With each passing year, more and more investors, consumers and other stakeholders advocate for sustainable, moral and ethical business and consumer practices. These concerns have led to the adoption of programs to manage and disclose the performance of companies according to environmental, social and governance (ESG) criteria. European governments have made the publication of ESG information mandatory. Some states have already developed regulations and various federal agencies are assessing potential risk assessment disclosure requirements for some or all of the ESG factors. The insurance industry has been a key part of the ESG movement and will be at the center of ESG regulation in the future.
Each of the three ESG pillars has its own considerations but interacts to support a sustainable business. The environmental component examines how a business acts as a steward of its natural environment. Key issues include climate impact and risks, and waste and water management. The social component examines how a business treats people and its community by focusing on issues such as diversity, equity and inclusion. The governance component examines a company’s management systems, including issues such as transparency and corruption.