Spreading the word: First guide on ESG risks for the insurance industry

By Hendrike Kühl, IUMI Policy Director

Marine insurers are no exception to the growing importance being associated with a forward-looking and sustainable business conduct. Many marine underwriters now take environmental, social and governance (ESG) factors into consideration in their decision-making. To further support this approach, the UN Environment Programme’s Principles for Sustainable Insurance initiative (PSI) developed the first guide for the global insurance industry to manage ESG risks in cooperation with a broad industry coalition, including opportunities to provide input via public consultations. IUMI participated in the review and submitted feedback on the draft.

The comprehensive document was launched in June 2020. Its key objective is to provide guidance for the development of suitable systems to assess ESG risks in non-life insurance business transactions. This includes risks arising from climate change, ecosystem degradation, pollution and animal welfare and testing; to child labour, controversial weapons, and bribery and corruption. It also includes optional “heat maps” indicating the potential level of ESG risk across economic sectors and lines of insurance business.

In IUMI’s capacity as Supporting Institution of the PSI initiative, a webinar in cooperation with UNEP PSI was held in October with four expert speakers to provide an overview of the guide. Moreover, tangible examples and insights were shared on marine insurers’ actions to incorporate a suitable ESG approach within their businesses. The challenges, benefits and variations related to size and lines of business as well as regional differences were also raised in the discussion. A full recording and the slides of the session can be accessed HERE.