ESG: Threat or Opportunity?
How Can the Insurance Sector Tackle ESG Effectively?
Research suggests that insurance companies are keenly aware of both the threats and the opportunities arising from today’s ESG trends. However, a new approach is needed if they are to tackle ESG effectively for the long term and avoid their efforts being perceived as mere “greenwashing”. We offer some pointers for a more holistic sustainability strategy.
Recent research for the FTI Consulting Resilience Barometer™ 2021 found that almost 90% of asset management and insurance companies see ESG as an opportunity – and there is good reason for their positivity. Insurers can offer cover for new and potentially profitable types of business, such as renewables. They can also invest assets in new areas that offer major long-term growth opportunities: sustainable infrastructure, for example.
More broadly, there are opportunities to ensure that the industry makes a worthwhile contribution to society’s aims. Insurers can play an active role in bringing about a more sustainable and fairer economy, for example by investing in social housing. They can take part in social initiatives to improve financial inclusion and financial literacy amongst the public. And they can collectively re-establish the industry’s relevance for customers and regain their trust: introducing parametric products to make the claims process more transparent and predictable is just one option here.
…but threats remain
The industry is already shaping up to realise these significant opportunities. However, insurers also appreciate that it is too early to shift the focus entirely away from the accompanying threats.