Bobbi Sills highlights key takeaways from the CII’s recent environmental, social and governance webinars
The CII’s new environmental, social and governance (ESG) webinar series explores the key themes insurance professionals need to consider to drive meaningful change in the ESG space.
In the first of three webinars, members heard from stakeholders, both inside and outside of the profession, about the current ESG hot topics and key developments on the horizon for insurance professionals.
Here are four key takeaways:https://bit.ly/3pQZuqe
1. Insurers have a crucial role to play
Environmental issues such as climate change have accelerated interest in ESG in the past five to 10 years, and insurers have an integral part to play in the discussion, acknowledged Professor Jill Atkins, chair in financial management at the University of Sheffield.
Ms Atkins highlighted two key areas where ESG matters have increasingly come under the spotlight – institutional investing and claims.
She said: “Research shows ESG issues have a significant impact on the return institutional investors such as insurers gain from investing in companies. ESG does have a premium – if you invest in companies that adopt and integrate ESG policies, then it will improve financial performance.”
But Ms Atkins emphasised that the environmental side of the coin is as much to do with corporate governance as it is to do with social responsibility.
A key barrier for clients and customers is a fear of the unknown and not understanding how to interpret ESG in a way that supports businesses moving forward
Stakeholder accountability and integration of social and environmental issues should lie at the heart of any good governance model, noted Ms Atkins.
“There is a premium attached to companies for reasons such as reputational risk, but also in the way that they can attract employees as well as investors if they show they have good governance practices,” she said.
Ms Atkins’ view was shared by Peter Bosshard, global coordinator of Insure Our Future, who emphasised the importance of integrating ESG policy into every aspect of the business.
He said: “Historically, insurance companies addressed the ESG agenda in their own operations and in their supply chains, for example, by recycling paper and saving water and electricity.
“Now, we have a consensus that insurers need to embrace this agenda in their core business, in where they invest, how they invest, how they manage risk and what they underwrite.”
2. Breaking down barriers
While the hallmark of the past century was the digital revolution, the next 50 years will be all about the transition to ‘net zero’ and a greener economy, predicted Rebecca Scott, group chief operating officer at Howden Group.
As a profession, Ms Scott said insurance is the “engine in the car” when it comes to breaking down the barriers to positive change and building back better.
She noted: “A key barrier for clients and customers is a fear of the unknown and not understanding how to interpret ESG in a way that supports businesses moving forward.”
By continuing to build innovative products and transparently discussing ways of mitigating risk, insurers can lead the way in helping clients prepare for the future changes they will encounter.
“When we talk about breaking down barriers, it is really about creating a link from the last century to the next century, and the role that insurance as a sector has to play in that,” said Ms Scott.
3. Harnessing data
To develop a meaningful ESG agenda, Nikki Gwilliam-Beeharee, investor engagement lead at the World Benchmarking Alliance, said insurance professionals should harness the data that is already out there. When it comes to understanding corporates and how they are managing their ESG impacts, a lot of the data has already been well developed, Ms Gwillian-Beeharee pointed out, so you do not need to worry about starting from scratch.
She said: “There are tools available through paid ESG research provider services and public datasets that exist around these topics, as well as publicly available information from the World Benchmarking Alliance, to make use of.”
Ms Atkins agreed that continuous training on ESG matters is key for professional development, but added that knowing where to start and avoiding information overload is often a barrier: “ESG is such a proliferation at the moment, which can lead to masses of information.”
She continued: “I would advise looking at the work of the Principles of Responsible Investment whose online resources highlight key ESG issues.”
4. Supporting employees
As part of the request-for-proposal process, businesses are increasingly being asked to report on what they are doing in terms of corporate social responsibility (CSR), noted Ms Scott.
She said: “The questions we are being asked force us to think about the social factors, for example the work of our charities and foundations, as well as what we are doing to support our employees in their working environments.”
Mr Bosshard agreed that CSR often starts from the inside out, emphasising the value of employees within a business.
He added: “We have seen very rapid momentum in insurers shifting away from coal, with 35 major insurers making the switch to more renewable energies. Employees have been critical in this process.
“The feedback we have heard from several companies is that the opinion of their employees who wanted to be part of the climate solution was an essential driver in the decision to move away from coal.
“The opinion of employees matters – they are an insurer’s most important asset,” he concluded.
Upcoming ESG webinars from the CII include:
Insurance and ESG: What Do Stakeholders Think? https://bit.ly/3pQZuqe
ESG Metrics: Who’s Measuring What? https://bit.ly/3oIAa6e
Insurance and ESG: Now and Next https://bit.ly/3lQBqSQ
Bobbi Sills is communications executive of the CII