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February 23, 2022 Thomas Spiller
Welcome to our ESG roundup, keeping you up to date on the insurance industry’s most significant ESG-related news. The consensus this month: Industry bodies flag ESG importance whilst insurers ramp up commitments.
Read our summary and analysis below.
Rising importance of ESG
- Chaucer, Moody’s join up for ESG scorecard (Insurance Business) Read more
- Climate risk identified as the top London Market challenge, IUA Survey shows (Insurance Journal) Read more
- LIIBAs 2022 agenda responds to unprecedented pace of change (Actuarial Post) Read more
- 77% of senior execs lack confidence in firms’ ESG approach (Reinsurance News) Read more
ESG commitments
- Everest signs the UN Principles for Sustainable Insurance (Business Wire) Read more
- NZIA and net zero (re) insurers commit to further climate targets (Reinsurance News) Read more
- QBE joins UN-convened insurance climate group (Insurance News) Read more
- Tokio Marine Holdings joins the Net-Zero Insurance Alliance (Reinsurance News) Read more
- Aviva powers up renewable energy insurance as it taps into net zero commitments (Aviva news release) Read more
Negative press
New ESG propositions
- QBE launches Sustainable Energies Unit (Insurance Journal) Read more
- Chaucer launches dedicated renewable power team (Insurance Business Mag) Read more
- AllianzGI creates unit focused on investing in companies with measurable ESG impact (Insurance Journal) Read more
- Marsh uses Risilience to support client climate reporting (Emerging Risks) Read more
- kWh Analytics raises $20m for ESG Insurance (Reinsurance News) Read more
Monthly summary: Industry bodies flag ESG importance whilst insurers ramp up commitments
This past month has been more of the same, as insurers (Everest Re, Tokio Marine, QBE) make external commitments to the market through the PSI and NZIA following a wave of commitments last year. Incredibly the NZIA now counts 21 insurers and reinsurers as members up from the founding 8 in July last year. This is a strong reflection of the increasing priority being placed on ESG (especially climate change) by executives and board across the industry. Reflecting this, in a recent International Underwriting Association (IUA) member survey climate change was identified as the biggest risk facing London market insurers.
Some are ahead of the curve such as QBE who recently launched a sustainable energies unit, or Chaucer who in addition to their own renewable energies’ unit, announced this month that they were teaming up with Moody’s to develop a new ESG scorecard incorporating 158 different ESG factors. The scorecard will be used to both assess companies ESG credentials, as well as to help coach clients to improve their own ESG scoring – something which we believe is critical in making meaningful change.
However, despite all this action that we are seeing, 77% of executives in a recent Willis Towers Watson survey are ‘not confident’ in their own companies’ ESG approach, which poses a reputational risk to the company and those executives in charge. We saw this just last week, as environmental activists accused John Neal of not doing enough to align the policies of Lloyd’s with the wider insurance and reinsurance industry. This will continue to be under the microscope as managing agents outline their ESG commitments and framework to the marketplace this year.
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Chaucer, Moody’s join up for ESG scorecard (Insurance Business)
Global specialty (re)insurer Chaucer and the global integrated risk assessment firm Moody’s are teaming up to develop a new ESG scorecard. The scorecard will enable Chaucer to assess companies ESG credentials using property data and 158 different factors, including water management, air pollution, diversity and inclusion and local infrastructure. Critically Chaucer made it clear that the tool can be used by other companies in its ecosystem to help them improve their own ESG performance.
Climate risk identified as the top London Market Challenge, IUA Survey Shows (Insurance Journal)
Recent International Underwriting Association (IUA) survey of 44 member organisations found climate risk the top challenge facing London market insurers. 27% respondents selected climate change and wider environmental, social and governance (ESG) issues above regulatory change, COVID-19 and working from home, and 45% selected climate risk as the most important emerging risk for insurance coverage – up from 7% four years ago.
LIIBAs 2022 agenda responds to unprecedented pace of change (Actuarial Post)
The London and International Insurance Brokers’ Association aims to put London insurance brokers at the heart of the debate about how best to achieve net-zero carbon emissions. In its recently published 2022 agenda LIIBA outlined that it’s up to ‘more than just banks’ to get involved if the UK Governments goal of making London a global green finance hub is to be achieved.
77% of senior execs lack confidence in firms’ ESG approach (Reinsurance News)
A recent Willis Towers Watson’s survey found over three quarters of the 500 global executives interviewed are ‘not confident’ in their companies’ approach to ESG topics. Furthermore 75% of executives said that their companies do not hold their board members accountable for reputational and ESG risks, something that WTW said created a negative perception around a lack of commitment. The survey covered 500 global executives from 250 major companies across 20 countries and multiple industries.
Everest Signs the UN Principles for Sustainable Insurance (Business Wire)
Everest Re announced that they have become an official signatory of the UN Principles of Sustainable Insurance, joining 11 other Bermudian or North American based insurers. Launched in 2012, the PSI provides a basis for insurers to address ESG risks and opportunities, as well as offering a global roadmap to explore and develop innovative risk management solutions for ESG issues. Most of the world’s leading insurers are signatories. In addition to the PSI, Everest was one of the first Bermuda-based (re)insurers to become a signatory to the UN Principles for Responsible Investment. Nearly 79 percent of Everest’s total assets are managed by other UN-PRI members.
NZIA and net zero (re) insurers commit to further climate targets (Reinsurance News)
NZIA and their members (e.g. Swiss Re, AXA, QBE, Aviva), have committed to a further set of climate targets above and beyond their net-zero emission target by 2050. The new commitment sees a firm decarbonisation range put in place for absolute portfolio emissions reductions for 2025 (22% to 32%) and 2030 (49% to 65%). The new targets are an extension of the original ambition, reflecting ‘the speed at which all parts of the economy need to decarbonize’.
QBE joins UN-convened insurance climate group (Insurance News)
QBE have announced that it has now become a member of the UN’s Net Zero Insurance Alliance (NZIA), a bloc that unites (re)insurers to support the green transition to Net Zero carbon emissions. QBE have stated that they look forward to working with the insurance industry to help define the methodology needed reach Net Zero by 2050.
Tokio Marine Holdings joins the Net-Zero Insurance Alliance (Reinsurance News)
Tokio Marine Group in January announced that they have joined the NZIA and will promote measures to combat climate change through both mitigation and adaptation. This is a natural progression for Tokio Marine who have launched new insurance products in line with the Paris agreement and have achieved carbon neutrality within its business activities for the last eight years.
Aviva powers up renewable energy insurance as it taps into net zero commitments (Aviva news release)
Aviva recently announced that their renewable portfolio is now more than 150% of the size of the fossil fuel power generation book it exited in 2018. This has been driven by onshore win, solar power and becoming a UK leader in battery storage insurance. Aviva has announced that they are targeting a top three position as a renewable energy insurer in the London Market by the end of this year.
Activists claim Lloyd’s CEO John Neal is failing on market’s ESG commitment (Reinsurance News)
Climate activists have criticised Lloyd’s CEO for failing to match the marketplace’s policies and mandates with the rhetoric that they have continued to push regarding their commitment to ESG. Neal is accused of labelling Lloyd’s ESG policy as a “provocative discussion document” which fails to reflect the sentiment expressed in Lloyd’s official documents. Moreover, Lloyd’s are also accused of failing to align its policies with a recent International Energy Agency (IEA) report released on coal mines and oil & gas fields.
Insurance firms make massive North Sea oil investment – and climate lobbyists aren’t happy (Insurance Business UK)
According to campaign group Uplift and non-profit research firm Profundo, 22 of the world’s biggest insurers invested £6.3bn in the oil and gas industry in the North Sea. This revelation sparked backlash from environmental lobbyists, whilst insurers retorted that investing a large sum allows them to engage with and help coach companies towards improved sustainability credentials.
QBE launches Sustainable Energies Unit (Insurance Journal)
QBE has set up a sustainable energies unit that will underwrite businesses transitioning to low carbon energy. The new unit based in London, will leverage existing capabilities across construction, operations, P&C and D&O liability lines as it brings ‘additional levels of service and support to new and existing energy customers looking to make meaningful changes to their business with a greater focus on sustainability’.
Chaucer launches dedicated renewable power team (Insurance Business Mag)
Chaucer have recently created a team focusing on renewable power as a crucial part of a strategy to broaden its energy division to support their oil and gas clients on their transition towards sustainable energy production. The energy division at Chaucer will now be split into two teams, renewable power and natural resources.
AllianzGI Creates Unit Focused on Investing in Companies with Measurable ESG Impact (Insurance Journal)
Allianz’s asset manager arm, Allianz Global Investors, has set up a new unit of 12 employees focused on “impact” investing as part of its sustainable investing drive. AllianzGI will look to invest in private companies that are ‘helping solve environmental or social issues’. This move follows other PE and asset management firms, such as Summa Equity and TPG.
Marsh uses Risilience to support client climate reporting (Emerging Risks)
Marsh recently announced a partnership with data analytics platform Risilience to support clients in understand their climate change risks and meet their obligations in accordance with the Task Force on Climate-related Financial Disclosures. The collaboration enables Marsh clients to map their journey to net zero, monitor their progress, and gain actionable insight.
kWh Analytics raises $20m for ESG Insurance (Reinsurance News)
kWh Analytics, a company that tailors insurance policies for renewable energy installations such as wind and solar, has raised $29m in Series B funding. kWh is taking a different approach to many insurers, by developing data-driven insurance solutions designed specifically for zero-carbon assets. Its first product, the Solar Revenue Put, currently protects over $3bn worth of solar power plants. The additional funding will be used to build additional solutions to support solar, wind and storage asset owners, as well as to expand into new international markets.
About the author
Thomas Spiller, Senior Manager
Tom is a Senior Manager at Oxbow Partners and has a range of experience across strategy, growth, digital and operating model projects in Europe, the UK and the London Market. Prior to Oxbow Partners, Tom spent three years working in the Strategy team at Suncorp, Australia’s largest general insurer. Tom has dual bachelor’s degrees in Economics and History from the University of Queensland.
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