AIA unveils climate transition plan with science-based emissions-reduction targets
Michelle Zhu
AIA Group has launched the AIA Climate Transition Plan 2023 – a report detailing the insurer’s near-term targets and long-term commitments towards achieving its net-zero goals for 2050.
Its near-term targets have been validated by the Science-Based Targets Initiative (SBTi), a global body which aims to keep the emissions-reduction targets for businesses in line with the latest climate science developments.
This makes AIA the first pan-Asian life and health insurer to do so, said the group on Friday (Nov 24).
Its head of sustainability, Amita Chaudhury, described the transition plan as a “significant step” in the insurer’s climate-action journey: “The Climate Transition Plan shows AIA’s road map for contributing to a sustainable future for the region, and delivering on our purpose of helping people live healthier, longer, better lives.”
In the near term, AIA aims to achieve a 46.2 per cent reduction in Scope 1 and 2 emissions by 2030, using 2019 as the base year.
Scope 1 refers to direct greenhouse gas emissions which are released through activity at a facility level; Scope 2 refers to those released at the power station for the generation of the electricity that a company consumes.
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The group has also made a commitment that 31 per cent of its investee companies will set targets by 2025 that are validated by the SBTi. (*see amendment note) AIA’s in-scope portfolio encompasses 55 per cent of its total investment and lending activities by general account assets under management as of 2019.
AIA’s Scope 3 Category 15 (Investment) emissions, which include emissions from assets under the insurer’s general account investment portfolio, account for more than 95 per cent of in-scope SBTi emissions.
(Scope 3 emissions are indirect emissions generated by upstream and downstream activities in the wider economy. They are beyond the operational control of the business entity, but exist in its value chain, and are notoriously difficult to measure.)
In line with SBTi requirements, AIA used two approaches to assess its baseline and set targets for its in-scope portfolio.
The first is a portfolio coverage approach for the insurer’s general account investment portfolio. This consists of listed equities and corporate bonds that are not in the power-generation and real estate sectors. The second, the sectoral decarbonisation approach, is applied to power-generation and real estate sectors. Targets under this methodology are aligned to a well-below 2 deg Celsius pathways, said AIA, and are tailored to support companies in energy-intensive sectors.
To achieve its targets for Scope 1 and 2 as well as Scope 3 Category 15 (Investments) emissions, AIA identified several levers. These include improving its buildings’ energy efficiency, transitioning its fleet to electric vehicles, and procuring renewable energy.
Other levers comprise engaging with the group’s investees, reinvesting corporate bonds, and exploring new investments that are in line with SBTi targets.
“Our initial focus for decarbonisation will be our six largest business units, with the top priority being to reduce the emissions from our real estate,” said the group.
Amendment note: This story has been edited to clarify AIA’s commitment that 31 per cent of the group’s investee companies will be setting SBTi validated targets between now and 2025.
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