The unraveling of the world’s biggest climate alliance of insurance companies is regrettable, but it doesn’t mean the industry’s environmental, social and governance (ESG) goals have been curbed, one ESG risk expert told Insurance Business.
Growing anti-ESG sentiment has led to a slew of exits from the Net Zero Insurance Alliance (NZIA), a United Nations-backed initiative aiming to help the insurance industry transition to a low-carbon economy.
But Lisanne Sison, managing director of Gallagher’s ESG and ERM (enterprise risk management) practice, is optimistic that the industry can stay on track with its targets regardless.
“It’s unfortunate that it’s coming apart, but the thing I would emphasize is that none of those organizations have changed their individual commitment to their ESG aspirations,” said Sison.
Several leading members of the NZIA, pressured by US Republican politicians, have fled the alliance, which has shrunk from around 30 members to 17.
The GOP has accused the alliance of potential antitrust breaches and blamed it for higher insurance costs and gas prices. Munich Re, Zurich, Swiss Re, Allianz, and Lloyd’s are among the firms who have defected.
Speaking to Insurance Business, Sison said the NZIA exodus signals that insurers must take a more considered approach to their ESG goals.
“The collective is being impacted; that part is not ideal. But I don’t think that means ESG is dead,” she continued. “I think the way we need to approach ESG needs to be more thoughtful in terms of how we would tackle it as an entire ecosystem.”
The Gallagher MD, who has worked in enterprise risk management for over 10 years, acknowledged that organizations face mounting regulatory and social pressures to adhere to their ESG commitments.
She advocates a multilayered, “ecosystem” approach that accounts for multiple driving factors in ESG risks and takes a broader view of an organization’s stakeholder groups.
With only about half of its remaining members left, is there still a role the NZIA can play in the insurance industry?
“I think there’s still a place for it from a thought leadership perspective, for setting advice and guidelines,” said Sison. “But in terms of setting policy, I don’t necessarily think that they are the right body for that.”
The Gallagher MD believes the industry will still need to collaborate on climate issues, but the shape and form of that collaboration remains to be seen.
“I don’t have an answer to that question, but I do think that it’s still a need,” she told Insurance Business. “I’m confident that there will be a solution, it’s just going to be in a different form.”
Does Sison see another grouping replacing the NZIA?
“It’s hard to say,” she answered. “I think another group at this moment is unlikely because of the different political pressures, the different regulatory landscapes, and the different cultures worldwide.”
While there are very different appetites for ESG, and a lot of uncertainty about how to move forward, Sison said that shared objectives will help the industry find its next steps.
“It’s a matter of being able to collaborate with common goals and objectives, and figuring out the best way to move the insurance industry forward in a way that supports our clients’ transitions and helps them work through their ESG risks and challenges,” she said.
Do you agree with Sison’s perspective on the Net Zero Alliance? Share your comments below.