairman Barry Meyer: Now LIVE on CSRwire!

24 Tuesday Jan 2012

Posted by Aman Singh in CSR, Uncategorized

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aman singh, Barry Meyer, Brand Management, Business, cause marketing, CEO Network, corporate social responsibility, CSR, CSRwire, Ethics, Events, Justice League, Leadership, Management, Nonprofits, Social Enterprise, Social Impact, Social Media, Social Responsibility, Uncategorized, We Can Be Heroes


Translating Business Responsibility: An interview with Warner Bros. CEO & Chairman Barry Meyer: Now LIVE on CSRwire!

When the Justice League comes together to fight evil, evil stands little chance. In a world of economic uncertainty and social unrest, superheroes provide children with mentors, entrepreneurs with lessons in responsibility, and the rest of us with inspiration. Now, DC Entertainment has joined hands with Time Warner and Warner Bros. to launch We Can Be Heroes.

Their target: The hunger crisis in the Horn of Africa.

Their spokescharacters: The Justice League

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The Convergence Economy: A New Reality For Business (Sustainability) and Nonprofits

10 Wednesday Aug 2011

Posted by Aman Singh in CSR, Guest Author

≈ 2 Comments

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Accenture, business, CEO Network, consulting, convergence economy, corporate accountability, corporate social entrepreneurship, corporate social responsibility, crisis management, CSR, CSR strategy, ethics and compliance, future of nonprofits, Gib Bulloch, Green, leadership, management, Nonprofits, risk management, social enterprise, social entrepreneurship, Stakeholder Engagement, supply chain, Sustainability, sustainability, sustainable business, UN Millenium Development goals, water, Work culture


If ever we needed proof that conventional development approaches are failing to address poverty, disease and malnutrition, the 10 year checkpoint for the UN’s Millennium Development Goals provided it.

The shortfalls in achievement in parts of Africa and South Asia cruelly expose the limits of our current efforts. Debate has recently turned to how business, governments and NGOs can work together in ways that align commercial self-interest with societal value. But the emergence of a ‘convergence economy‘ will disrupt incumbent development providers and ask many questions of businesses.

The Good News… and The Bad News

The good news is that the struggle against seemingly intractable problems such as malaria, drought and extreme poverty coincides with a time when global companies are looking for new markets. It’s no surprise, therefore, that NGOs and the private sector are increasingly working together. But all too often this collaboration is for one-off projects and conducted at arm’s length.

Business provides funds and NGOs deliver solutions. This may give business a license to operate in new territories, but it misses a large opportunity to transform communities for the long-term.

What is the Convergence Economy?

It is based on a merging of issues: Water, sanitation, education and disease, for instance, can only be addressed effectively together. It recognizes that the interests of NGOS do not run counter to those of business. And this results in a convergence of solutions, where it no longer matters whose logo is on the product or service that is improving the welfare of communities. 

We are all aware of how leading brands are supporting local communities and farmers, but beyond ethical supply chains and community based business practices, some businesses will have to consider more radical transformations of their operations.

Accenture's New Era of Sustainability 2010 Report

We can expect to see hybrid organizations that genuinely bring together NGOs and businesses in newly formed entities that have joint and flexible value chains at their heart. Danone’s collaboration with Grameen in Bangladesh illustrates this and has resulted in entirely new products to combat infant malnutrition. In some cases, we can expect the private sector to receive grants rather than NGOs.

The ‘convergence economy’ therefore requires businesses to create new business and operating models in local markets and to identify where they may have the best capabilities to ‘touch’ local communities in place of or in partnership with traditional aid providers. These new businesses or subsidiaries may be in joint partnerships with NGOs and other players.

For solutions to be sustainable, they will need to feed back local innovations into the broader business to maximize commercial benefit. To maintain their commitment, they will have to persuade shareholders that these commitments with longer term pay back periods are essential for future growth.

What does the convergence economy mean for NGOs?

According to our survey with the United Nations Global Compact of 766 CEOs, 27 percent of CEOs saw NGOs as key stakeholders in areas of sustainability in 2007. That figure fell to just 15% in 2010.

NGOs will still occupy a vital position in development—indeed they must, as they possess the local knowledge and knowhow, but they will see their role changing.

NGOs will act as coordinators, not just providers.

They will attract investment finance as well as seeking grants. They will support free markets as a tool for development. This means adopting new capabilities and, to some extent, a new cultural outlook. In the same way private sector companies are used to disaggregating their businesses and outsourcing non-core operations, NGOs will have to redesign their structure and purpose.

They will need a venture capital mentality to create conditions for investment.

The convergence of development and commercial enterprise is not therefore merely about ethical supply chains or profit seekers embracing a broader definition of value.  It is about a far deeper and more fluid operational collaboration across sectors. As multinationals enter new markets, they will have to redesign their models and assist NGOS to do the same.

Then, what could be seen as a marriage of convenience today can become a more committed and productive long-term relationship in the future.

–By Gib Bulloch, Executive Director, Accenture Development Partnerships

Gib is the Founder and Executive Director of Accenture Development Partnerships (ADP), a ring-fenced not-for-profit consulting group within Accenture, whose clients include many of the major international NGOs and development agencies. ADP’s main focus is bringing affordable business and technology expertise to the international development sector and promoting private sector engagement in sustainable development. In 2007, ADP was awarded the Management Consulting Association (MCA)’s CSR Award and in 2008, Gib was named as the Sunday Times sponsored Management Consultant of the Year in the Best Partner/Director category.

Gib has lived and worked extensively in developing countries and is a regular speaker on the role of business in development, corporate social entrepreneurship and cross-sectoral partnerships.

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