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      ESG in Insurance: A practical guide to sustainability reporting

      Sustainability reporting is becoming a top strategic priority, but requires a systematic approach across the organization to be successful
      two-men-talking

      As part of the environmental, social and governance (ESG) agenda, sustainability reporting requirements are changing the business landscape. For insurance organizations, sustainability reporting has become commercially and strategically important and offers a number of potential benefits to those who can successfully integrate it into their operating model.

      However, sustainability reporting presents some challenges. Whereas there are long-established processes and controls in place for financial reporting, the same is not the case for non-financial information.

      In this report, KPMG professionals explain how insurers can drive a successful transition to embed sustainability reporting through the organization. This requires non-financial reporting processes and metrics to be embedded within the operating model so that disclosures become a natural output of how the business functions, rather than an additional onerous effort.

      Roger Jackson
      Roger Jackson

      Global Insurance ESG Lead, KPMG International

      KPMG International

      Download executive summary
      Download full report

      Why sustainability reporting is important for insurers


      Sustainability reporting matters. It’s a way for insurers to demonstrate how sustainable the organization is to its clients and customers. It’s an opportunity to help live out the company values. And the market is increasingly requesting details on sustainability policies and practices.

      What’s more, for insurance businesses sustainability can drive competitiveness and increased sales – such as through the large and growing market for green or ethical insurance products and investments. It can also drive the share price, by demonstrating to investors and rating agencies that the organization has a resilient and sustainability-conscious business model, enhancing its position in sustainability index ratings. 

      96%

      of G250 companies report on sustainability or ESG matters1

      50%

      of digital leaders say expectations of ESG transparency are driving their transformation efforts2

      44%

      of insurance CEOs believe that ESG programmes improve financial performance 3
      For insurance leaders, ESG is high on the agenda – and this means that sustainability reporting should be, too. With increasing stakeholder expectations and growing regulatory requirements, getting the sustainability reporting approach right is becoming a major strategic importance.

      Roger Jackson

      Global Insurance ESG Lead

      KPMG International

      roger-jackson

      Focusing efforts towards a sustainable future


      Businesses are often at different stages in their sustainability reporting journey, driven by how important sustainability is to their corporate strategy and the regulatory jurisdictions they operate in. One key consideration as leaders develop their ESG strategy is the creation, or review, of a target operating model (TOM) for sustainability reporting, for example, through a Center of Excellence (CoE) model. Designing this up front can provide the organization with the flexibility of approach: transform quickly, or evolve organically over time, leveraging other ongoing change initiatives such as controls, technology and data improvement projects.

      As insurance organizations define their sustainability reporting strategy, it’s important to identify and prioritize what is material to the business. This should focus on getting ahead of the fragmented and evolving regulatory landscape, meeting the needs of priority sustainability rating agencies and grasping the opportunity to proactively support their reputation in the market. Bringing this together upfront can help identify synergies between the different demands, saving time, cost, and the challenge of continual compliance battles.

      Wherever the business sits, the following challenges are likely to be critical on the path to success:

      • Disclosing the right information
      • Confidence in reporting and getting ready for assurance
      • Delivering on public targets and commitments
      • Data flows
      • Technology and automation
      • New workload and skills
      • New methodologies and approaches

      How KPMG can help


      Sustainability reporting can be a complex challenge with many moving parts. KPMG stands ready to support and accelerate organizations’ progress. Our global team of ESG professionals bring deep industry knowledge, clarity and cut-through at each applicable stage:

      video_stable

      Stabilise

      Review and analysis of the as-is position, pre-assurance readiness assessment, process and controls diagnostics.

      schema

      Strategise

      Definition of the ESG reporting strategy and the high-level operating model design to support it.

      design_services

      Design

      Creation of the organizational design and role definitions, reporting controls framework, data model and architecture design, together with data & tech provider comparisons.

      published_with_changes

      Transform

       Implementation of solutions, delivery partner support, embedding new ways of working and upskilling the business.

      KPMG professionals help clients by breaking the task down to become manageable. Designing and building a target operating model for sustainability reporting doesn’t need to be a big bang implementation — leaders can choose their deployment strategy and the associated timeframes (unless driven by specific regulatory deadlines). Insurance organizations can also align this to other in-flight change projects and transition organically — saving money in the long term.

      KPMG member firms have formed strong alliances and relationships with leading technology solution providers, including those covering ESG-specific tools and platforms that can be leveraged to create custom ESG solutions. Combining these technology solutions with our own proven business methodologies, insights and accelerators, the team stand ready to help clients respond efficiently to the emerging challenges of ESG reporting.

      Key considerations for sustainability reporting


      Navigating the sustainability landscape can be complex. Here are seven key considerations for insurance leaders to review as they prepare for the new era of comprehensive sustainability reporting:

      1. Do you have transparency over ESG reporting processes and data collection activities?

      2. Do you understand your overall reporting approach including regulatory requirements, framework standards, material topics, priorities and assurance expectations?

      3. How do you collect and validate your ESG data and supporting metrics?

      4. How do you prepare ESG reporting to meet regulatory requirements and stakeholder expectations?

      5. How long will NFR implementation take and how much do you need to invest? Have you developed a business case?

      6. What controls need to be in place to support your ESG reporting processes?

      7. Who is responsible for ESG reporting and the supporting data or metrics information?

      Are you ready for ESG Assurance?


      Three-quarters of companies are not ready to have their ESG data assured externally months before new regulations kick off.

      The new Corporate Sustainability Reporting Directive (CSRD) mandates independent assurance for EU-listed companies from 2024, followed by large EU subsidiaries of non-EU parents² from 2025.

      Want to know how your company measures against it's peers?

      Complete the short survey now

      Our sustainability insights

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      Our people

      Roger Jackson
      Roger Jackson

      Global Insurance ESG Lead, KPMG International

      KPMG International

      Chirag Shah
      Chirag Shah

      Director at KPMG - Insurance Finance Transformation

      KPMG in the UK

      1 Source: Survey of sustainability reporting, KPMG Global, 2022

      2 Source: KPMG 2023 Tech Survey

      3 Source: KPMG 2023 Insurance CEO Outlook