The implementation of CIMS as a tool: the Colombian case
2DII’s CIMS aims at providing FIs with a clear roadmap and step-by-step process to develop, refine, and communicate impactful climate strategies to maximize FIs’ contributions to climate change mitigation.
2DII, in cooperation with the University of Los Andes (UniAndes) in Bogotá, Colombia, engaged with seven leading Colombian insurance companies. These FIs participated in the implementation of the CIMS assessment exercise. For a financial institution that wants to maximize its potential impact on real-world GHG emissions reduction, it is important for its action (e.g., engagement with investee coal companies) to match with the expected outcomes of the action (e.g., the closing of a coal-fired power plant). Being able to track the outcomes allows one to explore the success/failure of the FI’s action and to continuously improve it. During this exercise, the insurance companies were able to further develop their internal climate strategies and set up climate actions in accordance with their own internal priorities and goals.
Paving the way
Colombian financial institutions face external and internal constraints that limit their ability to :
- Heterogeneity and inconsistency of accessible data & information,
- Uneven assessments and a lack of homogeneity as to which guidelines to prioritize,
- Limited availability of sustainability-themed strategies and methodologies,
- Generational difference between senior and younger staff members,
- Internal teams might be understaffed and have insufficient capacity to understand all the thematics,
- Small scale companies’ climate actions might be less noticeable.
Yet, when it comes to emerging markets, Colombia is one of the most advanced markets compared to others in the region, particularly in terms of advancements in taxonomy, governmental supervision, and regulations. This is reflected in the strategies that we countered during the CIMS exercise:
- Participating FIs have shown a strong will to integrate sustainability, ESG, and climate criteria in the internal process and pursuing closely the developments coming from the Colombian regulators,
- Four out of the seven, have set very specific exclusion lists as part of their investment strategies,
- All insurance companies use screening as part of their investment decisions,
- Most of the participants are either currently engaging the companies that they are invested in,
- Divesting is considered as a strategy, but it is not really in use,
- Most of the Colombian insurance companies signed internationally recognized agreements.
The responses to Climate Action Template and the interviews reveal that seven Colombian insurance companies are actively developing internal strategies and solutions aligned with low-carbon transition plans. The participants do not underestimate the immediacy of the physical and systemic adverse effects of climate change. They have the ambition to build upon new climate-adapted business models, try to find new responses for the persuasive physical and transitional risks, create resilience, and revise investment strategies to mitigate the damage of climate change through creating rebalanced portfolios.
The results of implementing different phases with various FIs serve as clear proof that the CIMS is a useful and concrete tool to contribute to climate change mitigation. CIMS can assist the FIs in tracking, reassessing, improving their actions and strategies, and can constitute a further step in reaching a better climate justice. Besides, CIMS would help FIs reach their alignment targets and can be used as a complementary tool to international frameworks.
