How Aspen Insurance embraced ESG principles
Just ahead of Earth Day, the company's chief business development officer outlines its Second Annual ESG Report.
These days, the topic of environmental, social and governance (ESG) strategies is taking precedence throughout boardrooms and C-suite offices in businesses of all sizes, across all industries.
Historically speaking, ESG is nothing new: It grew out of the sustainability movement of the 1990s and early 2000s, which put pressure on the corporate world to consider the social and environmental impacts of their actions in addition to the traditional financial bottom line. In addition, ESG places focus on the separation of power and duties, on who and how they make key decisions within companies, and other ethical considerations in doing business.
PropertyCasualty360 recently connected with Jonny Atkinson, chief business development officer at Aspen Insurance, which published its Second Annual ESG Report early in 2023. Here’s what Atkinson had to say about how Aspen is forwarding its commitment to “build a business and culture that embraces ESG principles.”
PropertyCasualty360: How has the focus on ESG evolved in the insurance sector? Why are more companies in the industry turning their attention to ESG?
Jonny Atkinson: Any insurance business would find it difficult to ignore the climate change debate and strong ESG narrative in the world today. It’s also probably true to say that the investment and banking sectors were some distance ahead of insurance who are playing catch up now. Our industry has begun to assess and adjust behavior in earnest, developing its thinking around sustainability.
This adjustment has varied by geography, in terms of pace and emphasis, and with regard to the three pillars of E, S and G. However, this blending of ethics and capitalism was always going to produce complex outcomes.
There also has been a macro societal shift in expectation of how a business should behave — an expectation of a more defined social and environmental contract. Customers typically don’t just want pure capitalism, and investors expect more than just returns. This applies not only to investors and customers, but to employees as well. We see that with our Aspen colleagues today and expect it in our future. I would add that sustainability objectives can be delivered effectively alongside strong returns by the business for shareholders. Success enables critically important long-term sustainability and execution, or to put it another way: ‘Doing good by doing well.’
PC360: Why does Aspen care about ESG, and what overall efforts have you made in this area?
Atkinson: I am in my 12th year at Aspen. The cultural changes I have seen in recent times have been significant, if not remarkable. We have come a long way over the last four years since we changed ownership and Mark Cloutier was appointed Executive Chairman & Group CEO. The changes that he and the leadership encouraged have resulted in ‘ground-up’ ESG activity that is now more organic and a normal part of our business.
Each of the three pillars in ESG closely align with Aspen’s core values and cultural work that we began in earnest in early 2019 and have been refining since. Our ESG efforts demand accountability and transparency, starting with our executive leadership. So much of our ESG activity was already in effect or being constructed by 2021 that we were able to report on its progress in our Second Annual ESG Report.
PC360: What are the biggest highlights of Aspen’s ESG efforts as indicated by the report, and what are you most proud of?
Simply put , the progress we have made together and, frankly, I am proud of pretty much all of it! For example, we have begun thoughtful work to entrench more environmental sustainability into our insurance underwriting, a very complex issue for a company such as ours, with such a variety of specialty products. Our people have really stepped forward to aid communities less fortunate, including donations to Ukraine and significant environmental and social partnerships in Bermuda, U.K. and U.S.
Earlier this year, Aspen became a signatory to the UN Principles for Responsible Investment, which aligns with our Group Investment Guidelines, and we have committed to a training program for our investment team.
Aspen’s procurement strategy also has evolved with a five-step process and our carefully considered and chosen Carbon Offset program achieved carbon neutrality last year. Our ongoing ESG development allows us to be more considered and data driven, as well as be able to readjust strategy when the pace of change deems it necessary. Our office carbon footprint is supported globally by our hybrid working model. And we are continuing with a program that began in 2021, to transform and standardize our offices so they are more sustainable and less energy intensive. For example, timer switches, re-engineered LED lighting and smarter print services, zero plastic and single use drinks containers, and we have introduced food waste systems.
We reworked Aspen’s values and behaviors in 2021, and 2022 was a year of really bringing them alive. Our five core values are the backbone of our business, and earlier this year we launched the Values Champions Award to celebrate colleagues who personify them. Our employee engagement survey scored 89% in participation, and management’s focus on the wellbeing of employees was equally strong.
In 2021, the DE&I infrastructure was established, following meaningful groundwork from our subject matter expert workstreams (SMEs) and the broader business. Aspen began building a collective, internal alignment of our core values, and I had the good fortune to be appointed to the DE&I Delivery Board so I could see this good work first hand. We enjoyed initial success, building out two main pillars and laying the foundations — attracting diverse talent and fostering an inclusive culture — with broad involvement from across the business and executive sponsorship.
We also developed a robust and effective early careers program, and established Employee Resource Groups (ERGs) with really great success. One is focused on Gender (GAIN) and the other (RESET) on race and ethnicity, both of which have been very effective, popular and fun! Personal stories have been shared on our employee intranet site that were brave, touching and powerful, and we increased knowledge and awareness of important social issues with influential speakers. The reaction of the business to these and other activities has been frankly heart-warming to see.
PC360: How is Aspen embedding your sustainability initiatives and principles into your underwriting processes & overall decision making? Why do you feel it is important to do so?
Atkinson: This is evolving fast. In many lines we have been considering ESG for several years as a natural part of the underwriting process before it was widely recognized as, or termed ESG! Management Liability and Credit and Political Risks (CPR) are two classes, for example. For CPR, we launched Project Leaf to highlight ESG considerations, and saw 42% of premiums as being ESG-favorable in 2022, an increase from 29% in 2021.
We have been working with a major consultant/tech firm, Dun & Bradstreet, to develop a methodology that embeds ESG ratings into our underwriting more broadly. We are trialing a number of key lines with a group of senior underwriters and sharing our progress at the ESG Underwriting Group. All of this has led to enjoyable collaborations and considerations richly discussed around getting this right for Aspen and our clients.
At its core, we want Aspen to be a diverse and inclusive welcoming business. As others have heard me say, much of what we are talking about is simply, at its core, good old-fashioned manners and respect.
We are committed to providing strong returns for shareholders for the long term and have a deep sense of social responsibility, in supporting local communities and proactively managing our environmental footprint globally. However, maintaining a level of balance for all our stakeholders is not without its challenges. That includes colleagues, brokers and customers, investors, rating agencies and regulatory bodies. One of our five core values is, in fact, simply ‘Do the right thing.’
PC360: In 2022, Aspen became a signatory of the UN Environment Programme Finance Initiative Principles for Sustainable Insurance. What does this mean for Aspen and your ESG efforts?
Atkinson: We were excited to announce that Aspen become a signatory of the UN Environmental Programme Finance Initiative Principles for Sustainable Insurance. As mentioned, we are developing our access to ESG data with Dun & Bradstreet. This is a complicated subject matter and there are many ways to develop an ESG rating which are emerging in our sector. It seems these are producing very different results and alignment or standardization is yet to come. Brokers, consultants and carriers are all developing their own methodologies, so this lack of consensus is challenging.
We will develop our own path ultimately that is thoughtful, pragmatic and client empathetic. We will need to be open minded and agile as we evolve as a company and as an insurance community in sustainability. Aspen is also working with clients and brokers to progress and raise awareness of ESG issues, manage risk and develop solutions. This is a developing journey but one that we are committed to getting right and we will share these efforts as they evolve.
PC360: From a corporate social responsibility perspective, can you highlight key components of the company’s CSR strategy? What have been some of the key results of your CSR strategies?
Atkinson: We have enjoyed collaborating across the business and teams to work on projects to help the environments and the communities in which we live and operate. Two examples that quickly come to mind are our Atlanta office sponsoring a room in the Ronald McDonald House at the Emory Children’s Hospital, and our Houston office volunteering at the Houston Food Bank.
We continue to support Adara with projects in Uganda and Nepal. In 2022, we delivered $1.2M of charitable projects globally. We also donated $125,000 in support of the charity, Ukraine Rises, to help Ukraine rebuild.
A personal favorite of mine — and one where Aspen was an original investor — is Blue Marble Micro Ltd. (BMM), where I have been a Director since July 2022. BMM delivers innovative micro-insurance to the underserved around the globe, reaching 100,000 individuals, using parametric insurance and proprietary software.
They are really coming into their own and establishing themselves as a brand force in the social impact Insurtech space. They also have helped to deliver security to farmers around the world by partnering with public and private entities. It’s a true privilege to play my small part by representing Aspen in the BMM story.
PC360: How do you empower your employees to embrace your CSR efforts? Why is it important to have employees’ support in this area?
Atkinson: Aspen’s culture seems to flow quite naturally now. Our Give as You Earn and Volunteer Day policies empower staff to contribute time and money to a variety of projects globally. And an increasing number of our employees also have used our Aspen matching contributions to reach their own personally supported charities. I was excited to be able to enhance fundraising efforts in Norfolk, England, for the National Society for the Prevention of Cruelty to Children, where our speaker discussed methods of more sustainable farming on my wife’s family farm.
Teams often collaborate with other teams at an office location in support of good causes. Some of our Texan-based colleagues recently volunteered their time packing and delivering meals to local schools, where over one million people in southeastern Texas are regarded as food insecure.
In fact, I am looking forward to my day in April with colleagues at the Spitalfields Farm, East London, which produces healthy, local and affordable food to the local community in London. In the U.K., we also launched a salary sacrifice initiative for employees to lease electric/hybrid cars.
In Bermuda, we partnered with the Bermuda Mangrove Reforestation project, where 17 employees volunteered, led by Aspen Bermuda Ltd. CEO, Mark Pickering. And, across the pond in the Caribbean, our Puerto Rico colleagues supported efforts to fish their seas more sustainably. There are many more examples and I could go on; these are just a few.
PC360: What does the idea of good corporate governance mean to Aspen? What does your governance framework look like?
Atkinson: Simply put, good governance is a critical characteristic to running a good business. We have a number of jurisdictions in which we operate with strict operating structures to deliver good governance. We recognize the need for operational independence but will align across the Group where appropriate. The Disclosure Committee signs off ESG-related disclosure matters, and ESG strategy is ultimately determined by the Group Executive Committee, which reports directly to the Holding Board. We enjoy a Code of Conduct that is built on high ethical and moral foundations, and all employees embrace these goals and are encouraged to play their part in maintaining and developing these high standards.
ESG is placed firmly as part of the Aspen DNA and not isolated in an idealistic ivory tower, which I have observed at other companies. Moreover, we have just conducted a review of our ESG activity and structure, using expert third party and we will be making further enhancements to our Sustainability framework to make our efforts even more structured and effective.
PC360: What role do Aspen’s risk management initiatives play in your overall corporate governance efforts?
Atkinson: In short, an important one! We have a comprehensive Risk Management Framework through which we manage business opportunities and risk. It is both structured and disciplined when considering emerging and existing risk landscapes. In 2022, we deepened our efforts to understand risk, as it relates to climate-related risks. Our model is holistic, allowing for response to risk, management, strategy and appetite, reporting, assessment as well as risk governance.
To give you an example, our data protection, which is in every location where we operate, plays an integral role in our risk management framework. Data privacy plays an intrinsic social value, and we must protect the data we collect and the privacy of the entities from where it came. This takes care and measurement but is a critical need of which we are very focused.
PC360: How do you seen the focus of ESG evolving or growing within the insurance sector?
Atkinson: This is an evolving and complex subject often heightened by inherent, natural tension. The risks of unintended consequences are high, but that is not a reason for Aspen not to play its part. We and the industry have a major role to play.
At Aspen, having a successful business that gives something back is central to our culture and one our core values. We must continue to be thoughtful, agile, open minded, able to adapt, pragmatic and client considerate to get this right. Better businesses in the specialty (re)insurance sector will continue to operate with more clearly identified ethical objectives. This is becoming more normalized.
ESG will not evolve and develop in a straight line, and there will be some twists and turns down the path. Regulators and rating agencies are becoming increasingly focused, however, the weighting of their emphasis seems to depend on geography and is still nascent. I think the sustainability genie is out of the bottle and the insurance business will evolve, embed and refine its strategies over time. Currently, there are a huge number of solutions, ideas and optimal models being proposed by a large number of experts that surround specialty (re)insurance.
Given the complexity of this subject and the wide variety of products, customers and industries that are in play, ‘best practice’ models will take some time to emerge. I do hope we are collectively able to bring some consensus in philosophy and measurement into this space. I think considerable subjectivity will continue to exist in the sustainability debate as we progress, which is probably healthy, but I believe a bit more alignment would help us on this important journey.
Award-winning freelance writer, editor and author Maura Keller is based in Minneapolis, Minn.
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