Environmental

Supplier Sustainability

We recognize the critical role our suppliers play in helping Aon reduce Scope 3 emissions associated with our purchased goods and services. Our Sustainable Procurement Program seeks to engage and support our suppliers in their own decarbonization journey while setting measurable targets for and tracking the progress of our enterprise-level suppliers.

In 2022, Aon launched a new Sustainable Procurement capability that brings together key ESG risks to build a more resilient supply chain. Our new supplier code of conduct Opens in a new tab works to promote corporate resilience and sustainability by communicating our commitment to reducing greenhouse gas emissions. We expect our suppliers to reduce their environmental impact, set environmental targets and regularly provide progress reports to our firm.

Beyond environmental sustainability, we focus on inclusion and diversity in our supplier approach, which is fundamental to our belief that diverse backgrounds and experiences drive the best insights, advice and outcomes. Through our integrated supplier and business diversity efforts, over 6 percent of our U.S. addressable spend was with diverse suppliers in 2022. Advancing economic inclusion is a business imperative which fully leverages the promise of opportunity for entrepreneurs across diverse communities. For more than four decades, economic inclusion activities have evolved from being compliance-driven, to a fully collaborative strategy for doing business and meeting organizational financial objectives. Learn more from Aon's Diversity Solutions Economic Impact Report (2021) Opens in a new tab

Historically, we’ve taken steps to centralize our third party spend and now, around 90 percent of spend today is managed through preferred channels on our Aon Business Services (ABS) platform. This contributes to greater efficiency and transparency which enables us to manage our procurement spend more effectively with respect to our overall goals while also focusing on our emission reduction target. Within ABS, we continue to digitize processes, achieving greater efficiency and accuracy and client satisfaction — all while reducing emissions.

Also in 2022, Aon became one of the first signatories to the Sustainable Markets Initiative Insurance Task Force’s Global Supply Chain Pledge, which aims to drive greater sustainability across insurance industry supply chains.

Within ABS, we continue to digitize processes, achieving greater efficiency and accuracy while reducing emissions.

In 2022, in collaboration with ABS, we continued to use electronic invoicing and purchase orders, badge printing and DocuSign. Collectively, these initiatives have saved numerous resources:

• 23 million sheets of paper
• 499,000 kilograms of CO2e
• 7.5 million liters of water
• More than 2,700 trees

We are also reducing our impact by moving from hard copies of Certificates of Insurance and Policies to e-delivery. In 2022, e-delivery helped achieve paper savings that amount to 309 trees, 270,000 gallons of water, and 221,000 pounds of CO2.

As we expand the use of green materials in our offices, we are working with partners to improve purchased product life cycles and responsible end-of-use equipment practices. We have moved from ownership to leasing of hardware through our third-party partners — which enables end-of-life recycling for printers, print cartridges and laptops — and our office products are increasingly refurbished to reduce waste. We also donate to local communities to extend the life cycle of materials and products.

Additionally, Aon's Smart Working Opens in a new tab strategy is designed to maintain the highest levels of client service and collaboration among colleagues and support our Aon United culture and values Opens in a new tab while enabling more purposeful decisions regarding travel and real estate. In our most recent all-colleague engagement survey, this initiative was cited as a key driver in engagement and wellbeing. Colleagues and managers work together to determine the best option for working, whether that be remote, in the office, at a client’s office or in a combination of the three.

By investing in the virtual technology to make that seamless and effective, Smart Working enables us to make progress toward our net-zero ambitions while connecting our global firm and bringing the breadth and depth of our expertise to each other in more efficient, modern ways. Smart Working also allows our clients to choose how we connect with them and reduce their own footprints with more thoughtful decisions on travel.

Our Colleagues in Action

Aon colleagues play an integral role in our approach to decarbonization, and we’ve launched education efforts to learn more about environmental impacts and how our firm and our colleagues are making a difference. In 2022, we launched a global intranet community where colleagues can regularly share news of how they are making an impact around the globe. We also launched a quarterly educational webinar series that informs colleagues about Aon’s progress toward our net-zero commitment and highlights colleague accomplishments.

One of the major achievements of these quarterly webinars was the development of the Aon Sustainable Meetings and Events Guide. Driven by an interest in making events more sustainable, this guide was developed in collaboration with colleagues from across Aon, including the Meetings and Events, Travel and Sustainability teams. A cross-functional team was deployed to help develop materials to guide future events.

As we worked cross-functionally around the globe in 2022, we saw the opportunity to continue to expand this program in 2023 by formalizing a global Sustainability Engagement Network, which includes representation from all regions and is sponsored by our global head of ESG.

Real Estate Footprint

Even before the COVID-19 pandemic brought a new way of working into the world, Aon was taking measures to become an agile, flexible working space that’s designed to enable connectivity and collaboration. During the pandemic, investments in real estate and our ABS platform enabled us to shift 98 percent of employees to remote work over the course of a week. As we go forward, we’re using our Smart Working strategy to support employees in working wherever is most efficient for them to best serve clients or colleagues. With this strategy, we’ve been able to reduce our total leased space while at the same time empowering our people to more effectively serve clients and colleagues.

Energy Efficiency Practices

We are working to reduce the carbon footprint of our office buildings and business operations through ecologically sound energy and digital solutions. Aon strives to meet rigorous standards for green technology and environmentally conscious development, and we’ve achieved ISO 14001 environmental management certification Opens in a new tab for larger office buildings in Chicago, London, Singapore and Madrid.

Travel Optimization

As part of our Smart Working strategy, we are making conscious and purposeful decisions regarding travel, while continuing to maintain the highest levels of client service and collaboration among colleagues. Our investments in virtual and remote working technology make it easy and effective for employees to connect from anywhere around the world, enabling seamless connectivity and reducing our overall travel footprint.

Climate Solutions for Clients

As a firm, Aon has unparalleled data, analytics and expertise that continue to grow in relevance for clients across industries and geographies as their businesses are increasingly affected by climate change and associated risk, shifts in regulations and the magnitude of the challenge and its potential. Our focus is on helping our clients prepare for and respond to the challenges posed by the impacts of climate change and unlock opportunities driven by the transition to a lower-carbon economy.

Quantifying Physical Risks to Build Resilience Effectively

Quantifying risk is a key step in managing it, and we’ve developed solutions to help our clients understand the scale and nuance of climate risk. Our ImpactOnDemand Opens in a new tab platform gives clients real-time alerts about potentially catastrophic climate events. At the same time, our catastrophe modeling and climate projections, driven by our collaboration with academic institutions, gives organizations an informed view of future risks.

By understanding the size and type of the risks they face, clients are then able to prioritize and understand how their approach should be part of their broader business strategy. We aid in that process with risk mitigation and transfer solutions — including parametric insurance and catastrophe bonds — which are designed to help clients bridge the protection gap associated with physical climate risks. Our work in helping our clients with their reporting and disclosure also supports clients as they integrate climate risk into their decision-making processes.

Reducing the Costs and Volatility of Transitioning to Net Zero

In helping our clients transition to lower-carbon practices, Aon prioritizes cost reduction, risk management and strategies to unlock new investment opportunities. Aon’s focus on identifying potential risk exposures helps clients mitigate risks as they invest in well-established and emerging forms of renewable energy — including green hydrogen, long-term energy storage, electric vehicles, and carbon capture and storage. Our work across multiple dimensions of risk — including reputation, litigation, and other transition risks — provides our clients with the guidance they need to reduce volatility, increase bankability and responsibly transition assets and portfolios from brown to green energy.

Innovative Research and Solutions

As part of our effort to help clients advance ESG strategies and objectives, we’ve developed thought leadership and execution capabilities around captives that help clients address, manage and finance risk.

Our report Using a Captive Insurance Company to Drive Positive ESG Outcomes Opens in a new tab provides guidance for using captive insurance to support sustainability objectives through underwriting, investment, risk management and risk improvement, societal resilience and transition support. The report also discusses ways to embed ESG and sustainability concerns in a captive insurance strategy, including best practices, key considerations for organizations and captive boards, and a captive ESG model. Our additional thought leadership on captives Opens in a new tab discusses considerations such as underwriting strategies, risk retention and determining premiums.

Aon is a member of the United Nations Environmental Programme Finance Initiative’s (UNEP FI) Principles for Sustainable Insurance initiative, which offers a framework for addressing ESG in insurance, outlines ways a captive insurer can support sustainability objectives and was named the ESG Captive Initiative of the Year at the 2022 European Captive Awards.

Unlocking New Growth Opportunities

Aon supports its clients in the transition to a lower-carbon economy, which can create new growth opportunities and a more sustainable future. A comprehensive set of solutions — including bringing together risk and capital to enable decarbonization and clean technology — can help our clients innovate and advance their ESG goals.

Through collaboration with Revalue Nature, a developer of carbon offset projects, Aon works to help accelerate the deployment of nature-based solutions and reduce risks associated with voluntary carbon offset transactions.

A joint project between the UNEP, the World Economic Forum, Economics of Land Degradation and Vivid Economics notes that meeting climate change, biodiversity and land degradation targets will require closing a $4.1 trillion financing gap in nature by 2050. To help businesses unlock the capital to invest in new net-zero growth opportunities, Aon’s groundbreaking IP solutions help clients find access to minimally dilutive growth capital by assessing the value of intangible assets and structuring capital solutions — an initiative that placed Aon on Fast Company's list of Most Innovative Finance Companies of 2022 Opens in a new tab .

Responsible Investing

For many clients, one goal is a focus on more responsible, sustainable investment and a changing regulatory landscape, coupled with the potential for long-term value, and risk management is increasing that focus. We have been a global signatory to the Principles for Responsible Investing since 2009, and our UK Advisory and Fiduciary Wealth businesses are a signatory to the UK’s Stewardship Code.

Our tools help clients embed their values and goals in their portfolios, and we would highlight two scalable offerings:

• RI-360: Now in its fifth version, this dashboard helps clients make better decisions about climate, ESG, and stewardship and better understand the risks involved in their investment strategies.
• Climate Change Risk Modeling: Leveraging Aon’s extensive asset allocation and weather-modeling capabilities developed in partnership with the Institute for Sustainability Leadership at the University of Cambridge, our climate change scenarios help clients test the resilience of their investment strategy to climate-related shocks and supports their net zero goals.

In our UK-delegated portfolios, Aon has committed to a 50 percent reduction in carbon emissions by 2030 within investment portfolios and default strategies offered through the Aon MasterTrust and the BigBlue Touch, our Group Personal Pension Plan. By 2050, Aon U.K. aims to have a net-zero carbon emissions profile Opens in a new tab in our UK-delegated portfolios and default strategies.

Global Partnerships

Addressing climate change — a global challenge — requires a coordinated, targeted effort across geographies, governments, businesses and other organizations. We have convened high-impact partnerships and collaborations that are helping to identify solutions to some of the critical barriers. For instance, when Raphaëlle Vallet, head of solutions and innovation for Aon’s climate team, and Stephanie Betts, head of alliances, coalitions and reporting for Aon’s climate team, attended the 2022 United Nations Climate Change Conference — known as COP27 — in Sharm el-Sheikh, Egypt, governments clearly recognized that they cannot fund the transition to a carbon-neutral economy on their own and that, due to the rapidly evolving risks, financial markets and corporates must play a leading role.

Tackling the complex and interrelated challenges of nature and climate change will require a great amount of public-private sector collaboration and cross-industry knowledge exchange. Aon aims to contribute to this evolving space through its contributions to the Taskforce on Nature-related Financial Disclosures data catalyst initiative, the ClimateWise nature and insurance working group, UNEP FI and other relevant forums.

Amplifying our Impact

We choose to partner with organizations that align with our client needs and our capability to help unlock capital and help drive better data-driven decisions. Aon invests in partnerships and talent where we can draw on the expertise of climatologists and risk engineers when evaluating models and assessing risk transfer for renewable energy projects and deliver sustainable solutions for our clients. Our collaborations with top climate academic researchers Opens in a new tab allow us to bring scientific insight to catastrophe impact forecasting, quantification of climate risk in (re)insurer portfolios, and better decisions on pricing, investments and exposure management.

In 2022, Aon announced significant progress in its collaboration with the Karlsruhe Institute of Technology (KIT) in Karlsruhe, Germany, with a new initiative that aims to enhance (re)insurers’ view of risk. Through the extended collaboration, Aon will incorporate the latest climate science into its Impact Forecasting Opens in a new tab 's European flood models to help enable insurers to access more-accurate loss estimates to help shape better decisions for underwriting, reinsurance and regulatory requirements. This comes at an especially critical time: major flooding across Western and Central Europe accounted for $13 billion in insured loss in 2021.

KIT provides a stochastic flood event data set for different emission scenarios and time horizons if the frequency and duration of extreme events change under future climate conditions. These scenarios will be integrated into all of Impact Forecasting’s European flood models over the next three years, enabling (re)insurers to gain a physical view of flood risk based on both current and future climate.

Collaborations and Commitments

• Member of the Centre for Sustainable Finance in the U.K. and a founding member of ClimateWise
• Signatory to the U.N.’s Principles for Sustainable Insurance and the U.N. Principles for Responsible Investing
• Aon CEO Greg Case participated in a session on financing resilience at the Vatican’s and Notre Dame University’s third Dialogue on Energy Transition
• Continual participant in insurance industry forums such as the Insurance Development Forum
• Signatory to the Terra Carta in support of the Sustainable Markets Initiative and co-lead of two of the workstreams — one devoted to developing a Public to Private Solution Framework for a variety of catastrophe perils and economies and one seeking to accelerate product innovation across the insurance industry
• Aon is an observer on the Task Force on Nature related Financial Disclosures that is working to deliver a market-led framework for organizations to report and act on evolving nature-related risks