ESG strategy: Marsh head on an ever-shifting landscape Insurance BusinessESG strategy: Marsh head on an ever-shifting landscape Insurance BusinessESG strategy: Marsh head on an ever-shifting landscape Insurance Business
Impact Investing Forum 2023
London. Dec 05-06, 2023.
Barnes, who has worked in the environmental field for more than 20 years, has seen firsthand how the priority, volume, and focus on everything related to climate and sustainability have increased over the past 12-18 months. She explored whether this was directly related to COVID-19. She pointed out that there had been an increase in inquiries before the pandemic. The COPs and the work of TNFD were instrumental in providing a focal point for media and industry. She stated that climate and weather events are the big elephant in the room. People are feeling the effects of them. “So, I believe it’s a combination if factors that are increasing the number of inquiries. COVID is invariably one of them. People have also seen the weaknesses in their supply chains and had to think deeply about their health. This was in addition to the resilience that people have shown in the face so much hardship. There is a greater demand for thought leadership in ESG matters, Barnes stated, and brokers are the ones who can provide that insight. This is closely tied to what Barnes enjoys about her job in the sustainability sector. She finds it exciting to face new challenges every day and to be able to creatively and proactively connect different dots to solve problems. It’s an exciting industry. And because sustainability is so broad, it affects so many offices of a company. Procurement must have an ESG strategy, legal has to, and risk management must. Because it affects the entire business, it is not a risk issue that one operation can take on. Read more: World Economic Forum reports about business leaders’ top risks. Barnes and her team look ahead to offer insight and advice on unrealised exposures. This is a central part of what Barnes does, as Marsh’s annual sponsorship of the World Economic Forum’s global risk report. The report tracks the changing priorities of risk managers who, she said, have to constantly reevaluate the cost-benefit ratio for risk intervention. She stated that some of the risks we are currently experiencing [previously] seemed far enough away that they didn’t pass the cost-benefit ratio of risk intervention measures at that time. “These events have shown that even the most unexpected of events can have an extraordinary effect. We should re-evaluate certain cost-benefit decisions in order to ensure that our businesses are more resilient to any future uncertainty. Read more: Insurance companies – It’s time for insurance firms to get serious about ESG. The challenge is for corporations to shift their attention away from individual threat factors that could impact their operations and instead focus on the overall resilience of their business system. Marsh’s role in risk management is to help them understand the risks they face and to mitigate the challenges that a lack of a consistent reporting framework about sustainability presents. “This begins with messaging, such as: “How should I communicate our ESG message in an underwriting community that is increasingly interested in it?” “We encourage our clients tell their stories and then it’s another challenge to the insurer to digest that information in very different ways.” she said. We can offer support to clients on what information to share and how ESG is viewed from a risk management perspective. She said that there have been instances in the cycle when risk managers were ordained as insurance buyers, rather than actually owning risk. Although this is not true in all organizations, some organisations don’t value the role as it is – a role that adds value, resilience, and manages risk. The importance of the role of the risk manager is being given more attention than ever, due to the many challenges businesses are facing. She noted that “it’s not that it’s become more of a critical responsibility” but that it is now being seen as the critical responsibility that it should have been.