The standardisation of environmental, social, and corporate governance (ESG) metrics across the re/insurance industry is key, as it would help insurers to make more informed decisions, according to Chaucer analysts.
An industry-wide standard would further improve the quality of ESG disclosures by insured, experts also highlighted at the re/insurer’s Sustainability Forum this week, hosted in collaboration with Moody’s.
The agreement of standardised ESG metrics to be used by insureds will be key if the re/insurance industry is to drive real change, said Chaucer.
Sustainability specialists argue that uniform methods of measurement and reporting would enable better tracking of progress and increase trust.
A standard set of ESG metrics would also reduce brokers’ and clients’ burden, who are frequently asked to fill in different questionnaires, covering different criteria by a range of insurers, the re/insurer stated.
James Wright, Chief Risk Officer at Chaucer, said: “For ESG reporting to be robust and useful it needs to be consistent. Without that standardisation, our industry’s efforts to measure the ESG performance of our clients carry too much risk for error, inefficiency and frustration amongst customers.”
The Forum also covered other key industry issues related to sustainability, including the current state of ESG regulations, impact on performance, and the challenges of carbon offsetting and decarbonisation.
In order to address these issues, Chaucer has made a number of moves, and is proud for having established itself as an industry leader on ESG innovation.
Some ove these projects include its recent collaboration with Moody’s to develop an ESG Balanced Scorecard that measures the performance of clients and business partners.
The scorecard uses up to 158 unique data points to assign scores across various ESG factors – including on the disclosure of greenhouse gas emissions, health and safety of workers and boardroom diversity – to give underwriters better visibility of a client’s current ESG performance.
Wright concluded: “In hosting Chaucer’s first Sustainability Forum, our mission was to provoke vital ESG discussions with the wider re/insurance industry so that we can ensure a sustainable future for all.
“Across the industry, we must hold ourselves and our counterparties to account on crucial ESG factors, as sustainability becomes increasingly important to company stakeholders and customers alike.”
