Insurance companies are in an interesting position when it comes to ESG/Sustainability. Like with other sectors, it appears as though especially midsize-to-smaller U.S. carriers are late to the party in competitive ESG/Sustainability positioning. But that might be changing.
As we frequently read these days, ESG is here to stay and is solidly in the mainstream.
How might we conclude that U.S. insurance companies are behind?
Many reading this blog are familiar with the Dow Jones Sustainability Index (DJSI), UN Principals for Responsible Investing (UNPRI) and what was previously called the Carbon Disclosure project but now just goes by CDP. Chances are that fewer may be likely aware of the Principles for Sustainable Insurance (PSI) initiative. Pertinent information from these organizations and a few AlphaSense and internet searches include:
Aflac [$AFL], AllState [$ALL], American Financial Group Inc. [$AFG], Everest RE [$RE], MetLife [$MET], Travelers [$TRV], The Hartford [$HIG] and Torchmark Corporation [$TMR].
How might we also conclude that U.S. insurance companies seem to be catching-on?
According to MIT, “The insurance industry as a whole has taken note [of ESG/Sustainability] and begun to make strides in identifying and addressing these challenges.”
Quick scan of a list of U.S. insurance trade associations suggests more than a few are including ESG/Sustainability in their body of knowledge material, e.g. American Risk and Insurance Association (ARIA), American Society of Appraisers (ASA), National Association of Insurance Commissioners (NAIC).
From an insurer’s risk standpoint, think about exposure to subscribing companies that might occur in environmental, social and/or governance claims situations. From an insurer’s company return standpoint, think about missing competitive positioning opportunities to grow business by ignoring increasing B2B and consumer stakeholders’ attention to ESG related communications and inquiry responsiveness.
It appears to be time for more U.S. insurance companies’ leadership to catch-up and harness ESG/Sustainability for your company’s competitive advantage.
Pamela Styles is principal of Next Level Investor Relations LLC, a strategic consultancy with dual Investor Relations and ESG/Sustainability specialties.