Leading Sustainable Organizations
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Insurance companies are uniquely positioned to address environmental, social, and governance (ESG) challenges such as climate change and human rights issues in their roles as risk managers, risk carriers, and investors. There are many reasons why environmental and human rights risks are relevant for the insurance industry; similarly, the importance of climate change-related liability risks has also become devastatingly clear to industry leaders. The insurance industry as a whole has taken note and begun to make strides in identifying and addressing these challenges.
Much of this work is being steered by the Principles for Sustainable Insurance (PSI) initiative, launched by the UN Environment Programme Finance Initiative (UNEP FI) in 2012. The Principles serve as a global framework for the insurance industry to address ESG risks and opportunities. The PSI are now backed by more than 80 insurance and stakeholder organizations worldwide, including insurers representing approximately 20% of world premiums, and $14 trillion (USD) in assets under management.
According to Butch Bacani, who leads the PSI at the UN, “the number and the momentum of insurance industry initiatives that promote sustainable development have been growing over the years. They span multiple issues, from increasing access to insurance and building disaster resilience, to mitigating and adapting to climate change. This year offers a strategic opportunity for convergence. New global and national policies on sustainable development, together with private-sector commitments and multi-stakeholder partnerships, can help harness the full potential of the insurance industry in promoting economic, social and environmental sustainability.”
Last March, the PSI launched the United for Disaster Resilience statement, a commitment to help implement the new UN global framework for disaster risk reduction. It emphasizes that the insurance industry is “well placed to understand the economic and social impact of disasters (…) especially in the context of climate change adaptation, and the need for climate change mitigation.” The PSI has raised its ambitions still further, and is now calling on insurers to make voluntary commitments that build disaster resilience and promote sustainable development.