Environmental, Social and Governance (ESG) factors and criteria have never been more prevalent, particularly in the Insurance sector. While technological changes are reshaping products and markets, profound cultural shifts are also having a huge impact on the legitimacy and viability of businesses. Environmental and social concerns are now major drivers of consumer loyalty, brand strength and the acquisition of talent.
Where businesses in the past may have looked at a compliance or CSR mentality, now organisations are realigning themselves to be more purpose-driven.
Corporate purpose is at the heart of the leading corporate governance frameworks. Today, this goes well beyond mere stakeholder primacy. It is probably best defined by the British Academy: "profitably to solve the problems of people and planet, and not to contribute to them". Or, as Larry Fink puts it: "Purpose is not the sole pursuit of profits, but the animating force for achieving them."
It has never been more apparent that insurers and reinsurers around the world are displaying a deeper interest in Purpose and ESG factors. Some may argue that this is because regulators, such as the PRA, are imposing requirements on (re)insurers, others may argue it is because it makes good business sense. But whatever the reason, the rise of the prominence of ESG and Purpose is indisputable.
Most early adopters of ESG have typically been the large, European companies, but momentum is accelerating on a global scale. Exactly what embracing ESG and Purpose looks like for (re)insurers will largely depend on their individual approaches, but whatever happens, it is clear that 2021 is going to be an important year for ESG and Purpose in the (re)insurance industry.
In this series of five articles 'Global Insurance and ESG: Rising to the challenges of tomorrow', we will look at how environmental, social and governance considerations are affecting regulation and practice in the Insurance industry. We ask: what is the current regulatory landscape for sustainable finance in the UK, and what does the future look like? And what might this mean for insurers?
At Mishcon de Reya, ESG and Purpose is something that is very close to heart. Launched in 2020, Mishcon Purpose is Mishcon de Reya's new sustainability practice providing specialist advice and purpose-driven ESG insight to help our clients navigate the opportunities and risks presented by a complex landscape.
As lawyers, our first instinct is to look after our clients and their interests. In today’s rapidly changing and inherently uncertain world, we believe we do this best by being part of a wider community, which brings different perspectives to intractable challenges. Our community is strengthened by being part of networks and initiatives. For many of these, we are proud to be the legal partner, bringing our technical and professional skills as well as our passion. These include:
- The Chancery Lane Project
- Legal Services Alliance
- B Lab
- Athens Democracy Forum
In the next article of this series, Lydia Kellett explores the sustainable finance landscape in the UK. Sign up here to receive this next article.