While PCAF has established comprehensive guidelines for banking asset classes, its guidance for the insurance sector remains limited. Currently, the PCAF insurance guidance covers commercial lines and personal motor lines, with additional portfolios anticipated in future updates. For insurers, the absence of methodologies for significant portfolios such as Home and Contents presents considerable reporting challenges, particularly in regions like New Zealand where mandatory disclosures are required.

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Challenges in Insurance Emission Accounting

Unlike other financial institutions, insurers do not have ownership or financial control over their insured counterparties. This distinction necessitates unique engagement strategies for measuring and influencing insured emissions. The current PCAF methodologies, while robust for banking, fall short in addressing the entire scope of an insurer's portfolio, particularly in areas like home, contents, and agricultural insurance.

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Innovating Interim Solutions with Generate Zero

To bridge the current gap, Generate Zero has developed methodologies for a range of insurance portfolios in line with relevant existing PCAF frameworks for loans and investments. These calculation methodologies cover portfolios such as home, contents and agriculture. Generate Zero’s proprietary methodologies incorporate a wide range of property and business attributes, ensuring comprehensive and accurate emissions reporting.

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Key Features of Generate Zero’s Approach:

1. Broad Reporting Coverage: By adapting existing PCAF methodologies, Generate Zero enables insurers to report on a wider array of asset classes, ensuring no significant portfolio is left unaccounted for.
2. ‍Data-Driven Accuracy: The proprietary data is built on local property and business attributes, enhancing the precision of emissions estimates.
3. Global Standards: Generate Zero's platform and calculation methodologies follow global standards, allowing reporting entities to report with confidence.

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Benefits for Insurers

Generate Zero’s innovative approach offers several advantages for insurers:

• Enhanced Compliance: Insurers can meet mandatory disclosure requirements in jurisdictions like New Zealand.
• Comprehensive Reporting: The interim models allow for broad and detailed emissions reporting, even for portfolios not yet covered by PCAF.
• Proactive Engagement: Insurers can use these methodologies to engage with clients more effectively, helping to influence and reduce insured emissions.

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The gap in PCAF's current insurance methodologies presents significant challenges for insurers aiming to report their Scope 3, Category 15 GHG emissions. Generate Zero’s adaptation of relevant existing PCAF methodologies for insurance offers a practical solution, enabling insurers to meet regulatory requirements and drive meaningful engagement with clients. While PCAF develops its guidance, interim solutions like those from Generate Zero are essential for maintaining the momentum towards accurate and comprehensive emissions reporting in the insurance industry.