Allstate recognizes the impact of climate change-related catastrophes. We also advocate for and work to strengthen resilience to these catastrophes through prevention, preparedness and risk reduction. As the effects of storms and wildfires have grown, these efforts have become more important to the business, stockholders, customers and society. In December 2022, Allstate announced a commitment to achieve net zero emissions for direct, indirect and value-chain greenhouse gas emissions by 2030. Climate mitigation actions across the enterprise are essential to managing climate risk and fulfilling Allstate's purpose of protecting customers and generating attractive returns for shareholders.
Climate change is one of the most critical challenges of our time, and insurers have an important role to play. Customers' homes are subject to increasingly severe weather catastrophes. In 2022, Allstate incurred 124 natural-catastrophe events, totaling $3.1 billion. Catastrophic losses create volatility in shareholder returns.
Allstate's business viability depends on effectively modeling, pricing and managing climate-related risks. We are developing products and services that address climate change and the transition to a lower-carbon future. We are working internally and with our value chain to develop strategies and actions to meet our new net zero emission targets.
Senior management and the Board of Directors identify, measure, manage and monitor material risks, including those presented by climate change, such as severe weather and the potential for increased natural catastrophes. Our Board of Directors regularly hears from Allstate's chief risk officer about climate change risks.
Allstate's Sustainability team also collaborates with leaders across all departments, particularly those responsible for Allstate's facilities, vehicle fleet and procurement strategy, to optimize sustainability performance. The Sustainability team reports monthly to the ESG Steering Committee and the Board of Directors receives regular updates.
The ESG Steering Committee meets monthly and supports Allstate's commitment to the environment, health and safety, corporate social responsibility, human capital management, corporate governance, sustainability and other public policy matters.
Climate strategy management
In December 2022, Allstate announced a commitment to achieve net zero emissions for direct, indirect and value-chain greenhouse gas (GHG) emissions by 2030 in alignment with the Paris Agreement. By the end of 2025, we will establish a goal for financed emissions. We will continue to evaluate emerging methodologies associated with GHG emissions from underwriting activities and keep our stakeholders apprised of progress toward adopting a methodology that aligns with Allstate's business practices and strategy.
Allstate's Sustainability team guides and develops the strategy to meet these goals. In addition, the Sustainability team develops the annual Sustainability Report, responds to ratings and rankings questionnaires, drives employee awareness and engagement, and reports monthly to the ESG Steering Committee. The Sustainability team also supports regular ESG updates to the Board of Directors.
Allstate has maintained a cross-functional ESG Steering Committee since 2007. It includes leaders from various business functions. The senior vice president of corporate strategy and senior vice president of corporate law co-chair the 12-member committee, which meets monthly and updates senior executives. The committee supports Allstate's commitment to the environment, health and safety, corporate social responsibility, human capital management, corporate governance, sustainability and other public policy matters.
Climate risk management
Allstate manages climate risks using our integrated Enterprise Risk and Return Management (ERRM) Framework, which applies risk and return principles, modeling and analytics, governance, and transparent dialogue to proactively manage the company's highest-priority risks. The Enterprise Risk and Return Council (ERRC) evaluates climate change risk in coordination with the ESG Steering Committee.
Insurance, investment and reputational risk categories are significantly impacted by climate change.
- Insurance risk: More severe natural catastrophes are increasing loss costs for homeowners insurance, requiring risk management actions such as changes in pricing, product coverages, underwriting practices and reinsurance strategy.
- Investment risk: Climate change presents physical risks to real estate and infrastructure investments, as well as transition risks that impact holdings in certain industries, requiring consideration within investment underwriting and portfolio construction activities. The evolution of society to a low-carbon footprint presents opportunities to both participate in the development of solutions and to earn attractive investment returns. Read more about how Allstate is addressing climate-related risk in our investment portfolio in the Responsible investing section.
- Reputational risk: Climate change matters deeply to internal and external stakeholders, and Allstate continues to enhance disclosures to provide transparency into its strategy, progress and goals in this area.
Risk monitoring and reporting
To be as responsive as possible to changing conditions, Allstate monitors state-specific risks and scientific consensus on climate change impacts, as well as competitor trends. Our annual Sustainability and Task Force on Climate-Related Financial Disclosure (TCFD) reports demonstrate Allstate's commitment to sustainability and mitigation of climate change.
The Board oversees all risk and return activities, including those related to climate change, and reviews ESG matters to prioritize efforts and progress. The Nominating, Governance and Social Responsibility Committee oversees ESG priorities, strategy and reporting. The Risk and Return Committee oversees climate change risks and opportunities using Allstate's ERRM framework, while the ERRC evaluates climate change risk in coordination with the ESG Steering Committee, which leads Allstate's broader ESG efforts.
We apply our risk-return principles directly to climate risks, such as emerging changes to the transportation system and property construction, the potential for increased frequency and severity of losses due to extreme weather and catastrophes, losses on investments, and regulatory compliance.
Allstate's executive compensation program is based on short- and long-term incentive components and does not reward excessive risk-taking. Monetary incentives for achieving corporate and performance goals incorporate risk and return management, including managing risks affected by climate change.
Allstate's executive compensation does not include components explicitly linked to performance on climate-related metrics, although the performance of this sustainability program is one component of performance for the chief procurement officer and program development team.
Policies and practices
Managing climate risk is also foundational to Allstate's financial and operational success. Early in 2023, Allstate developed a climate policy which covers relevant business practices relating to decarbonization and biodiversity.
Climate change modeling
Allstate's Catastrophe Modeling and Analytics team and pricing groups assess climate change information and update product and risk leadership as needed. The team uses information from the Intergovernmental Panel on Climate Change (IPCC), the U.S. Global Change Research Program (USGCRP) and the Actuaries Climate Index (ACI). The IPCC and USGCRP evaluate research by climate scientists around the world and conduct reviews to provide information to decision-makers. The Responsible Investing Committee and the Investments Risk Committee assess Allstate's portfolio for potential short- and long-term exposures to climate change. The ACI provides an objective measure of extreme weather and sea level rise over time through quarterly updates. Finally, Allstate is partnering with our reinsurance brokers to understand future changes to the hazard component of catastrophe models prompted by climate change.
To help inform Allstate's approach to increased insurance risk, we use Verisk (formerly AIR Worldwide), a hurricane modeling software that looks at data from years with above average sea surface temperatures and the resulting landfalls of hurricanes.
Allstate has developed business continuity plans for our most critical processes. These plans address a variety of scenarios, including loss of facility. Our business continuity lifecycle involves identifying the most critical processes, developing business continuity plans for them, and then performing exercises for each plan. The lifecycle is performed annually. Dependencies such as vendors, key technology and other processes are addressed in the plans.
Physical climate risk adaptation
Allstate's ERRM Framework and Economic Capital Framework together ensure that Allstate continually monitors and assesses the broad impacts of climate change on our businesses and operations and supports adaptability. Allstate adapts to changes in weather and helps develop solutions for risk areas. We use reinsurance and third-party products to continue providing protection to customers. We hold sufficient capital to remain viable as a business and weather extreme scenarios beyond the 1-100 probability level. Allstate creates and analyzes scenarios to explore events that may not be well represented in historical data, including extremely low frequency scenarios (ELFS). Scenarios vary widely and include combinations of economic turbulence, financial market stress, pandemics, severe weather and catastrophe events.
We are evaluating long-term climate change scenarios to further assess climate risk and frame actions. The Enterprise Risk and Return Council (ERRC) provided feedback on the appropriate risk horizon and impact of policy errors as the world responds. This feedback will be incorporated into the refinement, implementation and usage of enterprise scenarios.
Partnerships to advance resiliency
More frequent and severe weather events have an immediate and traumatic effect on our customers, communities and economies. We have long-standing partnerships with industry leaders to sponsor research that improves resiliency to weather-related perils, so customers can prevent damage and lower insurance costs.
Allstate is an active member and financial supporter of the Insurance Institute for Business & Home Safety (IBHS). IBHS delivers top-tier science and translates it into actions that prevent avoidable suffering, strengthen our homes and businesses, inform the insurance industry and support thriving communities. To reduce future losses, IBHS analyzes existing standards and identifies improvements. Allstate partners with IBHS to promote more durable homes and buildings through better building practices and stronger codes.
This work led to improved building codes in Florida, the development of impact-resistant shingles and the identification of fire-resistant materials and building codes that mitigate wildfire damage with no increase in overall construction costs.
Allstate partnered with the National Association of Mutual Insurance Companies (NAMIC) to advance climate resiliency efforts, including measures contained in the bipartisan Infrastructure Investment and Jobs Act. Allstate also worked with the U.S. Chamber of Commerce on climate risk and resiliency efforts. These efforts include supporting the Infrastructure Investment and Jobs Act and continuing to advocate for long-term reauthorization of the National Flood Insurance Program. Allstate is a member of the Business Roundtable, which prioritizes climate risk and resiliency.
The Allstate Foundation partners with agents and local and national nonprofits — such as Chamber R4R, Points of Light and the American Red Cross — to prepare communities for disasters by providing emergency kits and other tools. These efforts increase awareness of severe weather-related risks and help people better protect themselves and loved ones.
Advocating for disaster prevention, preparedness and risk response
Climate change is making natural catastrophes more frequent and severe. We work with national and local organizations to prepare and protect communities from the adverse impacts of climate change.
Allstate is fighting for more resiliency for property owners facing catastrophic events such as wildfires, floods and hurricanes. We want improved flood controls and stronger building codes, and we are considering how to use data from catastrophic events to mitigate some of the damage they cause. We support additional federal resources for climate change mitigation, including for programs like FEMA's Building Resilient Infrastructure and Communities (BRIC), which offers grants for mitigation and related activities.
Given the challenges with efficiently assessing mitigation, particularly for wildfires, we are advocating for state and local programs to promote and assess mitigation and increased federal support of such programs. Allstate is a champion for pooled solutions to protect consumers in high-risk areas, such as establishing a Florida-style catastrophe fund to help stabilize California's homeowners market, along with other reforms and mitigation funding. We have also helped create public risk sharing pools in Florida, Texas, and California to provide customers with affordable protection for uninsurable risks.
Greenhouse gas emissions
Over the past several years, we have measured our GHG emissions and launched resource reduction and recycling programs related to our buildings, vehicles and business supplies.
In 2010, Allstate set a goal to achieve a 20% absolute energy-use reduction within our owned portfolio against the 2007 baseline by 2020. We surpassed that 2020 goal in 2014. Deepening our dedication to a lower-carbon future, in 2022 we announced our commitment to achieve net zero emissions for direct, indirect and value-chain greenhouse gas emissions by 2030.
To understand Allstate's impact on climate and work to manage it, we have measured our annual GHG emissions since 2007. We quantify our GHG emissions in units of carbon dioxide equivalents (CO2e), which includes the emissions from various greenhouse gases and converts them, on the basis of their global-warming potential (GWP), to the equivalent amount of carbon dioxide. See our 2023 CDP Climate Change report, once published, for our measured and verified emissions from calendar year 2022. At the time of publishing this report, our most up to date, complete emissions inventory was from calendar year 2021. In 2021, as in every year since 2014, we measured and verified our Scope 1 and 2 emissions, measured Scope 3 emissions for categories 1-7 (see below), and verified Scope 3 Category 6, business travel.
Emissions displayed in this image are also available in Allstate's CDP Climate Change Reports, which are available to view at CDP.net and Reporting. CDP reports disclose emissions and climate-related activities from the full calendar year prior to the year of publishing. Thus emissions data from calendar year 2022 will be publicly available when CDP reports are published in Q3 of 2023.
|Scope 1 (mt CO2e) [verified]
|Scope 2 (mt CO2e) [verified]
|Scope 3 (mt CO2e)
|Emissions from sources Allstate owns and has operational control over, like burning natural gas in our facilities or gasoline in our fleet of vehicles.
|Emissions associated with Allstate's purchased energy use that occur in locations we do not own or control, like the electricity that powers our facilities.
|Emissions not produced or owned by Allstate that we're indirectly responsible for, up and down our value chain.
Of the fifteen Scope 3 categories, Allstate measures:
Changes we made to our real estate portfolio, facilities management and fleet composition and use have, for the most part, resulted in year-over-year reductions in Allstate's Scope 1 and 2 emissions.
Allstate's Scope 1 and Location-Based Scope 2 GHG Emissions, 2019 - 2021
Scope 3 emissions are more nuanced, and Allstate has been working to improve our calculation methodologies. Recent refinements, particularly to our purchased goods and services calculations, make our 2020 and 2021 Scope 3 emissions more comparable to one another than to those in years prior.
Measuring these GHG emissions gives us data to develop and prioritize reduction strategies. The practices and programs described below have already led to GHG emissions reductions paired with improved client and employee satisfaction. With our recent net zero commitment and forthcoming climate strategy, we expect to further accelerate our emissions reductions.
Real estate emissions reductions
As part of Allstate's multi-year Transformative Growth, during 2022 we reduced our real estate footprint of owned and leased Allstate and National General facilities from over 9 million square feet to under 7 million square feet. This downsizing of real estate reduces our operational energy and water usage, GHG emissions and waste production.
Of the office space the company still leases or owns, more than 694,000 square feet was LEED-certified as of Dec. 31, 2022. We reduced our energy consumption further by recapturing heat energy as a byproduct of Allstate's data center operations and using energy-efficient equipment and systems. In 2022, lighting updates in some of our remaining facilities saved an additional 211,167 kWh of electricity.
Real estate footprint reduction
In October 2022, we sold our 232-acre campus in Northbrook, Illinois. As featured on Fortune.com, this accounted for 2 million square feet of Allstate's real estate footprint reduction. In addition to reducing operational GHG emissions and environmental impacts, this shift offers Allstate major savings on operational energy consumption, internet usage and IT costs. Allstate redistributed and recycled much of the furniture from the offices, donating 67,500 pounds to schools, colleges and charities. Allstate supports the 5,400 employees who used to report to the campus through its work-from-anywhere strategy. 83% of those employees chose to work remotely after the closure, and Allstate continues to offer desks at several offices, all accessible by public transportation.
Renewable Energy Credits (RECs)
Allstate's priority in terms of GHG emissions is to prevent them from happening. Our real estate reductions, reuse and recycling partnerships, and sustainable procurement decisions work together with continued focus on limiting our emissions where possible. Until the electrical grids in our operating locations fully decarbonize, however, providing power to our facilities will continue to produce GHG emissions. To compensate, we purchase renewable energy credits (RECs). In 2021, Allstate purchased RECs to cover 100% of the 44,319 MWh of electricity use from our Illinois and Texas facilities. This represents 26% of our total U.S. electricity use from owned and leased facilities in that year and is equivalent to 20,579 metric tonnes of CO2e emissions. For an update on Allstate's use of RECs in 2022, keep an eye out for our 2023 CDP report in Q3, available at CDP.net and in Reporting.
Allstate's goal is to implement centralized waste, a system for properly separating and disposing of recyclables and landfill waste, across all new locations and 100% of existing locations by 2023. As of 2022, Allstate has a waste removal request for proposals that stipulates vendors report on landfill, recycling, compost and diversion quantities. Unfortunately, due to our reduced real estate footprint, we have received limited interest in participating in the RFP. Only two vendors had submitted responses at the time of this report, and neither met the RFP's requirements for reporting on quantities of waste landfilled, recycled and composted.
Programs and performance
In addition to managing risk from the changing environment broadly, we are reducing our contributions to the climate crisis in both our internal operations and along our value chain. Below are a few highlights.
Over the past decade, Allstate has reduced its Scope 1 and 2 GHG emissions through efforts including energy efficiency, occupied building reductions, and increased use of hybrid vehicles in Allstate and National General fleets. However, we need to deepen our carbon reduction efforts in response to the climate crisis and its impacts on our stakeholders. In December 2022, Allstate announced its commitment to achieve net zero emissions for its direct, indirect, and value-chain greenhouse gas emissions by 2030, other than its investment portfolio and underwriting emissions. By the end of 2025, we will establish a goal for financed emissions. Allstate will continue to evaluate emerging methodologies for emissions associated with underwriting activities that align with Allstate's business practices and strategy.
To achieve these ambitious targets, we will develop our climate strategy in 2023. This strategy will outline the levers and opportunities of focus needed to achieve our commitments. We will estimate the emissions reductions achieved by each lever in order to prioritize our emissions reduction investments. Key reduction levers will likely include renewable energy, increased energy efficiency, supply chain engagement, fleet electrification and commuting strategies.
Allstate plans to expand the Task Force on Climate-Related Financial Disclosures (TCFD) report in the future to reflect the work done on measuring both operational emissions and financed emissions. We are developing a financed emissions inventory and heat map that help identify the impact of our portfolio on climate change and facilitate emissions reductions.
Allstate's chief procurement officer (CPO) incorporates sustainability initiatives into Allstate's purchasing practices. The CPO implemented a sustainability program as part of Sourcing & Procurement Solutions to assess the environmental risks and opportunities within Allstate's supply chain and purchasing operations enterprise-wide, including the potential to reduce greenhouse gas emissions. We require Allstate's most critical suppliers to disclose carbon levels and their plans for reductions annually.
CDP (formerly the Carbon Disclosure Project) is a not-for-profit organization that runs a global disclosure system for investors, companies, cities, states and regions to manage and report environmental impacts. Allstate has been disclosing emissions for our CDP submission since 2010. In 2022, Allstate achieved a "C" score for our CDP Climate Change submission, indicating awareness-level engagement on environmental stewardship. In 2023, we aim to improve this score through our increased efforts on decarbonization for internal operations and supply chain. Allstate's historical CDP responses can be viewed in Reporting. or at CDP.net.
In 2022, Allstate requested that the disclosure of environmental data from companies' supply chains be reported through CDP Supply Chain. In 2022, we received emissions data from 157 suppliers, for a 93% response rate. Both of these are increases over 2021. Estimated annual CO2 savings was 46 million tCO2, and annual monetary savings from emissions reductions was $10 billion; 59% of responding suppliers reported active climate targets.
Allstate's vehicle fleet
Allstate operates a fleet of sedans and SUVs to support business travel requirements across the company. Several years ago, we started to use more hybrid vehicles to improve fuel economy and reduce our GHG emissions. We have also reduced the size of our fleet as we rely more on aerial surveys for claims data. Allstate's goal is to have 100% hybrid vehicles by 2025 and to incorporate fully electric vehicles thereafter. At the end of 2022, Allstate's legacy fleet was 85% hybrid, and the company's total fleet, which includes Avail and National General vehicles, was 52% hybrid. Avail is moving to a zero-fleet model through peer-to-peer car-sharing, and each time a National General vehicle is no longer serviceable, it is replaced with a hybrid.
To prevent waste, Allstate reduces printing and paper use and instead keeps documents and communications electronic whenever possible. In 2019, record retention for claim files was reduced from 25 to 7 years, shrinking our Record Center footprint and minimizing Record Center operating costs from $6.2 million in 2016 to approximately $2.1 million in 2022. From 2019-2022, we reduced mailings by 21% (32 million mailings reduction), paper use by 23% (1.55 billion pounds of paper reduction), and envelope use by 27% (54 million envelope reduction). In addition to reducing our use of paper, we recycled approximately 470,800 pounds of paper in 2022.
Print center – mailings, paper and envelope trend (2019 to 2022)
Allstate has made significant progress toward eliminating paper consumption by digitizing the procurement process. In 2022, our e-signature system executed 3,566 electronic contracts with suppliers.
Allstate has invested $12.5 million in improving customers' digital, paperless experience since 2015. Our eDelivery and Document Management teams offer three paperless initiatives: eSignature, ePolicy and eBill. Customers are prompted to use our online self-service hub to sign up for these free services, and these programs were highly utilized in 2022.
Allstate makes intentional decisions about the resources we purchase. In 2022, Allstate purchased 6,303 square yards of carbon-neutral carpet tile from Interface. Interface is a global leader in modular flooring, which is easier to install and maintain and allows customers to replace specific sections, enhancing resource efficiency. They're also the first and only flooring manufacturer to achieve third-party Carbon Neutral Enterprise certification. They eliminate as many emissions as they can through manufacturing decisions and innovation, and compensate for the rest with verified emissions credits. Verified by Apex, this flooring purchase offsets 51 mtCO2e.
Windshield recycling partnership
Allstate partners with Safelite to provide customers with windshield glass replacement and recycling services. Safelite recycles the damaged windshield that it removes, separating the glass and vinyl interlayer, which is then converted into new products such as fiberglass insulation and carpet backing. It is estimated that over 90% of windshield materials can be recycled, and since its inception in 2012, Safelite's recycling program has recycled 15 million windshields. Safelite reports that 1 ton of CO2 emissions are prevented for every 6 tons of glass recycled, and through this partnership, Allstate recycled 3,604 tons of glass during 2022. The long-term benefits of our valued partnership include the reduction of waste to landfill, energy conservation and the creation of eight jobs for every 1,000 tons of glass recycled.
Vehicles reuse and recycling partnership
Extreme weather events such as floods and hurricanes produce thousands of flood-damaged vehicles. Allstate partners with Copart's recovery services and online auction to retrieve, resell and remarket these vehicles. Extending the life of vehicles and automobile parts through reuse and recycling reduces the carbon emissions and costs associated with manufacturing automobiles and automobile components in support of a circular economy. This program has a positive effect on Allstate's bottom line through the reuse and resale of the materials derived from these damaged vehicles and conserves the consumption of scarce materials.
Electronics reuse and recycling partnership
Our customers' recovered Milewise and Drivewise devices are digitally wiped and tested for functionality by Danlaw, then sent to Arity for redeployment. Alternatively, Danlaw buys back retired Milewise and Drivewise devices, reconditions them and provides Arity with a credit on new device purchases for devices that are resellable. Devices that are not resellable are recycled by HOBI or Danlaw in partnership with Allstate and Arity.
Allstate facilities nationwide are serviced with IT and mobile asset disposition by certified women-owned business enterprise HOBI International Inc. HOBI helps Allstate ensure staffers are using up-to-date energy-efficient equipment and manages energy-efficient shipments to and from distributed employees. HOBI safely recycles and disposes of outdated Allstate devices, recovering precious metals that can be reused without compromising sensitive information. In 2022, Allstate's partnership with HOBI kept 39,249 electronic devices in circulation through reuse, and recycled 7,101 more.
Reconext also provides its services to Allstate to salvage small electronic devices, such as cellphones and tablets, that cannot be repaired or restored. Reconext provides clients, including Allstate, with a customizable trade-in platform to simplify the execution and oversight of the program in its three key areas: collection/shipping, reporting/payment and customer support. Allstate's relationship with Reconext began in 2017.
The magnitude of our global procurement activity means our procurement practices have far-reaching effects, and we can positively influence the businesses from which we source products and services.
The Sourcing & Procurement Solutions team implements the Allstate Sustainable Procurement Program to mitigate corporate risks and align procurement decisions with environmental and social sustainability. The Responsible Procurement team oversees our sustainable procurement strategy, which increases visibility in the supply chain and evaluates, tracks and mitigates risk exposures. We are working to understand how suppliers manage factors such as GHG emissions, waste, diversity, equity and inclusion, regulatory compliance, and cybersecurity, to further articulate and progress Allstate's expectations. Aligning our procurement decisions with environmental and social responsibility increases the confidence of stakeholders who depend on Allstate's performance.
Managing supplier impacts
Allstate works with suppliers to accelerate environmental and social improvements across the value chain. We manage environmental and social impacts in our supply chain through agreements, surveys, scorecards, resource reduction programs and policies.
All suppliers doing business with Allstate must adhere to our Supplier Code of Business Conduct, with requirements regarding human rights, environmental stewardship, diversity and inclusion, child labor and more. In 2022, the code's Environmental Stewardship section was updated with expectations relating to suppliers' climate action, environmentally preferred products and services, CDP disclosure, and the measurement and public disclosure of their climate activities. As of 2022, Allstate also expects suppliers to implement their own codes of conduct, in addition to adhering to Allstate's. To support suppliers who have not yet met this expectation, Allstate shares resources to help with code of conduct development.
Also new in 2022, Allstate implemented a Diversity and Sustainability Contract Governance Standard Process. Contractual sustainability language was added to riders for existing contracts and now appears in all new contract templates. The language establishes ESG expectations of suppliers and holds suppliers accountable for their ESG performance and actions, which can cause risk to Allstate's brand and reputation.