In the rapid evolution of the global insurance sector, the importance of Environmental, Social and Governance (ESG) factors can hardly be overstated, especially for firms that operate in carbon-intensive contexts. As such, there is ample cause to welcome the June 2020 release of the United Nations’ first ESG guide under the UN Environment Programme’s principles for Sustainable Insurance Initiative.
While not intended as a formal standard, this guide should serve as a common framework to encourage cohesion and cooperation on such issues within and across the global insurance sector, and promote the provision of competitive and sustainable coverage for under-served industries.
Under the title “Managing environmental, social and governance risks in non-life insurance business”, the publication encompasses four main themes:
- Embedding Environmental, Social, and Governance issues in decision-making.
- Working with clients and business partners to raise awareness of environmental, social, and governance issues, manage risk, and develop solutions.
- Working with governments, regulators, and other key stakeholders to promote widespread action across society on environmental, social, and governance issues.
- Demonstrating accountability and transparency in regularly disclosing publicly progress in implementing the Principles.
For businesses seeking insurance coverage, it is advisable to prepare and present a comprehensive ESG overview within the early stages of engagement with insurers. Such a document, covering critical questions such as: carbon-footprint reduction and climate transition; gender / racial equity; governance and representation, should give due attention to Social and Governance factors, and include adequate metrics for measures, targets, and achievements.
Despite the vital importance of ESG concerns to insurance assessments, cross-sector efforts have thus far proved fragmentary and unfocused. The release of the UN’s ESG guide offers a prospect of more unified and positive discourse and innovation.