In this month’s edition of The ESG Insurer we speak to Marsh McLennan president and CEO Dan Glaser on the steps being taken across the broking group to implement its ESG strategy, as well as the important steps the industry needs to take to deliver on sustainability goals
As a global company, what are the main challenges in implementing your ESG strategy across your businesses? How do you ensure a consistent approach?
Our ESG strategy springs from our shared purpose: we make a difference in the moments that matter. We want to show up for each other, our clients and for society in the best way possible and deliver maximum impact.
To align on the outcomes we want to achieve for clients and for society, we’ve established a management ESG committee. Members are drawn from senior management across our four global businesses and corporate departments. The committee is responsible for identifying and discussing ESG themes and issues that matter to our stakeholders.
Our four businesses work together to bring the full power of Marsh McLennan to address some of our clients’ biggest challenges from cyber risk to helping to close protection gaps and improving public health and climate resilience. This work clearly aligns with a variety of ESG factors. Having four businesses working on these issues from different perspectives is an advantage.
Where would you like to see the (re)insurance sector do more on sustainability issues? What do you think are the key next steps the industry must take as a collective in order to meet its ESG responsibilities?
Insurance has an important role to play, truly a responsibility, to aid the world’s transition to cleaner energy by developing better risk management solutions for the alternative energy sector. The answer is not declining to underwrite risks, but to support traditional companies as they transition to producing cleaner energy.
Through our work, we can help facilitate the flow of green capital to these businesses. Our employees and clients as well as policymakers across the world expect us to support this critical transition.
Marsh McLennan has a 150-year legacy of partnering with industries in their infancy, from telecommunications in the early 1900s to the launching of commercial satellites in the 1970s. We’ve helped shepherd these from risky business propositions to enterprises that provide benefits for billions of people.
Marsh is already leading the charge. It recently established a renewable energy practice and appointed veteran energy and power risk executive Amy Barnes as head of sustainability and climate change strategy.
Extreme weather events, fuelled by changes to our climate, are a threat to people in every corner of the world. Insurance will be critical in reducing protection gaps and bending the risk curve as the world tilts towards a warmer future.
The reinsurance sector can be a leader in addressing this issue. Guy Carpenter has been a trailblazer in developing public-private partnerships to address natural catastrophes, helping communities build their climate resilience. We’d like to see more of these partnerships throughout the world to address systemic risks.
And we should all be reducing our carbon emissions. We’ve committed to be carbon neutral this year and will reduce our carbon emissions by 15 percent below 2019 levels by year-end 2025.
Social issues are becoming much more prominent and rightly so. The reckoning with racial injustice we experienced last year is not over, and it shouldn’t be until we see meaningful change as a society.
The (re)insurance sector has work to do to improve its diversity and ensure that people from all walks of life feel empowered to do their best work in this industry. It’s the right thing to do and it’s business imperative. We need different experiences and diversity of thought to innovate for clients. Change is up to all of us.
To what extent are ESG factors linked to remuneration at Marsh McLennan? Is this something you would like to enhance?
Tone at the top matters. ESG is part of how we do business, and it’s considered in our executive committee compensation process. ESG factors are examined in each executive’s strategic performance and qualitative assessment.
Which of the ESG measures you have introduced are you most proud of?
When I look back on 2020, I’m proud of how we delivered as leaders by supporting our colleagues through Covid-19. We pledged very early in the crisis to preserve jobs and salaries through the thick of the pandemic and we implemented a range of new and expanded benefits. We also pivoted our business to respond to urgent needs like the development of public-private partnerships for pandemic risk insurance globally.
The Covid-19 crisis brought out the best in Marsh McLennan. Our colleagues’ courage, empathy and resilience was truly remarkable, and I’m deeply appreciative and thankful for their hard work. They dug deep. They found workarounds that spurred innovation. They stayed connected to clients and to our communities. We were resilient throughout the crisis because we supported one another.
What response have you had to the Leading the Change initiative? How do you see this initiative evolving?
The response to the Leading the Change initiative has been fantastic. Our leaders are very engaged in this journey. The actions we announced in June 2020 are bearing fruit.
Our Race Advisory Council recommended adopting Juneteenth as a company holiday in the US and that will start this year. We launched a professional development programme for Black colleagues. We’ve kicked off allyship training, and unconscious bias and inclusive leadership training will launch later this year.
Our inclusion and diversity vision is ambitious. We want our company to be the gold standard for inclusive leadership. Beyond achieving representation, we also want to ensure that we are cultivating a culture of inclusion where people can reach their full potential because their unique attributes are not just accepted, but are truly valued.
Within your Mercer unit, to what extent has demand for investment advice shifted its focus towards ESG factors? How has your focus on advising institutional investors shifted over the past five years, and how do you think it will evolve over the next five?
Mercer is a pioneer in ESG-focused investing. It launched a responsible investing arm in 2004.
Historically there may have been a feeling that responsible investing comes at the cost of performance. However we have seen a significant shift in how investors – specifically those investing insurance balance sheets – have embraced responsible investing. Indeed insurers have become a major source of funding for sustainable projects such as clean energy, infrastructure, renewables and so on.
In the coming years, we will see even more interest in ESG-led investing not only as returns emerge but also as regulators review how insurers are responding to issues such as climate resilience on both sides of the balance sheet. We continue to talk to clients about how to position their investments for these changes.