Climate Change Disclosure Practices in the Insurance Industry

: Evidence from European Companies

Abstract

This study investigates how European insurance companies disclose climate-related information using a novel multi-dimensional content analysis disclosure framework based on guidance from the Global Reporting Initiative (GRI) standards and the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations. It particularly focuses on climate change conceived as an externality (the impacts of the company’s activities on the natural environment) and a dependency (the risks posed by climate change to the company itself) in their annual reports for the period 2016 to 2021. The results indicate a rising trend in both the frequency and the quality—encompassing breadth, extent, and accuracy—of the information disclosed. However, this perceived enhancement in disclosure quality primarily stems from an increase in the volume of information provided, rather than a substantial quantification of climate-related externalities and dependencies within annual reports. Furthermore, insurance companies, on average, tend to disclose more about climate-related dependencies than they do about externalities. Based on legitimacy and signalling theories, the findings suggest that the efforts of insurance companies to enhance their climate disclosure practices may be driven more by a desire to maintain legitimacy than by an aim to reduce information asymmetry.

Date of Award	1 Oct 2024
Original language	English
Awarding Institution	University of Bristol
Supervisor	Giovanna Michelon (Supervisor) & Ruby Brownen-Trinh (Supervisor)