How to respond

As the regulatory waiting game continues, the costs of inaction are enormous. Fortunately, there are immediate steps insurance companies can take to run smarter, rather than merely faster, while awaiting more concrete ESG regulations:

Don't shun dialogue with competitors. The insurance community needs to prioritize information sharing. Such intra-industry dialogue will not be easy, as companies are often reluctant to divulge practices they may see as a competitive advantage. Yet without this dialogue, we are losing a great opportunity to learn from one another when identifying best practices and robust metrics for ESG reporting. The insurance industry is deeply interconnected, and in order to successfully transition from ESG pledges to action, we will undoubtedly need to collaborate more than ever before.

Show your work with data. Insurance companies need to document their ESG data in a rigorous and defensible manner. No longer will relying on data that is built on simple estimates, rather than quantifiable figures, suffice. Neither will collecting incomplete data that doesn't add up to all the pieces of the puzzle, as overlooking one important stream of data will distort the total tally. That means companies need to set up the proper infrastructure for reporting as well as sourcing, scrubbing, analyzing and verifying data to be statistically airtight. The reality is that there is immense information at our fingertips, so it is vital for companies to handle this complex data in a comprehensive and meaningful way. Companies must consider doing so by investing internally in skilled experts who specialize in data science or by contracting a third party to handle this function.

Give ESG a seat at the C-Suite table. Once considered a "bolt-on" to long-term strategy for companies, ESG is and will continue to be a key pillar to a company's performance and longevity. Therefore, if not already the case, ESG leaders need to be a part of the C-Suite. Put differently, ESG needs to be a core part of insurance companies' business strategies and a prioritized topic at C-suite and board room meetings. Investing in the infrastructure, tools and talent needed to support a company's ESG goals should be a major focus if insurers would like to maintain stakeholder and investor satisfaction.

Ultimately, in order to truly make strides toward improving ESG, the global insurance industry needs to establish an environment where there exists a universal language and form of measurement for ESG. Standards should be clear and consistent, and the outputs of reporting should mimic comparisons in an apples-to-apples manner; unlike the apples-to-oranges system the industry currently experiences due to discrepancies across voluntary self-reporting. An internationally standardized way of reporting will not happen overnight and is going to require immense collaboration between the private, public, and governing bodies of our industry. In the meantime, however, companies cannot afford to take a wait-and-see approach.

Special Reports /

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