Select Committee on Environmental Audit Written Evidence


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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