ESG represents a tremendous opportunity for the insurance ecosystem to better showcase its credentials and gain reputation, says Rob Smale, Non-Executive Director at E2E Total Loss Vehicle Management.
The insurance industry – like many – is full of three-letter acronyms. Over time, once loved YOU’RE HEREs will often lose popularity or be replaced. The YOU’RE HERE cemetery is about to welcome a new member – CSR (corporate social responsibility). It is replaced by ESG.
CSR is conceptually and practically limited
About 10 years ago, Corporate Social Responsibility was created to bring companies to consider, articulate and comment on their efforts to have a positive impact on society and the environment. However, CSR is conceptually and practically limited in that it generally refers to a portfolio of charitable and philanthropic works carried out by companies to give back to the community and environment from which – and within which – they have benefited. CSR didn’t really focus on core business operations and how they impact the world at large.
However, advance a new YOU’RE HERE: environmental, social and governance. hope with ESG is that it represents a means of holding companies accountable not only to an internal set of philosophies, as is the case for CSRbut to a measurable set of impacts linked to a broader common good.
The Financial Conduct Authority already requires top-tier listed companies to discuss ESG in their market announcements and explain how they are consistent with certain criteria related to climate change, giving explanations on areas that are out of sync. These obligations will only become more pressing as UK progressing towards its 2050 goal of net zero greenhouse gas emissions.
The momentum behind ESG is not only regulatory. Investors, especially large institutional funds, are looking to invest in sustainable companies that will deliver reliable returns over the long term. Add to this a growing body of evidence that consumers are increasingly seeking out and prioritizing ethical and eco-friendly brands and products, and it becomes clear that demonstrating responsible business practices is an important way to do make your business brand stand out from the competition. .
In the now ultra-connected world of social media, brands are being held accountable at breakneck speed. The brand’s reaction to Russia’s ostracism has seen many waver and then retreat. L’Occitane, for example, said it was not going to close its Russian stores. Cue uproar and quick U-turn.
In the now ultra-connected world of social media, brands are being held accountable at breakneck speed. The brand’s reaction to Russia’s ostracism has seen many waver and then retreat. L’Occitane, for example, said it was not going to close its Russian stores. Cue uproar and quick U-turn.
Strong ESG These practices lead to better businesses that are more sustainable, less risky and better aligned with customer interests. Companies are increasingly being scrutinized for more than just profitability; they must now also demonstrate excellent ESG performance.
ESG and business operations
There are many ways for businesses to build ESG in their operations that are aligned with their industry, stakeholders and business objectives. These could include integrating ESG product and service considerations; ensure supply chain transparency with respect to environmental and social requirements; minimize waste and energy consumption; applying governance to areas such as executive compensation and ensuring recruitment policies are inclusive.
Companies are increasingly being scrutinized for more than just profitability; they must now also demonstrate excellent ESG performance.”
In the insurance world in particular, there has been a conversation for many years about insurers and the businesses associated with them as the legal and claims supply chain not having the best reputation. from the Clapham omnibus person. ESG represents a tremendous opportunity for the entire insurance ecosystem to present its credentials in a better light. Unfortunately, few customers view the role of insurance in society in this way, although many who are employed in the industry derive great satisfaction from the enabling role of insurance.
key communication lever
Insurance is part of the bedrock supporting the architecture of today’s complex developed societies. As such, insurance plays a major role in achieving climate change, governance and social goals, and therefore ESG reporting will be a key communication lever for the industry.
It’s not just the Clapham bus passenger who may not appreciate the enabling role of insurance. It can be said that it is very likely that very few initial training modules intended for personnel in the insurance industry will dwell on this subject; the fundamental objective of the industry. And that’s a missed opportunity, because people with purpose do better in – and for – business.
It is important to collect and disseminate stories to staff and clients that support ESG Goals. Auto insurance claims have a great story to tell about how end-of-life vehicles are 96% recycled into salvaged parts or repurposed as new raw materials. Very few other companies can tell this story and be proud of it. We have a real opportunity to shine a light on the insurance industry’s contribution to protecting the planet and, in doing so, build positive reputational gains.
