Background
As risk managers, insurers and investors, the insurance industry plays an important role in addressing environmental, social and governance (ESG) issues. ESG issues—also known as sustainability issues pose a shared risk to insurers, communities, businesses, cities, governments and society at large, providing a strong incentive for innovation and collaboration. Some ESG issues have varying implications, with some increasingly being recognised to be potentially financially material (e.g. climate change, ecosystem degradation, pollution).
As part of UNEP FI’s mission to support insurers align their business with ESG standards and sustainability objectives, the Principles for Sustainable Insurance (PSI) Initiative together with leading insurers across the globe developed the first-ever ESG guides for the global insurance industry.
Managing Environmental, Social and Goverance Risks in Non-Life Insurance Business
Developed as a result of a multi-year PSI initiative, this project was the first global guide to manage ESG risks in risk assessment and insurance underwriting. The project aims were to:
- Engage insurance industry practitioners and stakeholders worldwide to identify key ESG risks, priority lines of business, and types of insurance coverage
- Develop a shared understanding by the insurance industry on how to approach ESG risks
- Benefit the economy, society, and the environment by encouraging the prevention and reduction of ESG risks
- Contribute to building a sustainable financial system and support global policy frameworks such as the UN Sustainable Development Goals, Paris Agreement on Climate Change, Sendai Framework for Disaster Risk Reduction, and UN Guiding Principles on Business and Human Rights through improved risk management strategies and practices across the insurance industry
The final version of the guide was launched in 2020.
Managing Environmental, Social and Governance Risks in Life & Health Insurance Business
Through leadership from HSBC Life, the PSI built on the ESG guide for non-life insurance report by developing the first global guide to manage ESG risks in Life & Health. The project aims were to:
- Provide recommended guidance to insurance industry participants in developing approaches to evaluate the potential impact of ESG risks on underwriting risks in the Life and Health insurance business, and provide examples for consideration to mitigate such risks
- Highlight the potential materiality of certain ESG risks on the underwriting risks in Life and Health insurance business, and provide examples for consideration to mitigate such risks
- Address growing concerns by stakeholders across society (e.g. NGOs, investors, governments) on ESG risks and articulate the peculiarities of the insurance business
- Demonstrate the valuable role the insurance industry plays in the global economy and society, and strengthen the industry’s contribution to sustainable development through enablement of collective coverage for individuals
The final guide launched in 2022.
Reference materials/links
|
|
|
|
|
|