ESG in the Insurance Industry: Environmental and Investment Considerations for Insurers
November 18, 2021
HARTFORD, CT – November 18, 2021 – ESG (environmental, social, and governance) concerns have been increasing for years. Insurers are under pressure to incorporate ESG criteria into their investment strategies. Insurers, especially property-casualty insurers, are also under pressure to refrain from offering any insurance products to carbon-intensive industries, particularly the coal industry.
The Conning Focus Series, “ESG in the Insurance Industry: Environmental and Investment Considerations for Insurers” examines the broad range of strategic options insurance companies are using to evaluate investments, from simple measures such as negative screens that exclude certain investments, to increasingly complex measures such as developing a proprietary ESG score, balancing the options of divesting or engaging with companies, and investing in green bonds. It also looks at how insurers are positioning themselves with respect to insuring coal and other industries that are seen as detrimental to the environment.
“Insurers rely heavily on their investment income as a key portion of their revenue. Their investment options are already constrained by regulations and the nature of their business and adjusting investments for ESG adds an additional layer of constraint. Some claim that investing in an ESG-mindful way actually is in the ultimate best interests of the policyholders but eliminating investments in industries that are not ‘green’ will increase investment concentrations in the remaining industries,” said Terence Martin, a Director, Insurance Research at Conning
“Coal is the focus of much of the attention, but all industries face risks in a transition to a lower-carbon economy. Transition risks can result in a company or industry becoming unattractive to investors because it cannot respond quickly enough to the pressure,” added Steve Webersen, Head of Insurance Research.
This report is the third in a series Conning is releasing that examines how the insurance industry is integrating ESG concerns into their operations and reporting. The first installment provided an overview of ESG, current regulations and disclosures, and a summary of current efforts to standardize ESG regulations and disclosures. The second, examined social issues, including the important topic of DEI (diversity, equity, and inclusion). The final report will examine governance concerns.
“ESG in the Insurance Industry: Environmental and Investment Considerations for Insurers” is available for purchase from Conning by calling (888) 707-1177 or by clicking here.
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Conning (www.conning.com) is a leading investment management firm with a long history of serving the insurance industry. Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.
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