It may only have been three months since Katie Lennon (pictured) stepped into the newly created position of head of ESG, UK and Lloyd’s for AXA XL but it’s a natural fit as her commitment to ESG and sustainability is deep-rooted. For Lennon, who has always sought to work with a view to creating a genuinely positive impact, it has been a valuable experience to come into the financial services industry and broadcast that acting with purpose is not incompatible with acting for profit.
It’s exciting to be taking on this opportunity, she said, particularly as it reflects the real commitment from AXA XL’s UK leadership team to this timely topic. ESG is so often used as a buzzword across the industry right now, Lennon noted, which is why it has been so positive to see the engagement and commitment of AXA XL’s leadership team. She will be working closely with the UK team in the near term to make sure that the right structures and processes are put in place to bolster the business’s ever-evolving ESG agenda over the coming months and years.
“There are three key areas of focus for me,” she said. “The first that companies can act for both purpose and profit and that there’s a huge role for risk managers to play in that. The second is that ESG is so much bigger than climate. Climate is where our industry has really been focused, but I’d love to [broaden] that conversation. And the third is that as ESG data, both in terms of its quality and completeness, is rapidly improving, that has a huge role to play in what we’re going to be doing as an industry and as AXA XL.”
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Touching on the first point of focus, Lennon highlighted that so many people think acting with purpose forgoes profit, which goes against the significant research out there which demonstrates the very opposite. She cited research done by the FSTE 100, which demonstrates that the year on year revenue growth of companies that align their actions with purpose is materially stronger than those that don’t. Therefore, what the industry needs to be doing now is demonstrating how these things go hand in hand.
“One of the things I’ll also be doing in this role is bringing to life within our UK and Lloyd’s business the AXA Purpose,” she said. “That’s one of the really wonderful things about AXA, it has always acted with purpose. So, it’s about making sure that we’re bringing that to life across our UK colleague population, and also making sure that we’re bringing that to the London market.”
Shifting her attention to her second core area of attention, Lennon emphasised that climate is only one part of the ‘E’ in ESG. As an industry, as a society, even as people working within ESG frameworks, she said, it’s easy to be accused of neglecting other environmentally related concerns not due to any lack of care but rather because the world is now dealing with one of its biggest and most immediate concerns – the climate crisis.
But the truth remains that there’s so much more to the ‘E’ in ESG, she said – it’s also about dealing with waste, plastic pollution and issues around water. There’s so much else to think about with regards to environmental considerations and it’s the responsibility of risk managers to make sure that they’re ahead of those conversations. This extends to the ‘S’ of ESG as well, as a lot of countries are still reeling from the impacts of COVID and the call for insurers and risk managers alike to act with purpose has come to the fore during the last 20 months.
“People have time to sit and reflect and think about what it is that they want from their jobs, what they want from their employers, and what it is that they’re doing personally, as well,” she said. “So, what I find most interesting about the S piece is that, particularly [with regards to] ESG data providers, you can score very well in having social and human rights policies, or diversity, equity, inclusion policies.
“But what’s great is to see those go hand in hand with action. It’s very simple to say, ‘we’ve got all of these policies’, but to demonstrate action and also progress over time - that to me is what’s really important on the ‘S’ side.”
Given that the industry is dealing with the climate crisis and so much regulatory pressure around that piece, a lot of action is being driven on the climate front as opposed to the other areas she has outlined.
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“However, I am seeing really fantastic signs of people starting to broaden the conversation,” she said. “It’s challenging because ESG is a bit of a hot topic now, but it’s only really something that people have been talking about over the past 18 to 24 months in a very commercial and business-focused way. So, we can’t have an expectation that all of our executives are fully up to speed with it.
“So, for me, it’s about making sure the biggest and most immediate issues like climate are there but that all the other issues are also tabled. It’s up to both insurance companies and risk managers in other companies and the clients that we serve, that we consider our priorities when it comes to ESG. It’s really important to make sure that we understand, as an industry, where our greatest impact can be.”