The insurance industry plays a key role in promoting economic, social and environmental sustainability as risk managers, risk carriers and investors.
At present, there is no global guidance for the insurance industry on the integration of environmental, social and governance (ESG) risks into insurance underwriting—the process of evaluating, defining and pricing insurance risks. While the banking industry has, for example, developed the Equator Principles as its ESG standard for project finance—a specific type of financing—there is no equivalent insurance industry ESG standard for any line of business.
This project is an opportunity for the insurance industry to identify and define ESG risks from an insurance underwriting perspective, how to prevent and reduce such risks, and uncover opportunities. It has evolved out of other PSI-related projects, starting from the first-ever global insurance industry survey on ESG issues and insurance in 2009.
The project aims 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
This multi-year project includes a global consultation process and is expected to produce initial outputs in 2018.
The core project team currently includes:
- Allianz (Co-Lead)
- UN Environment’s PSI Secretariat (Co-Lead)
- Munich Re
- Temple University Fox School of Business
- University of Technology, Sydney (UTS) Business School
- West Chester University
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