How insurers turn ambition into action

When it comes to shifting the global economy towards a net zero future, insurers can be catalysts for change.

As the principal managers of risk within the real economy, the insurance industry needs to find ways to help businesses understand and mitigate the risks and uncertainties of moving towards a net zero future. Insurers will need to play a key role in the transformation into a green economy though their investment and underwriting activities as well as their risk management capacity.

(Re)insurers can be agents of change by bringing ESG to the forefront of strategy and governance

(Re)insurers are in an ideal position to influence sustainability strategies and promote positive outcomes through underwriting and investment decisions. This will enable (re)insurance carriers to move from simply absorbing the impact of climate change to becoming vital enablers and accelerators for the development of a green and inclusive economy. This presents both a crucial test of purpose and a once-in-a-generation opportunity to drive innovation and growth.

(Re)insurers need to stay ahead of the evolving ESG regulatory environment

The influx of new ESG regulations and the policy objectives on which they are based are placing a whole new set of expectations on businesses. These changing expectations have significant implications for an insurer’s (or reinsurer’s) strategy, reputation and market valuation, as well as its compliance capabilities.

Many of the rules are still being finalised and there are likely to be even more of them in the future. But the timelines mean that (re)insurers cannot wait until everything is agreed before making a start with implementation. Further challenges arise from the inconsistencies and even conflicts between the various regulations. It’s important to be able to communicate a clear strategy, while embedding an ESG-focused culture and defining relevant KPIs – all backed up by firm evidence and honest proof.

(Re)insurers need to be part of the solution by embedding sustainability in their products, assets and own operations

Product development, asset management and the management of a carrier’s own operations, including its supply chain, are the building blocks for turning a (re)insurance carrier’s ESG ambitions into concrete actions. The (re)insurers leading the field are looking at how clients’ risk protection needs are changing and how to put these new requirements at the centre of their product design. They are also bringing their influence to bear as major investors. And – to make sure they practise what they preach – they are considering how to bring the sustainability, inclusion and ethical policies within their own businesses and value chains up to the standards they expect from clients and portfolio companies.

(Re)insurers can turn reporting, risk and tax management into engines of ESG

Risk, reporting and tax management are the key engines of delivery for ESG. Growing stakeholder demands for ESG disclosure are an opportunity to convey a carrier’s ESG ambitions, build stakeholder trust and attract new business. However, sustainability reporting remains fragmented, sometimes inconsistent, and challenging to use.

Without the burning platform of regulatory change, there might be a tendency to view ESG risk as largely a compliance exercise. But with the risk landscape changing so fast, ESG strategy and risk management need to be fully aligned.

Legislative and sustainability developments as well as the shift from shareholders to stakeholders’ capitalism have placed tax firmly on the sustainability agenda. Tax is increasingly coming under the ESG spotlight, both in terms of how much you contribute as a business to the societies in which you operate and as an incentive for sustainable strategies and investments.

A data rethink can sharpen insight, innovation, and credibility

A (re)insurer’s ability to realise its ESG ambitions depends on data. The main challenge isn’t the lack of data – they’re largely there if you can find them – but how to embed them into decision making and performance reporting in a way that turns information into insights and intentions into actions.

Start with your ambition

The climate crisis and wider focus on ESG are changing what society and clients want and expect from (re)insurers, requiring them to become enablers for the green transition and the sustainable economy of the future.

This challenge is neither straightforward nor linear, with the scale of the task being amplified by the uncertainty, ambiguity and inconsistency surrounding it. But where there’s a will, there’s a way. This report seeks to cut through the immensity of ESG to provide a structured approach to turning ambition into action.

It starts with the strategic and regulatory imperatives, before moving on to what this means for the fundamentals of your business and how to gear up your organisation to deliver. What cuts through this is the need to determine what a green and sustainable future looks like, what your clients need in order to transition and what you can do to support them. The answers and solutions are an opportunity to unleash the full power of innovation and risk expertise within your business and emerge as a leader in a sustainable new economy.

Embracing ESG: How insurers turn ambition into action

How you as an insurer and the industry as a whole can move forward on ESG? Download our EMEA Insurance ESG Whitepaper now and register for our webcast to get insights into the complex impact of ESG on the insurance world!

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