UK businesses, regardless of their sector, are experiencing increasing pressure and scrutiny from investors and regulators to show that they understand and have a grip on existing and emerging ESG issues.
As ESG moves to centre stage, identifying, measuring, and managing exposures is becoming paramount.
ESG matters to the ‘triple bottom line’
People
• Stronger employee value proposition: Former Unilever CEO warns that employees will walk away from businesses with weak values, based on a survey of 4,000 employees in the UK and USA. ESG integration may create a sense of purpose for many motivated employees and can help attract new talent, hence reduce key people risk
• Reduce disruptions due to working conditions in your value-chain: Living wage, good health and safe working environment and diverse and inclusive supply-chains will face lower disruptions Planet
• Climate action in line with the UK Government’s commitment to become Net Zero by 2050 pre-empts any future legal risks
• Cost of environmental non-compliance and damages is increasing multi-fold
• ESG activism on non-adhering firms could be disruptive to their business Profit
• Stronger customer value proposition: ESG integration will be attractive to the customers demanding green credentials from insurance brokers
• Access to green finance and rebates: various plans and policies to transition to green economy can be found on the UK Government website: //www.gov.uk/government/publications/uk-government-green-financing
• Retaining agency facilities with large insurers who are putting green at the top of their agendas
• Aligns with FCA (Financial Conduct Authority) work on building ‘good’ culture that sets the right tone for the business
Planet
• Climate action in line with the UK Government’s commitment to become Net Zero by 2050 pre-empts any future legal risks
• Cost of environmental non-compliance and damages is increasing multi-fold
• ESG activism on non-adhering firms could be disruptive to their business
Profit
• Stronger customer value proposition: ESG integration will be attractive to the customers demanding green credentials from insurance brokers
• Access to green finance and rebates: various plans and policies to transition to green economy can be found on the UK Government website.
• Retaining agency facilities with large insurers who are putting green at the top of their agendas
• Aligns with FCA (Financial Conduct Authority) work on building ‘good’ culture that sets the right tone for the business
You can also refer to the UNEP FI Principles for Sustainable Insurance (PSI), of which BIBA is a signatory, to understand more about the context and importance for the insurance industry. The following excerpt from PSI highlights the purpose of the global framework:
“The vision of the PSI Initiative is of a risk aware world, where the insurance industry is trusted and plays its full role in enabling a healthy, safe, resilient, and sustainable society. The purpose of the PSI Initiative is to better understand, prevent and reduce environmental, social and governance risks, and better manage opportunities to provide quality and reliable risk protection.”