Antonia comes to JLK Rosenberger on secondment as part of the PKF Global Opportunity (PKF GO) program. Her education and specialization at her firm in Dusseldorf, Germany, focus on corporate sustainability and reporting, ESG research, and consulting. Her background provides a unique EU perspective on ESG.
Some insurance entities embrace ESG reporting. Others are resistant. Like it or not, agree with it or not, federal and/or state regulations, as well as rating agencies, might force compliance with some aspects of ESG. To help those who have not started to report on ESG initiatives, we offer some helps below to get started.
- A crucial element of ESG reporting represents the analysis and management of risks, including those arising from social aspects (e.g., changes in labor law, consumer protection regulations) and environmental issues (e.g., floods, hurricanes, etc.) and the impacts of the company’s activities on people and the environment. Thus, a good starting point is considering the business model first and analyzing how susceptible it is to the effects of climate change and what impact business activities have. At its core, the principles of mutualizing and managing risks are in the DNA of insurance companies.
- When determining what information is relevant, it is helpful to remember who the ESG report’s addressee is, i.e., to whom the information is provided. At first glance, this question seems simple, as companies generally know their stakeholders. In an effort to understand the stakeholders’ expectations, conversations should take place early. Identifying key stakeholders and their interests is not a one-time process. Therefore, stakeholder involvement should be regularly reassessed because interests change over time.
- Those who understand and know how to serve their stakeholders have a competitive advantage – they know what is required and can act accordingly. Addressing one’s own stakeholder management in the context of ESG reporting should not only be seen as a means to an end to prepare a report that meets the legal requirements but should also serve to identify the opportunities that go hand in hand with it.
- Remembering that developing a good ESG report takes time and cannot be completed on short notice is helpful. Instead, it is a process repeated every year. To minimize the risk of greenwashing, delivering high-quality information and assurance are essential in building trust and providing stakeholders with credible, relevant, and transparent information.
- Systems and processes for collecting relevant ESG data must be established and tested before they go live. This is especially true for Scope 3 emissions, which require collecting data from outsourced providers, vendors, and clients. Initially, it may be helpful to focus on the essential targets and metrics linked to the strategy and purpose to keep the first report manageable. There are many different tools and software options for calculating emissions, including those developed by SAP, Boston Consulting Group, Carbon Trust, or Sphera.
For more information about starting the ESG reporting process in your organization, take a look at our webinar, “ESG for Insurers: Like It or Not, Here It Comes.”