“If insurers could do only one thing on ESG, what should it be?” That was a question I recently asked a panel of insurance industry leaders. I’ve taken the liberty of highlighting (and augmenting) their very thoughtful answers below.
Success in the ESG era means more than one thing. Insurers must take action on several fronts – from adjusting underwriting processes and restructuring investment portfolios, to establishing appropriate models for corporate governance and board oversight, to launching new risk prevention services and educating consumers and their local communities about the risks from climate change. But it was interesting to hear different perspectives on both strategic and tactical priorities.
Figure out where ESG fits in a purpose-led business strategy. Leading with purpose means looking beyond risk transfer and helping customers protect themselves against unprecedented risks. Further, purpose is especially important to attracting new talent, as younger workers want to work for organisations where they can make a difference.
Participate in the development of industry standards and then embrace them. Meaningful standards are starting to emerge relative to disclosures for climate risk and diversity, equity and inclusion (DEI). Compared to other ESG initiatives, increasing transparency does not require large investments. Data standards are vital to identifying the right metrics for tracking ESG performance.
Allocate appropriate resources. ESG is too big an issue for it to be anyone’s second job. Ideally, senior executives are accountable for delivering against high-profile commitments and have sufficiently large teams to ensure change takes hold across the organisation.
Engage and innovate – both internally and externally. While insurers should look to adopt the highest DEI standards internally, they can also promote DEI as they engage in their communities (e.g., through banking relationships). Similarly, once they have set their own plans to reach net-zero emissions, insurers can develop solutions that help other types of companies do the same.
Again, the range of these priorities illustrates just how broadly and creatively insurers must think and act if they are to show leadership in helping society face up to its biggest threats, starting with climate change and social justice.