Untapped Opportunity for Sustainable Insurance Growth

Risk, it’s everywhere.

The landscape of risks facing the insurance industry seems to expand daily. Cyber security, uncertainty around natural catastrophes, low interest rates, energy price volatility, shifting regulatory regimes … the list goes on.

Insurers that seek out the perspectives of a range of stakeholders can gain a competitive advantage. Your clients, suppliers, reinsurers, shareholders and nonprofit organization partners all have different views of your company’s operations and strategic outlook. Are you tapping into this potentially rich vein of risk and opportunity information?

Ceres, a nonprofit sustainability advocate, has for the past 25 years helped companies understand their key environmental and social impacts, and helped identify sustainability risks and opportunities through stakeholder engagements.

We convene confidential, collaborative dialogues between companies and others with a vested interest on topics of material concern. The topics frequently relate to the development of a strong sustainability strategy, evaluation of whether a company is disclosing material sustainability related information, or how a company might identify clean energy investment opportunities, among other topics.

Engagement with insurance companies, regulators and investors in the past decade has focused on sustainability risks and opportunities. Since 2010, we have published four reports analyzing insurers’ National Association of Insurance Commissioners Climate Risk Disclosure Survey responses, providing insights into how insurers are disclosing climate and sustainability risks. These reports analyze insurers’ climate risk management practices across governance models, underwriting strategies, investment management and catastrophe modeling.

The latest report, released in October, found that a number of companies disclosed examples of how they reach beyond the walls of their corporations to engage a broader perspective.

For example, German insurer Allianz described its environmental, social and governance (ESG) dialogue process as “regularly engag[ing] NGOs (non-governmental organizations) to create an evidence-based dialogue built on trust and mutual understanding … We can also tap into [NGOs’] expertise when formulating ESG positions and guidelines.” Such engagement aids the company’s formulation and validation of policies for addressing strategic ESG risks and opportunities.

Greater climate-related disclosure is not just being sought from the insurance industry. Ceres has worked with Citigroup and The Walt Disney Co. to engage stakeholders on key environmental and social issues, and to disclose how they are incorporating feedback into corporate strategies.

Citigroup disclosed feedback it received from stakeholders on its sustainability reporting and efforts to address conflict minerals in its supply chain.

Disney used stakeholder engagement methodology to review its sustainability strategy. The company disclosed the recommendations it received on topics ranging from measuring the return on investment of sustainability projects to the development of a comprehensive climate change strategy. Investors may not expect these companies to have solutions to address these challenging issues, but by disclosing stakeholder feedback, the companies show good faith efforts.

Thoughtful stakeholder engagement can help companies see beyond their usual frames of reference. From such dialogues with interested parties, innovative products and services can be launched, value-adding policies and procedures can be developed, and lines of communication on emerging risks can be opened.

Working with stakeholders to establish what constitutes material risks and opportunities can be a powerful input for strategy development.

Understanding who the stakeholders are and being open to their points of view can lead to more resilient and valuable companies.

Topics Pollution