Political focus on climate action has escalated over the past month with the insurance sector positioned to play an increasingly prominent role in creating solutions to enable a more sustainable future.

ESG

Within this latest edition of The ESG Insurer we hear from Ekhosuehi Iyahen, secretary general of the Insurance Development Forum (IDF), who believes the emergence of a clear policy signal from governments has created an opportunity for the industry to step up and showcase the role its tools can play in building societal resilience.

The shift in political momentum has been driven by renewed engagement from the US following Joe Biden’s victory in the US presidential election and his decision to reverse his predecessor Donald Trump’s intentions to pull the US out of the Paris Agreement.

During May, President Biden’s executive order on Climate-Related Financial Risk highlighted the extent to which the policy agenda was shifting. Ahead of this latest edition going to press, the G7 group of countries revealed plans for mandatory climate disclosure for corporates while also pledging greater regulatory scrutiny of companies’ environmental impacts.

As Axa CEO Thomas Buberl outlines in this month’s ESG interview, insurers can play a pivotal role in addressing biodiversity challenges through the right protection and prevention mechanisms.

Moving forward, the ability to build industry-wide initiatives and public-private cooperation will be key to maximise the sector’s collective impact, the Axa CEO believes.

E is not the only component in ESG, however. In this edition we also hear from Aon’s chief people officer Lisa Stevens on the broker’s efforts with regards to diversity and inclusion, as well as examining QBE’s approach to mental health and wellbeing.

As ESG issues increasingly permeate the corporate agenda, all company activities will increasingly be viewed through this lens.

Acting in the best interest of shareholders will no longer be sufficient justification if these actions are to the detriment of other stakeholders, both within and external to an organisation.

The rising focus on ESG also presents opportunities for the sector, as demonstrated by two key announcements over the past month.

Plans by Parhelion to raise $500mn for a dedicated ESG insurance vehicle, as well as Beazley’s plans for an ESG consortium and dedicated syndicate in a box, are high-profile examples of carriers making dedicated capacity available for companies that adhere to ESG principles.

This momentum will continue to build over the coming months. As ESG issues move further up the political agenda it will present regulatory hurdles for the industry to cross, but alongside this smart insurers will recognise their opportunities to deliver solutions for a more sustainable future.