U.S. insurers investing 'significantly' in ESG

Nearly 70% of U.S. insurance companies have incorporated environmental, social and governance (ESG) factors into their investment consideration during 2021, according to a survey from Conning Holdings Ltd., which found most began accelerating ESG investing during the past two years.

“Over the past two years, I’ve seen Aspen’s approach to diversity and inclusion completely transform,” Sarah Stanford, Aspen Lloyd’s active underwriter of Syndicate 4711, said in a recent ESG report. “We’ve gone from being silent on the subject to now having a comprehensive program of work, including launching Employee Resource Groups so our people have a clear mechanism for influencing our D&I activities. We’ve invested significant time in building robust data to measure our progress, and take a partnership approach so HR experts work in collaboration with the business to embed real change in a sustainable way.”

While U.S. insurers have been quick to pick up ESG investing in recent years, the sector has been relatively slow to move in this direction when compared to European and Asia insurance companies. The challenging market environment, disparate and unaligned reporting standards and concerns about returns on these investments served to slow U.S. companies’ commitments to ESG, according to Conning.

“ESG has been and will continue to be central in conversations with clients about investment strategies moving forward, especially given an increasing regulatory and social focus on a range of issues including global environmental risks, social justice, diversity, and proper governance” Woody Bradford, CEO and chair of the board for Conning, said in a release. “Those who don’t keep up or ensure thorough implementation will be left behind as ESG grows in importance to all stakeholders.”

Protect your rep’

Nearly every respondent, 92%, said protecting the company’s reputation was the top reason for incorporating ESG investing. Other leading considerations were employee and customer concern, regulatory requirements, leadership concerns about social issues and the potential for gaining a competitive advantage.

The survey also found that while many see short-term risk in ESG investments, the potential benefits outweigh those perils for nearly 70% of companies. Further, 80% said ESG is an important aspect when assessing investments.

In addition to investments, more than 40% of respondents said their companies produce a sustainability report, have a social investment policy, established a DEI council, have a diversity officer and developed a governance investment policy.

“Despite the many considerations, resources, and challenges involved with implementing ESG-focused investing, insurers seem to understand that, ultimately, the benefits outweigh the costs,” Matt Daly, head of corporate and municipal teams at Conning, said in a release. “Given the responses we saw in this survey, ESG is likely to become an even more central part of insurance asset management in the near future.”