ESG Takes Center Stage as Insurers Set Sustainability Goals and Restrict Cover to High Polluters

DBRS Morningstar released a commentary titled “ESG Takes Center Stage as Insurers Set Sustainability Goals and Restrict Cover to High Polluters” that discusses rising Environment, Social, and Governance (ESG) awareness. Insurance companies are starting to respond more decisively by setting ambitious emissions targets for themselves and restricting cover for some industries like high polluters in the energy and oil and gas sectors, notably the tar sands in Canada and coal.

The commentary highlights the following:
-- Insurers are setting ambitious emissions targets and restricting cover and investments in the oil and gas sectors.
-- An increasing number of insurers are signing on to follow the United Nations Environment Programme Finance Initiative's Principles for Responsible Investment.
-- With more than $36 trillion in assets, the global insurance industry will play a key role allocating investments to economic sectors that better align with long-term sustainability goals.

“With the continued interest in the adverse effects of climate change and the need for concrete action, investors, regulators, and customers are beginning to appreciate the relevance of ESG factors in fostering a sustainable global financial system.” says Victor Adesanya, Vice President, Insurance. “The growing momentum of sustainable investment among insurers will facilitate the transition toward a low-carbon economy globally, which will help mitigate the effects of climate change. DBRS Morningstar expects that many insurance companies will adapt to sustainability frameworks in the future with the trend accelerating in the near term.”