In conversation with The Insurer TV as part of its #ReinsuranceMonth series, EY’s global insurance leader urged the (re)insurance industry to incentivise its clients to deliver on short-term climate goals in addition to their long-term objectives.
But Santenac pointed out recent energy pressures in Europe have also created a paradox by incentivising dirty energy.
“Right now we’re experiencing quite a paradox,” she said.
“I think the industry can play a big role. A lot of firms are part of the Net-Zero Insurance Alliance, which is great, and is a long-term commitment. Now, how can they play a role in supporting the transition?”
However, the war in Ukraine has led to a switch back to dirtier energy to keep the heating on in Europe this winter, as European policy faces off against Russia.
“You have a short-term objective, which is how do we avoid a shortage of energy for the winter? In particular in Europe, this is a critical element,” she said.
Turning coal-fired power stations back on is the wrong course of action for the planet, Santenac noted.
“A lot of countries have announced already that they are going to use much more coal energy than they were doing before. And you have those commitments, driven by a lot of pressure from activists, and how do you reconcile the two?” she said.
“What is interesting right now is to see how you combine short-term objectives, which are very important for the society, and long-term objectives, which are very important for the planet,” Santenac added.
This illustrates a common problem faced by many insurance firms adopting ESG strategies, she explained, of turning everyday operations towards long-term goals.
Some of what is needed is cultural, she suggested, driving the right behaviours across an organisation rather than just relying on someone with ESG in their job title to tick the box and improve matters.
A roadmap helps to set out the strategy for how to get from ‘A’ to ‘B’, Santenac emphasised.
“The first thing that they have to do is to define the strategy regarding ESG,” she said. “What do they want to commit to and when do they want to commit to it? Then they need to define a roadmap,” she said.
“We see a lot of companies announcing that they want to be carbon zero in 2040 or 2050. As you can imagine, it’s quite a long-term objective. They need to have a roadmap with shorter-term milestones for 2025 and 2030, in order that they can explain it to the market and to their people.”
The social element
Companies also face a further challenge when defining an ESG strategy, and that concerns the ‘S’ or social element and driving diversity, equity and inclusion.
“For me, it’s imperative they do that better,” said Santenac. “And why? Because we are in a war for talent everywhere, and we know well that the industry is not very attractive for young talents.”
Diversity and inclusion (D&I) initiatives are a way for companies to differentiate themselves from rivals in the competition for talent, Santenac suggested.
“If [the industry] focuses more on how to improve D&I, and diversity as a whole, I think it will resonate very well with young generations,” she said.
Click to watch the full interview with EY’s Isabelle Santenac, speaking with The Insurer TV in Monte Carlo from our pop-up studio suite in the Hôtel de Paris. Click for more on:
- Impact investing and impact underwriting
- Developing an ESG strategy and roadmap
- Working on the ‘S’ in ESG