Gallagher Specialty launches new carbon insurance solutions service

June 6, 2024

Gallagher Specialty has launched a new carbon insurance solutions service for its clients which will reportedly enable them to mitigate risks associated with de-carbonisation initiatives.

Gallagher Specialty observed that companies are now seeking to decarbonise amid regulatory and stakeholder pressure, with solutions such as carbon credits gaining traction.

The purchase of carbon credits is largely voluntary now, however, the pressure on businesses to find ways to reduce their carbon footprint is reportedly growing.

“It is likely that for certain sectors this will be mandated in the near future as a way of reducing their environmental footprint,” Gallagher Specialty said.

According to the firm, the voluntary carbon market was estimated to be worth $2 billion in 2022 and is expected to scale up to $40 billion by 2030.

Gallagher Specialty explained that there is a range of risks associated with carbon projects and that its team of climate risk professionals will support clients with advice on how to manage them, developing tailored insurance solutions based on individual exposures.

The team will be led by James Bosley, Head of Climate Strategy, Carbon Insurance & Parametric Solutions for Gallagher Specialty, who commented, “The size and scale of the carbon market is expected to increase significantly over the coming years, and is being driven by a growing desire by firms to address their role in impacting the environment, and increasingly widespread reporting requirements.

“Since last year UK financial and listed firms have been required to report their strategies for transitioning to net zero and the EU’s Corporate Sustainability Reporting Directive will require companies to disclose their transition plans in the coming year.”

Bosley continued, “These are just two examples with many more requirements being implemented elsewhere globally – meaning that firms need to be transparent about how they will reach climate targets, and the purchase of carbon credits will play a crucial role in many businesses’ strategies.

“Carbon insurance provides firms with the ability to de-risk carbon credit transactions, including protecting against the risk of non-delivery, damage to the underlying asset, reversal of the carbon capture or the invalidation of the credit, enabling them to invest with confidence and deliver on their climate aspirations.

“Our team can advise clients on what insurance cover is available and by using insurance, clients will have an extra layer of security when purchasing or selling carbon credits.”