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3) Role model ESG in your business model
Climate risk must become a boardroom priority and seen as brand enhancing in the fight for new business, and to attract and retain talent. There is a new perspective amongst insurance leaders toward ESG where sustainability ceases to be a problem to be fixed and rather that it is seen as a critical part of their growth strategies.
ESG is changing insurers’ business models. Concerns about the protection gap are partially mitigated by the rise of captives. But the expectation is that business models will change and businesses will cease to operate as they do now – for the better.
Market trend data shows that many progressive insurers are phasing out high-emitting counterparties and divesting from sectors such as coal, while integrating ESG into their investment decision making.
Progressive insurers are reassessing their investments – developing risk appetites based on net zero and implementing carbon reduction pathways. However, more importantly, they are also supporting counterparties in their transition to net zero via feedback in the due diligence process.
At the same time insurers are actively seeking to invest in assets that generate positive ESG outcomes that align to UN sustainability goals.