Strong commitment - German insurers leading on sustainable transition
Long-term economic success depends on an intact climate and natural environment. This is why German insurers are committed to their sustainability goals and review their progress in an annual sustainability report.
The European economy faces another challenging year in 2025 with a grim economic outlook as well as fiscal and geopolitical risks. Evidently the focus in public debate has shifted towards competitiveness while sustainability issues seem to be less important. In the short run, economic and ecological goals may indeed be conflicting. Consequently, political and corporate leaders can perceive themselves to be trapped and pressured to make ‘tough’ choices – either climate protection or economic growth.
Insurers follow a strategic, long-term approach
When taking a long-term perspective, which comes naturally for insurers as long-term investors and risks takers, it becomes clearer that economic and ecological goals are highly interlinked and offer opportunities for resilience and innovation. As matter of fact, preserving climate and biodiversity are necessary conditions for long-term economic success. German insurers have therefore opted for a long-term, strategic approach. The GDV’s sustainability roadmap 2021 reflects the German insurers’ long-term commitment to the Paris climate goals and the UN Sustainable Development Goals.
The GDV documents the industry’s progress and identifies current challenges in an encompassing annual sustainability report. The data basis for the GDV sustainability report 2024 consists of surveys among GDV member companies that covers between 85 and 90 percent of the market. The high level of participation by member companies in the sustainability survey also demonstrates the industry’s broad support for the sectoral sustainability commitments. This structured approach places the GDV and its member companies among the leaders when compared to other national and European industry associations.
German Insurers continue transformation efforts
The GDV sustainability report 2024 shows that insurance companies strongly integrate sustainability in their strategies and organization structures. Most insurance companies (82%) have a sustainability strategy that goes beyond the consideration of risks. Across almost the entire industry (85%), responsibility for implementing the sustainability strategy lies with the management board or C-level.
In 2023, the insurance sector reduced the carbon footprint of its investments in 2023 to 61 tonnes per million euros invested (previous year 79 tonnes). At the same time, sustainable investments now amount to 163 billion euros including investments in renewable energy that increased by 4 billion euros to 23 billion euros.
At the same time, the sustainability report also identifies areas for improvement. As a case in point, the scope 1 and 2 emissions from own operations have plateaued. Further reductions require relatively large medium-term investment, for example in the areas of vehicle fleets, business travel and energy efficiency.
Overall, the integration of ESG criteria in the P&C insurance market has stagnated. 60% of the P&C insurance market take account of their own sustainability impacts in underwriting (previous year 62%). Entering dialogue with and providing support for corporate policyholders is now selected by 45% of the market as a means of promoting sustainability (previous year 49%). This may be due to the difficult economic situation and increasing regulatory requirements. For smaller P&C insurers especially, regulatory developments are tying up resources that are consequently unavailable at present for more in-depth integration of sustainability.
Market-based instruments: A key to sustainable growth
While the sustainability report primarily tracks the industry’s progress, it also emphasises the critical role of policymakers in creating better conditions for green growth. Instead of more and detailed reporting requirements, policymakers should make greater use of market-based instruments, such as emissions pricing. Strong, and clear price signals are key to they make sustainable business models more competitive and promote sustainable innovations. In addition, reducing bureaucratic burdens, expediting approval procedures, and facilitating investments in sustainable infrastructure are essential steps to accelerate the sustainable transformation. Finally, with increasing temperature and more extreme weather events, prevention and climate adaption measures become even more important to reduce climate-related risks. These measures promote environmental and climate goals while they also strengthen the long-term competitiveness of companies across Germany and Europe.
