Memorandum submitted by Royal & SunAlliance
UK
DESCRIPTION OF
ROYAL & SUNALLIANCE
INSURANCE GROUP
PLC AND
ROYAL & SUNALLIANCE
UK
1. Royal & SunAlliance is one of the
world's leading multinational quoted insurance groups, writing
business in 130 countries and with major operations in the UK,
Scandinavia, Canada, Ireland, the Middle East and Latin America.
Focusing on general insurance, it has around 24,000 employees
and, in 2005, its net written premiums were £5.4bn. With
an almost 300-year heritage. We are the oldest insurance company
in the world still trading under its original name.
2. Within the UK, Royal & SunAlliance
is the second largest commercial lines insurer, covering the insurance
and risk management needs of a significant number of FTSE 100
companies. We are also one of the UK's top three personal motor
and household insurers. Royal & SunAlliance won General Insurer
of the Year, Claims Initiative of the Year and International Initiative
of the Year at the 2006 British Insurance Awards.
ROYAL & SUNALLIANCE
UK AND THE
VOLUNTARY CARBON
OFFSET MARKET
3. The purchase of voluntary carbon offsets
by Royal & SunAlliance is part of a long term programme to
manage our environmental impacts as part of our broader corporate
responsibility programme. We have tracked and publicly reported
on our carbon footprint since 1999 and set improvement targets
since 2000.
4. We first purchased offsets for some internal
business flights in 2001. In 2006, following measurement and reduction
of our carbon footprint for five years, we purchased over 30,000
tonnes of voluntary carbon offsets to become the first UK insurer
to achieve carbon neutrality.
ROYAL & SUNALLIANCE
RESPONSE TO
INQUIRY ISSUES
Ought there to be a compulsory UK or European
accreditation scheme for carbon offset projects or companies?
If so, how should this operate?
5. There are a number of potentially confusing
designations and schemes for carbon offsetting currently in operation.
It proved challenging for us to identify and critically evaluate
the different types of offset that are available and who provided
them.
6. We chose to work with the Carbon Neutral
Company because they had already developed their own proprietary
standard for carbon neutrality and were therefore able to answer
many of the standard challenges that we as a company would put
to any supplier. We wanted robust criteria to be met, in which
any provider could demonstrate the following:
— A documented process for procurement
of the offset
— A transparent evaluation of factors
such as additionality and environmental impacts
— The involvement of an independent
third party making assessment of the operations (in a manner analogous
to financial due diligence protocols).
7. Our experience in purchasing offsets
has demonstrated the importance of having a proper, comparable
evaluation of factors such as additionality as well as third party
assessments. We would look for any scheme (whether mandatory or
voluntary) to be able to provide such assurance.
Should offsetting become mandatory for some of
the more carbon-intensive activities, such as flying?
8. Offsetting should be considered just
one of the tools available to individuals and businesses to help
them reduce their carbon footprint. Education on the most effective
ways of minimising carbon impacts should be the priority, as a
means of encouraging more responsible behaviour. Where there are
no viable opportunities for impact reduction, we consider offsetting
to be a positive action.
Is there enough clarity within the offset market
to allow customers to make informed choices based upon robust
information about different schemes at different prices?
9. Many of the problems and challenges we
faced on matters such as selection of offset types and protocols
have been related to transparency, ie being able to show what
was happening and why. For example, we chose not to include forestry
based offsets in our purchased portfolio, not necessarily because
we do not feel they are valid (indeed anecdotally it appears that
some employees make the link between tree planting and carbon
reduction more easily than for technology approaches) but rather
because we did not want to get involved in debates about permanence
and quantification. The technology based offsets we chose also
reflected our business interest in areas like renewable energy
insurance. Government actions which develop the understanding
of offsetting and promote the transparency of different offsets
(through voluntary or mandatory means) should help the market
develop appropriately.
10. In terms of available guidance we have
found the recent Carbon Trust document on developing a robust
offsetting strategy to be very useful. We have also drawn on advice
and guidance provided by external parties such as Forum for the
Future and the Green Alliance
11. There needs to be a broad basic knowledge
in place to facilitate intelligent discussion on the pros and
cons of offsetting. This is an area in which we think the Government
can play a key role, providing information on the subject, building
on useful material that is already available from organisations
such as the Carbon Trust
What evidence is there to show that offsetting
helps to change the carbon behaviour of the customer?
12. It is still too early for us to be able
to assess whether we have achieved behaviour change in our workforce
or customers. As mentioned above, we feel that in going carbon
neutral and acquiring offsets (over and above reducing our footprint)
we are helping to inform our employees on our environmental impact.
We see this as part of an ongoing environmental programme within
the company, and in meeting the growing concerns of our customers
about the challenges of climate change.
To what extent are the schemes and projects funded
by offset companies more broadly sustainable, in an environmental,
social or economic sense?
13. Schemes and projects clearly have the
potential to have social or economic impacts which in some cases
may be unintended. One of the factors in our selection of offset
provider and offset projects was that there had been proper initial
assessment of wider impacts (including environmental) beyond carbon
reduction and that projects could also realise local social and/or
economic benefits. In our view this reinforces the need for any
scheme to incorporate a documented assessment of sustainability
impacts and the involvement of third party assurance.
I hope that the Committee finds this contribution
useful. If you would like further information, please do not hesitate
to contact me on the number of email below. There are also details
of our corporate responsibility actions on the `About Us' section
of our website at www.royalsun.com
January 2007
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