How to develop and integrate an ESG strategy

How do (re)insurers tackle incorporating ESG into decision-making? Read Moody's Analytics new joint paper with the Chaucer Group

Authors

  • Hayley Maynard - Chaucer Group
  • Simon Tighe - Chaucer Group
  • Paul McCarney - Moody's Analytics
  • Salman Siddiqui - Moody's Analytics

Partnered content

Environmental, Social and Governance issues have undoubtedly become key priorities for (re)insurers. The next step is for (re)insurers to start thinking about how they tackle, and indeed can benefit from, incorporating ESG into decision-making across their entire business, including underwriting.

Auditable, purposeful and authentic: a recipe for success

A successful ESG strategy must be auditable, purposeful and authentic. (Re)Insurers need to carefully consider their priorities, who they really are, what they care about, and what they want to achieve.

One effective approach is a strategy that includes a balanced scorecard. This should be "co-designed" by all key stakeholders, with the primary objectives and metrics set out from the start. The scale of this task can seem a daunting prospect, which is why Moody's Analytics and Chaucer have drawn on our combined experience. Chaucer has developed a Balanced Scorecard and Moody's Analytics provided data and analytical capabilities. Together, we introduce this step-by-step guide to help insurers create their 'own view' of ESG and ultimately place ESG at the heart of their business.

A step-by-step guide to creating an ESG strategy for the whole business

  1. Identify risk criteria across E, S, and G
  2. Define data points that measure each of the risk criteria in scalar and vector ways
  3. Define what is important and weight the risk criteria, and underlying data points accordingly
  4. Find a partner who can provide the data and the platform to build and implement your ESG balanced scorecard
  5. Embed into the decision making across all functions of the business
  6. Measure
  7. Build a data roadmap to ensure quality
  8. Assess
  9. Define targets and associated metrics

The full paper explores these in more detail.

Why start now?

ESG, as a new risk factor, creates risk but also opportunities for (re)insurers to grow their business. It has the potential to be another lens through which to view risk selection and appetite. If implemented properly, this could open the door for (re)insurers to build competitive advantage.

 

Download the full paper here

 

Moody's have been engaging with the market and taking a partnership approach with our commercial P&C customers to develop a solution that considers ESG in the risk selection process. To find out more about how Moody's ESG Insurance Underwriting solution can help your business, contact us today.