Japanese insurers take balanced approach to ESG – report

Insurers move to reconcile pressures from ESG activists and government strategies with policyholders’ interests

Japanese insurers take balanced approach to ESG – report


By Abigail Adriatico

Japanese insurers have adopted a balanced approach when it comes to environmental, social, and governance (ESG) factors, according to a report by Fitch Ratings. The report said that the balance came from the ability of insurers to reconcile the pressures received from ESG activists and government strategies with the interests of policyholders.

According to Fitch Ratings’ “Japanese Insurers Tread the ESG Tightrope” report, in recent years, insurers in Japan have been regarding ESG considerations such as issues concerning the environment to be important as Japan has set its national ambition to attain net-zero CO2 emissions by 2050.

Japanese insurers have also begun to disclose their target CO2 emission reductions in their medium-term business plans that are posted on their websites, which showcases their efforts and progress.

They have also been closely monitoring the progress of Europe and North America when it comes to similar goals. Insurers were also actively participating in prominent initiatives concerning ESG in order to help in shaping the criteria for activities related to it.

Fitch anticipates that Japanese insurers will continue to incorporate ESG considerations in their enterprise risk management frameworks, the report said.

Insurers were also more likely to efficiently tread through the complexities of the dynamics of ESG as they take into account factors such as those supportive and against ESG movements, the government’s stance on “transition finance,” as well as the risk-return profiles of investments related to ESGs.

“We expect that Japanese insurers will invest in ESG-related assets only when they present an appealing risk-return profile,” Fitch said in its report.

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