Leading the industry in climate knowledge
As part of our sustainability roadmap, we want to integrate sustainability in our business decisions, our governance and corporate strategy. We are also actively working on reducing emissions from our own operations and decarbonizing our portfolio. But a key part of our roadmap is the pillar we often mention last – leading the industry in the sustainability transformation. This means engaging with partners in the insurance industry, with business associations, and with academia to advance our common knowledge and improve best practices.
There’s a lot to be gained from fostering and strengthening connections between academia and the private sector. In academic research, there’s the possibility of focusing on a single topic in great depth and detail; in business, there’s the possibility of a concrete application for research. This is research and knowledge on climate change mitigation and resilience that the entire trade credit ecosystem can benefit from – naturally our customers, but also insurance providers large and small, brokers, financial partners and regulators.
Building a cross-disciplinary jury
We decided early on that our jury should reflect our mission to foster closer ties between academia and business. That’s why we invited academics Anna Creti and Clément Carn from Paris-Dauphine University (where I also teach part-time) and Richard Wulff from the leading trade credit and surety association, ICISA, to join my colleague Piril Kadibesegil Yasar and myself. Anna and Clément are leading academics in their field; separately, our Sustainability Office engaged with Clément’s students on sustainable finance topics. As for the ICISA, we have worked closely with them for a number of years to raise the bar on sustainability expertise in the industry.
In addition to our jury, we had an internal panel of experts from the economic research, credit assessment, risk and sustainability departments. They were responsible for the first read of submissions, and brought a diversity of expertise.
In all honesty, we didn’t know what to expect this first year, and whether or not there would be interest from researchers, so we were thrilled to receive high-quality applications from around the world. Submissions focused on food systems and agriculture, as well as transportation and air travel.
Deliberations and the winning factor
Once the submissions closed and our internal panel of experts shared their thoughts on the applications, our jury got to work. I noticed that our academic partners were looking for deep analysis, and we were looking for globally applicable models, which illustrates the complementary strengths of our mixed jury.
While our discussions were animated, I found that we didn’t have any major disagreements, and we were mostly aligned when selecting our four finalists and winner. Our priorities were: innovation (the proposal had to have a novel approach to the issue), applicability in a business context, demonstrable potential impact (in shaping business decisions or public policy, for instance), relevance to the challenges at hand, and maturity in the idea and its expression.
Our winning selection is backed with a tremendous amount of data. The candidate has sought to create a new model to assess the relationship between two variables, and in our opinion the fact that it is backed by so much data increases its applicability in the business world. We found his proposal very clearly expressed and accessible as well.
Building on our collaboration with leaders in climate science
Once the finalists’ compendium is published, Allianz Re is hosting a ceremony in Munich on December 2 to announce all the winners (including ours!) This will be the first touchpoint of our collaboration with our winner, who we are inviting to our offices early next year to introduce him to internal stakeholders who could benefit from his research. Thanks to the data-backed approach of the paper, I think there is a strong potential for the research to be applied in credit risk intelligence and by our sensitive risk unit. Commercial teams could also make use of it to inform their work.
Climate change is happening, it’s here to stay, and unless we act, it will only get worse with time. Climate change already affects the normal functioning of businesses and global trade at large. We simply cannot ignore climate change when making business decisions. For a number of years we have been working on integrating climate risk intelligence into credit risk assessment. The research we support through the Allianz Climate Risk Award will accelerate our efforts.
