As an insurer, we recognise the potential impact of environmental, social and governance (ESG) issues on insurance and investment portfolios and, conversely, the potential for insurance and investment portfolios to impact the environment and society.
The AIA Singapore Enterprise Risk Management (ERM) framework considers Sustainability Risk as any ESG event or condition that, if it occurs, could cause an actual or a potential material negative impact on our business and operations.
AIA Singapore considers Environmental Risk as a category of Sustainability Risk. We define Environmental Risk as risk that arises from the potential adverse impact of changes in the environment on economic activity and human well-being. Such changes may come about as a result of climate change, loss of biodiversity, pollution and degradation of water supplies. The financial and operational impact on our portfolios and activities can arise through physical and transition risk channels.
- Physical risk arises from the impact of weather events and long-term or widespread environmental changes.
- Transition risk arises from the process of adjustment to an environmentally sustainable economy, including changes in public policies, disruptive technological developments, and shifts in consumer and investor preferences.
The impact of Environmental Risk can vary by geography, line of business, sector, customer characteristic and other factors.
The disclosures below are made in response to the Environmental Risk Management Guidelines (Insurers) issued by the Monetary Authority of Singapore in December 2020.