ESG in insurance: Where the industry stands and what opportunities it should seize

Insurance companies have long recognised the special importance of ESG factors for their industry. On the one hand, this concerns the new business opportunities that are opening up here. At the same time, insurance companies themselves are under pressure to formulate and implement ESG goals. Last but not least, they usually have a lot of knowledge about the risks caused by climate change. Some of them already use this knowledge to support their clients in their ESG strategy and to accompany them in the transformation towards a sustainable business model.

The white paper "ESG in insurance: Strategy and transformation" addresses these aspects, explains the challenges and shows how a goal-oriented ESG strategy aligned with general business objectives can succeed. For this purpose, we interviewed KPMG experts on the topic worldwide.

The implementation of ESG programmes in insurance companies is currently at different stages of progress, but the focus on the following two main areas is recognisable.

• First, insurance companies are already implementing ESG criteria in their business practices.
  Many industry leaders already have mechanisms in place to measure and review their progress towards ESG goals and investments. They are also setting ambitious but measurable targets to manage future risks, reduce costs and increase efficiency. 
• Second, insurers are supporting customers and stakeholders in their ESG plans.
  For example, many leading insurers are using product innovation, new technologies and gamification to encourage customers to reduce risk. They are also integrating ESG components into existing insurance models to make risks more understandable.

Nevertheless, even some insurance companies currently find it difficult to prioritise ESG goals and measures and to implement them in all business areas and functions. Therefore, the white paper lists the following recommendations, among others:  

• Consider interdependencies: When it comes to ESG, the "E", i.e. the environmental aspect, is often in the foreground. Companies should bear in mind that measures aimed at this area can have a strong influence on the other ESG criteria - both positively and negatively.  
• Change management: As with any transformation, it is helpful to educate employees about the ESG strategy and involve them in the change. This includes training and the opportunity for open dialogue or feedback. 
• Stay up to date: Compliance breaches or greenwashing allegations should be avoided. The best prerequisite for this is to always be aware of all regulations as well as changes and to strictly monitor implementation. 
• Formulate individual goals: The ESG strategy should of course be based on current regulations. However, it can also make sense to set your own priorities that are particularly well suited to the company.    
  

Do you need more information on the topic? Download now the white paper "ESG in insurance: Strategy and transformation" .