ESG strategies are certain to impact insurers in the coming years in several critical ways.
In the wake of a global pandemic, with the crippling effects of climate change becoming ever more apparent every year, ESG principles have rapidly moved to the top of insurers’ strategic agendas. According to UK environmental non-profit CDP, climate change alone could potentially generate $1 trillion dollars worth of financial risks.
Situations such as the above can result in wider effects than higher operating costs or customers becoming impossible to insure. Without clear and transparent environmental governance, insurers may begin to lose the business of major customers. Coupled with evolving mindsets around topics such as gender, race, and sexuality, ESG is certain to impact insurers’ strategies in the coming years in several critical ways.
One of the clearest signs is the growing number of insurance companies appointing chief sustainability officers (CSOs) or their equivalent to help form and lead those firms’ ESG strategy. Those CSOs face a wide number of challenges. These include insufficient resources, an uncertain governance structure, and most previous ESG efforts occurring in siloes.
In addition, risks associated with ESG include aspects such as climate, transitional, and social risk and are…
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