Where: Online, sign up via Eventbrite

Archived webinar:

Who:

• Nick Tyrone, SERI Legal & Governance Lead, Icebreaker One (Chair)
  
• Ben Howarth, Manager Climate Change and Open Data Policy, Association of British Insurers (ABI)
  
• Ted Christie-Miller, Senior Researcher, Onward
  
• Richard Hobbs, Chair, Acrisure Re
• Dr Bronwyn Claire, Senior Programme Manager, ClimateWise, Cambridge Institute for Sustainability Leadership (CISL)
• Stuart Shipperlee, Managing Director, Litmus Analysis

What:

As the climate changes, risks from environmental factors will increasingly impact both insurers and the insurance sector. Added to this, TCFD-related regulation and other climate-related regulation will soon be coming into effect. How will the insurance sector respond?

Establishing a sector-wide data sharing framework will be central to the solution – yet this faces several challenges. What regulatory framework would be required to make data sharing effective – or at least give it a kick start? 

In this hour-long event, these and related issues surrounding Net Zero and the insurance industry will be discussed. The SERI team will answer questions from the audience and share information on how to contribute to the SERI programme.

SERI (Standard for Environmental Risk and Insurance) is a UKRI and EIT Climate-KIC -funded programme.

However, an even bigger challenge is to tackle the total GHG emissions used to produce a built asset, known as embodied (or capital) carbon. As urban growth continues and new buildings are erected, the contribution of embodied carbon is projected to double by 2050, making it urgent to address mitigation strategies in the design phase.

While some types of building passport exist, a climate-ready building passport could provide the means to capture and share data on a building’s life cycle (design, build, operation) and provide owners with a pathway to meet GHG reduction goals.

Various disparate tools exist that serve specific needs, but there is a wide gap between current data availability, its formats, discoverability and useability and a fully functioning, transparent, interoperable and scalable system that could capture the diverse requirements of potential users. In other words, there are many barriers that prevent stakeholders accessing the data they need that could help to reduce the GHG emissions of a building.  

The creation of a digital “building passport” could enable a variety of stakeholders to discover and share appropriate data in a secure environment, underpinned by robust standards for data sharing, allowing for real-time reporting to enhance risk analysis that would in turn incentivise climate-ready behaviours and allow for the development of innovative insurance products. There is an urgent need to collaboratively develop the shared data infrastructure where multiple use cases for digital building passports can help incentivise net-zero behaviours.

Icebreaker One is actively looking for feedback on the idea of climate-ready building passports. We’re currently consulting with industry, and building Advisory Groups to meet this Spring. The Advisory Groups will explore the idea and provide a forum for discussion to ensure this product meets user needs.

To share feedback or express your interest in joining the Advisory Groups, send us an email on seri@ib1.org

What is a building passport?

A building passport is a tool to capture appropriate data in a digital format that could be useful to building owners, occupiers and those that have responsibility for monitoring and reporting on a building’s performance. The idea of a building passport is not new. Indeed, the European Union through the European Commission’s Directorate-General for Energy is providing technical support to investigate the feasibility of introducing optional building renovation passports (BRP) in the EU. Following Article 19a of the Energy Performance of Buildings Directive (EPBD), the relevance, feasibility and potential impact of BRPs was studied and the results showed that there is low awareness of the benefits of energy renovation and insufficient knowledge of what measures to implement and in which order.

Existing building passports are able to store historical information about the design, construction and fitting out of a structure that could be made available on demand to restricted users, such as the fire services. The desire for safer built environments has been the impetus for the creation of organisations like Building Passport. For example, in the light of the Grenfell Tower tragedy and subsequent Inquiry and Phase 1 report, a vital use case for building passports is making floor plans and information that could exacerbate fire risk instantly available to rescue services. 

A climate-ready building passport could go further than providing specific information to rescue services. To enable the widest possible adoption, the concept needs to be enabled by a standards-based approach to data sharing. The Standard for Environment, Risk and Insurance (SERI) is looking to develop open standards to enable insurers to access shared environmental, financial and risk data across organisations and silos. Capturing additional environmental data will provide incentives that could support more meaningful actions to reduce GHG emissions and so underpin net-zero goals.

There are several other uses of the climate-ready building passport that could provide credible reasons for all stakeholders to collectively agree on a shared data infrastructure to support more comprehensive access to information about a building, in a secure environment with the appropriate governance structure in place. For example, the rich data captured in Building Information Modelling (BIM) does not get shared as exposure input data used in risk assessments or the catastrophe modelling process used in insurance pricing. Data standards could assist asset owners where there is no normalised process for capturing and reporting climate-related disclosures, which will soon become mandatory.

How would the data be used?

Creating a digital building passport would open up a wealth of opportunities, but it does pose an expanding hierarchy of questions depending on the user. To narrow the scope, key questions need to be answered from each stakeholder:

– What are you trying to do?
– What data are you using to do it?
– What data do you need?
– What data elements are missing?
– What data formats are missing?
– What data do you not have access to?
– Would a digital passport be the right tool to capture open / shared data?

For SERI, our goal is to encourage the development of innovative insurance products that incentivise carbon net-zero behaviours. Insurers use a wide range of data inputs to assist in pricing decisions and risk management. This data is captured from individual buildings and residential properties, through to massive schedules of information from corporate buyers (such as hotel or fast food chains). None of this data is currently structured to be captured and shared easily.

While third-party catastrophe model vendors are beginning to make their proprietary standards open, and open exposure data standards exist through the work of platforms like Oasis Loss Modelling Framework, the data that is captured is limited. Data on age, construction, number of stories together with primary modifiers like occupancy and location are supplemented by secondary modifiers such as construction quality and cladding. This data is mostly captured in spreadsheets, CSV formats or worse in PDF files. The industry is looking at new tools that could capture additional data elements leveraging more scalable software solutions such as JSON. This allows for a more powerful ability to capture hierarchical and relational data. For example, for buildings this could include:

–> Physical characteristics including its structure, orientation, materials, locations, neighbourhood
–> Use and building performance characteristics including occupancy, services & utilities, critical dependencies
–> Legal and financial characteristics – owners, portfolio relationships, leases

How to get involved!

We believe that there is an opportunity to leverage the work that was originally achieved for Open Banking, and now being used for Open Energy and help crystalise a “Shared Data Infrastructure” that could provide utility for many downstream activities.

Icebreaker One is looking for representatives from diverse organisations that are involved either in the supply or use of data to assist in developing a use case for creating a shared data infrastructure that is aligned with the goals of SERI.

We’re currently building Advisory Groups that will meet over the next few months to do this. Being part of an Advisory Group means meeting occasionally with other sector leaders, and providing insight and feedback on what Climate-Ready Building Passports could be most valuable.

To share feedback or express your interest in joining the Advisory Groups, fill out this short form. Alternatively, write to seri@ib1.org.

Meanwhile, join Icebreaker One here and help us deliver a net-zero future!

Photo credit: City of London Skyline by Trine Syvertsen CC by 2.0

It will team up with a world-leading, multidisciplinary team to unlock opportunities for the UK to lead in greening finance and financing climate-friendly solutions. 

The consortium, led by the University of Oxford Smith School of Enterprise and the Environment, was selected by UK Research and Innovation to establish the Centre, with £10m initial investment.

Other members of the consortium include Imperial College London, the Met Office, the World Bank Group, COP 26, and the Alan Turing Institute. 

The Centre will begin its work at the start of April 2021 ahead of COP26.

Read more about the UK Centre for Greening Finance and Investment here.

The Committee on Climate Change (CCC), an independent non-departmental public body formed under the Climate Change Act of 2008 to advise not only the House of Commons but also the devolved parliaments of the nations on how best to tackle the climate crisis, is chaired by a Tory, Lord Deben. It has highlighted that current policy on buildings continues to lag behind what is needed. An emission reduction of up to 18% overall could be the result of an effective retrofitting of homes to make them more energy efficient – more than three quarters of the emissions in question are from domestic homes. The same conclusion that retrofitting of houses is crucial has been echoed by Onward, a centre-right think tank that produced a paper entitled Costing the Earth on the subject of tackling climate change, as well as the Green Alliance, who argue for scaling up the domestic supply chain for “deep retrofit” (costed at £300m) and investing an additional £1 billion of public capital every year which they calculate will mobilise a further £3.5 billion in private investment.

The Green Alliance also proposes Natural Infrastructure Schemes to create a market in avoided costs. These would, for example, reward land owners for activities that reduce flood risk, improve water quality and sequester carbon like planting trees and creating wetland habitats. There are calls for market-based solutions from all quarters, even from organisations traditionally seen as centre-left.

Meanwhile, a lot of the more ambitious proposals on reforestation are coming from the centre-right. Take the proposal for a “Forest of Britain”, a single, unbroken, two-mile wide line of protected natural habitats from John O’Groats to Land’s End, via the east of Wales. Or a Nature in the City Act, something which would contain a range of measures to protect declining species and enhance the built environment including implementing a programme of ‘rewilding’ of public green spaces, apportioning a certain area of each park to the stewardship of local schools or wildlife trusts and introducing payments to local authorities for the provision of environmental services. Both of these ideas came from Policy Exchange, perhaps the leading centre-right think tank in the UK.

With there being a consensus being reached between left and right on not only the need to tackle climate change but on a lot of the means of doing so, the path toward the most sustainable economic recovery from the Covid-19 crisis possible begins to come into focus.

1. To work with our partners in the insurance industry in developing climate-ready insurance products, and 
2. To develop the shared data standards and infrastructure that will underpin the data requirements arising from these products. 

What does climate-ready mean?

There is a lot in there, so let’s start by defining what “climate-ready” means in this context. Icebreaker One’s definition of climate-readiness is twofold. Firstly, climate-readiness translates into delivering net-zero by stopping new emissions and balancing out, or offsetting, all prior and current emissions. Secondly, it means that we need to  address the consequences of climate change, by adapting and becoming more resilient to its impacts

What are climate-ready products?
Building on this explanation, we have defined a climate-ready insurance product as one that incentivises certain behaviours in the business models of the companies and individuals buying insurance. This includes incorporation of net-zero objectives and outcomes into their business model and operations, and demonstrating greater resilience and adaptation in response to climate and environmental risks.

What does a climate-ready product look like?
So far, so good. But how do we begin to identify the set of potential products that can best deliver climate-ready objectives? How do we work with our partners in order to test the appetite of insurance buyers and market participants, and to understand the challenges – both in general and those specifically data-related – associated with creating these? 

The ideal climate-ready insurance product has something to offer to everyone involved – reducing premium costs for the buyer whilst also incentivising climate-ready behaviours, and reducing the risk to the insurer and also helping them to manage their own transition risk, and giving brokers a clear choice and opportunity to present to buyers. 

From an insurer’s perspective, how does the ability to demonstrate climate-ready characteristics impact the risk assessment and pricing of a client’s insurance? There are obvious impacts, in addressing the consequences of climate change, on climate and environmental risk – i.e. catastrophe insurance.  However, there are also potential impacts in terms of the client’s credit rating and business continuity risk. A client having a sustainable, net-zero supply chain is arguably one that is more likely to have a robust ability to cope with the potential risks to its business continuity that arise from climate and regulatory change.

Where SERI comes in 
We want to find use cases that already exist, and where the absence of appropriate insurance solutions is holding back progress towards climate-readiness. For example, we can look at new and innovative technologies that can help advance a climate-ready agenda in sectors such as the built environment, shipping and agriculture. Are there some technologies for which a lack of insurance coverage is holding back adoption? How can SERI help address the challenges in providing insurance cover for these technologies, through the availability of shared data standards and infrastructure?

We can also collaborate with other existing green finance initiatives, in order to understand the challenges they face in developing their own plans, and how insurance may be able to help address those, or where the development of data standards can solve multiple problems at once. Are there incentives that can be created on a wider scale, in terms of receivables and project financing, if we can demonstrate that climate-readiness has a material impact on a company’s credit risk, and hence its trade credit insurance costs?  

Our goal is to internalise the externalities – turning climate-readiness into a material impact for risk assessment, in terms of both financial and non-financial risks. We also need to unravel and address the data requirements that are needed to support the process of moving climate-ready insurance products from theory into reality.

You can help!
The SERI Policy Working Group will be looking at all of these questions and challenges, and will identify the levers of change required across the industry, policymakers, legislators and regulators in order to solve them. If you’d like join us on either the SERI Policy Working Group, the SERI project more generally, or to find out more about Icebreaker One’s work and plans, please contact us.

The research team at Icebreaker One have been investigating the use of remote sensing across the SERI project and potential benefits these techniques can bring to stakeholders and beneficiaries. Focussing our immediate work on the insurance sector we’ve seen examples of the use of remote sensing in the field of catastrophe modelling, exposure management and risk engineering to event response and claims control. Some of these examples can be used to guide our work to define climate-ready financial products within the SERI project for property insurance, e.g. 4EI used remote sensing data to develop a building heat index across the UK. Could such a dataset be used in addition to existing data sets (such as flooding hazards, landslide susceptibility) and help better define financial products such as mortgages and home insurance? We don’t know yet if climate change is causing more weather weirdness but a project to use supercomputers to re-run climate models has been proposed by the Met Office.

Figure 1: some uses of remote sensing within property catastrophe insurance

Other examples include Skytek, a technology company that uses remote sensing technology to support shipping insurance businesses. They use earth observation data to monitor storms and severe weather events, to track ships offshore and assess their proximity to potential disastrous storms. They also use data to guide insurance underwriting and post storm claims. Combining the ship’s tracking system (AIS which also uses Global Positioning System (GPS) to define the ship’s location and satellite imagery of upcoming weather events allows insurers to identify ships which may be at risk and monitor their response to storm alerts (Skytech, 2020). The shocking events in Lebanon have been well documented in the mainstream media and there are a number of before and after satellite images published and offered as free data by major satellite image providers (e.g. Maxar). That data is very useful for damage analysis for post-event insurance claims which may be used following man-made disasters or natural catastrophes.

From extreme weather events and disaster response to ship emissions, a topic which is of high importance to the International Maritime Organisation and their recent focus on cutting sulphur oxide emissions. The use of UAV (unmanned aerial vehicles) remote sensing is evolving. Companies such as Martek Marine uses drones to assess emissions from ships. Another example is EMSA that uses UAV remote sensing with gas sensors to monitor sulphur emissions on the coast of Denmark. One way the shipping industry is looking to reduce emissions is by moving to LNG (Liquified Petroleum Gas).

As the IMO (2016) states, “the use of LNG is considered to have significant environmental advantages. An LNG fuelled ship reduces the emissions of NOx by 85% to 90% (using a gas only engine), and SOx and particles by close to 100% compared to today’s conventional fuel oil. In addition, LNG fuelled ships may result in a net reduction of greenhouse gas (GHG) emissions”.

Decarbonisation of shipping is one of the product ideas of the SERI project – we are exploring how remote sensing and related technologies can be used to develop financial products.

The agriculture sector is one of the heaviest greenhouse emitters and remote sensing can be used to estimate emissions. One example by SEGES using Web Map Service (WMS) imagery highlights how machine learning algorithms were applied to remote sensing imagery to detect in an automated way over 26,000 slurry tanks and assess ammonia emissions across 34,000 farms and over 42,933 km2 land in Denmark in 2019.

From the studies mentioned above we can see that remote sensing data is usually used within each sector as derived data, i.e. it’s not the raw data outputs that are most useful but those obtained by processing and analysing imagery information to gain climate and environmental insights, monitor and detect changes. Creating climate-ready financial products offers an opportunity to use or develop derived information,  e.g. thermal or greenhouse gas emissions calculations, flood hazard mapping, land-use etc.

Through our research and collaboration with SERI project partners and stakeholders, we hope to be able to use remote sensing to inform our development of climate-ready financial products in a sandbox/test-bed environment over the coming months. We are currently collecting use cases from other fields that may contribute to climate-ready financial products innovation. This will be an exciting journey –please reach out if you’d like to learn more. We’d love to hear from you!