“ Ultimately, an insurance
industry committed to
sustainability can help
realise more stable, thriving
insurance markets – and
make truly meaningful
contributions to global
sustainable development…”
UNEP FI: Global state of
sustainable insurance report
Ray-ann Sedres
Head: Sustainability
31 August 2012
CONTENT
The impact of ESG risks on insurers
Industry’s response to the changing risk landscape
(the journey has started)
Our learning and next steps
THERE IS A STRONG CORRELATION BETWEEN INSURANCE AND
SOCIAL, ECONOMIC & ECOLOGICAL LANDSCAPE
Ecological
Social
Economy
Our environment : provisioning &
regulating services
Individuals and communities
Businesses
Social, economic and ecological wealth
ensures insurance industry’s sustainability
AS A RESULT INSURERS FACE MULTIPLE ESG CHALLENGES
Political and civil unrest
UNREST
Crime & corruption
Capability & capacity
Changing
frameworks
& fundamentals
CRIME
SLOW
SKILLS
REGULATIONS
Quality, availability &
maintenance
Slow economic recovery
& inflationary pressure
PRESSURE
ESG
CHALLENGES
INFRASTRUCTURE
BEHAVIOUR
CLIMATE
RISK
CHANGES
Premium rates
under pressure
Consumer
behaviour
Technological changes
- a social revolution
Increasing extreme weather events
AT THE SAME TIME, INSURERS CAN PLAY AN ACTIVE AND
INFLUENTIAL ROLE IN ESG RISK MANAGEMENT
Global insurance industry
• +/- 7% of global GDP
• Premiums = over US$4.3 trillion
• Assets under management =
over US$24 trillion
SIGNIFICANT
IN SIZE
Risk
Managers
FULFILLING
MULTIPLE
ROLES
ESG
Factors
Risk
Carriers
Institutional
Investors
The insurance industry is:
• A collective ‘safety net’
• A global connector
• A contributor to global socio-economic
well-being and development
THE INSURANCE INDUSTRY SITS AT A NEXUS TO INFLUENCE MANY
STAKEHOLDERS
Business
partners
Clients
Government
Insurance
industry
Note: Illustrative
Local
authorities
WE AT SANTAM WANTED TO LEARN MORE AND CONTRIBUTE
This is why we joined and actively support:
•
•
•
•
•
Raising awareness on insurers’ role in sustainability
Developed the Principles for Sustainable Insurance
(launched in June 2012) to promote effective ESG
risk management by insurers
An international collaborative insurance initiative
Guided by six founding principles
Focused on climate risks and opportunities
WE AT SANTAM WANTED TO LEARN MORE AND CONTRIBUTE
PSI & PRI: A holistic global
sustainability framework for
the insurance industry
Guided by six principles:
• Lead in risk analysis
• Inform public policy making
• Support climate awareness amongst our clients
• Incorporate climate change into our investment strategies
• Reduce the environmental impact of our business
• Report and be accountable
LESSON LEARNED
Action needed under the two perspectives
Adaptation: Minimise the predicted impacts of climate risks
•
Understand the drivers of risks
•
Adapt how we respond
•
Manage risks collectively with key stakeholders
Mitigation: Eliminate or reduce the long-term climate risks
•
Reduce own environmental footprint through resource efficiency
•
Support transition to low-carbon economy
LESSON LEARNED
The importance of principles and framework in encouraging collaboration,
reducing barriers to action and reducing tragedy of the commons
Public
Governments,
regulators &
other key
stakeholders
Clients &
business
partners
Own business
strategies &
operations
Structure of the Principles for Sustainable Insurance: aligned with insurers’ spheres of influence
OUR ACTIONS: EDEN PROJECT PHASE 1
A strategic research partnership which developed a practical and integrated
understanding on the following components:
RISK
Understand the socio-ecological risk landscape
RESILIENCE
Understand the main drivers of socio-ecological resilience within this landscape
ROLE
Understand the role of insurance in reducing risk and increasing resilience
RESPONSE
Determine the potential response by the formal insurance industry
to reduce risk and improve resilience
OUR ACTIONS: EDEN PROJECT PHASE 1
Key findings
•
•
•
Climate changes are driving risks higher
Changes to ecological buffering capacity is as important as climate change
Real risk on the ground is the end result of many factors in a dynamic complex system
Insurers can influence some key drivers of risk in a changing landscape
LITTLE INFLUENCE
MORE INFLUENCE
Wind intensity
Sea level
Temperatures
Population density
Dune management
Reduce hardening of coastline
Planning & regulations
Sea storm as an example
OUR ACTIONS: EDEN PROJECT PHASE 1
Recommendation: adopt a systemic view of risk assessment
A conceptual
model of a
case study in
the project
Develop systems models that will
provide a suite of possible risk
probabilities based on different
plausible scenarios
These systems models have the potential of focusing the
insurance industry on the real drivers of risk
OUR ACTIONS: EDEN PROJECT PHASE 1
Recommendation: promote proactive, collaborative & effective risk management
•
Promote risk management aimed at
systemic drivers of risk
•
Identify and expand connections to key
societal nodes within the local landscape
that have the greatest potential to create
shared value
A shared response strategy will create shared
understanding of local drivers of risk and shared value
INDUSTRY ACTIONS: SAIA STRATEGIC RISK FORUM
A world first - driven by leaders in the insurance industry and other sectors
We spearheaded the establishment of this industry forum which aims to:
•
Engage on strategic risks to the industry’s sustainability
•
Understand what is being done to mitigate these risks
•
Initiate interventions collaboratively to mitigate these risks
EDEN PHASE 2
Insurance
collaboration
RISK ASSESSMENT
Adapt internal
processes
RISK MANAGEMENT
Interventions
(clients, brokers,
communities, Local
agencies
Influence stakeholders (shared goal)
BAAM
(Business-Adopt-a- Municipality)
Local government /
municipality programme
REDUCING OUR ENVIRONMENTAL FOOTPRINT
Targets 2011 – 2015
Sanlam Group
Energy
• Monitoring and measuring energy
consumption
(baseline 2010)
Waste to landfill
20%
15%
•
Aircon systems, light sensors
•
T5 lighting in all new revamps
•
To incorporate at least 50% of the
waste into the recycle process
• Retrofitting lighting
Water
10%
• Waste management
Paper
15%
• Reduce travel
Travel
Total carbon
15%
15%
•
Install more video & teleconference
facilities
• IT green initiatives
•
Every PC / Laptop has been set to
print double-sided
• Introduce water harvesting in 2013
OUR PLANS GOING FORWARD
Embed the PSI into core business
Continue with ClimateWise
Move forward on shared risk
management (Eden phase 2)
Further reduce own environmental
impact and footprint