As far as Environmental Social and Governance (ESG) efforts go for the insurance industry, the train has well and truly left the station, and for the most part, insurance companies and their executive teams are on board with the concept. Some may be reluctantly on board, given that there is still much confusion about how ESG is defined, measured and reported.
This acceptance is driven largely by the ever-growing array of ESG-focused insurance stakeholders – customers, regulators, investors, industry analysts, and credit-ratings agencies – becoming more vocal in demanding that insurers take into account ESG factors in their underwriting, investing, and day-to-day operational activities of their businesses.
The demands are such that insurers’ chief executive officers and chief financial officers dare not attend an earnings call, investor days, or even tackle their ratings agencies without being prepared to discuss their ESG strategy that is detailed and actionable.
But, specific evidence about ESG practices is very difficult to unearth in the public domain as it appears very few insurers use, or consistently apply a specific ESG framework when reporting. A common reason could be that many frameworks exist, which may confuse industry participants.
In our view insurers must be crystal clear when stating ESG goals and providing details about the path they will choose to achieve their goals. Further, is has become critical in this industry to inform stakeholders about how ESG efforts will be measured and how it will be reported.