Industry Updates
Amid Move Toward More Disclosure of ESG Risks, Insurers Begin to Realign Talent, Structures

• Frank Klimko
• May 2021
• 

AM Best: Increased legislative and regulatory emphasis on climate risk will prompt U.S. insurers and reinsurers to accelerate their ESG efforts.

In a market moving toward greater disclosure of environmental, social and governance risks, carriers are beginning to realign their staff and corporate structures to better respond to regulators and investors seeking data on how insurers approach social responsibility.

“It has brought control points to what otherwise historically has been viewed as just being a good corporate citizen,” said Fred Crawford, president and chief operating officer, Aflac Inc. “The analogy I like to use, as a matter of business operations we always have to manage our insurance company to do the right thing. What ESG now does is say, 'Hey, you've got to answer and disclose to constituencies.'”

Other carriers have taken a different path. Allstate last year created the role of chief sustainability officer, the first such position in the company's 90-year history, and appointed former company corporate counsel Susan L. Lees to fill it. Scor SE Chief Financial Officer Ian Kelly said his company plans to diversify its leadership ranks. He said the group's board of directors set a target of 20% female representation on the executive committee in 2021 and 30% by the end of 2025, compared with 10% today, he said. The board also set a target of 27% of women among Scor's most senior partners by the end of 2025, up from 19% today, said Kelly.

In a commentary earlier this year, AM Best said President Joe Biden's decision to rejoin the Paris Agreement, along with an increased legislative and regulatory emphasis on climate risk, will prompt U.S. insurers and reinsurers to accelerate their ESG efforts.