This report provides guidance for finance teams of insurers and reinsurers (re/insurers) on calculating insurance-associated emissions. These emissions, a type of Scope 3 emissions, are defined as greenhouse gas (GHG) emissions in the real economy associated with specific insurance policies within a re/insurance portfolio. Measuring these emissions helps re/insurers develop strategies to reduce them, set net zero targets, and track progress. Finance teams are encouraged to begin calculating a baseline, even if initial data is imperfect, as this allows iterative improvements and better accuracy over time.

The role of the finance team

Finance teams possess the expertise to manage financial data, making them well-positioned to support or lead the process of calculating emissions baselines. Their skills in interpreting guidance, establishing governance frameworks, and analysing data are critical to managing insurance-associated emissions. Finance professionals are encouraged to help set up cross-functional teams and to engage other departments, such as pricing and operational teams, to improve the data collection process. Suggested actions include applying governance procedures, helping re/insurers establish clear internal controls, and playing a key role in sharing knowledge across the organisation.

The PCAF standard

The Partnership for Carbon Accounting Financials (PCAF) Standard is the first global standard for measuring and reporting insurance-associated emissions. It currently covers personal motor and commercial lines and encourages standardised approaches to prevent divergence across institutions. Applying the PCAF Standard ensures consistency and provides a framework for future expansions to other business lines, such as treaty reinsurance and project insurance. Finance teams should become familiar with this methodology to help drive accurate reporting and improve data quality.

Top tips for calculating insurance-associated emissions

The report outlines several practical tips for finance teams starting with insurance-associated emissions. One key recommendation is to focus first on business lines with high emissions and strong data quality, such as personal motor and commercial lines, before expanding to other areas. Finance teams can leverage their data consolidation skills to prioritise these areas. Another tip is to draw on external expertise and peer organisations, as well as working closely with intermediaries like brokers, to verify and collect GHG emissions data. Although data challenges are common, finance teams are advised to use PCAF’s data quality scoring to ensure reporting accuracy.

Iterating and improving your baseline

It is unlikely that the first baseline calculation will be perfect. The report stresses the importance of starting early, even with imperfect data, and iterating to improve accuracy. Multiple revisions may be necessary before an emissions baseline can be reported externally. Finance teams should assess the control environment for the baseline calculation and use internal reviews to ensure the rigour of governance, processes, and controls.

Building capacity and knowledge-sharing

The report emphasises the importance of building capacity within the organisation by embedding insurance-associated emissions into ongoing technical training and providing regular updates across operating entities. Regular upskilling and knowledge-sharing sessions can help ensure that employees understand the significance of measuring and reducing emissions. Finance teams are encouraged to play a key role in facilitating this training and embedding emissions data into standard continuous professional development.

Expanding and developing your approach

As methodologies and data availability evolve, finance teams should stay informed about changes in best practices. The PCAF Standard will likely continue expanding to cover more business areas, and finance teams should adapt their approach as new guidance emerges. This proactive engagement ensures that re/insurers do not attribute zero emissions to segments not yet covered by current guidance.

Clear communication of methodology

When reporting an emissions baseline, it is essential to communicate clearly what is included and what challenges were encountered. Finance teams should ensure internal and external reports explain any data quality issues or gaps. Developing an internal methodology that aligns with the PCAF Standard is recommended to improve clarity and consistency. Finance teams should guide internal communication and coordinate with other teams to ensure accurate external reporting.