Three little letters – ESG – can strike business decision makers with anxiety as they strive to incorporate nonfinancial factors into their strategic analysis and planning.

Shorthand for “environmental, social, and governance” these factors, which seek to capture the environmental and social impacts of operations and investment practices, have  become more pressing in recent years due to:

• Globalization,
• Concerns about climate and extreme weather, and
• Inequity and injustice becoming more visible in real time, thanks to social media.

This visibility can affect purchasing choices, spur consumer and shareholder activism, and even spark civil unrest, leading to physical injuries, property damage, and business disruptions.

Fortunately, the insurance industry has ESG hardwired into its DNA. While ESG priorities may seem new to many industries, insurers have long been involved in understanding and addressing these and other risk factors as a fundamental part of doing business. As a result, they are well prepared to meet ESG-related demands and are ideal partners for businesses, communities, and nonprofits seeking to navigate this “new” area of risk and opportunity.  

And, far from being an impediment to profitable performance, research increasingly demonstrates an ROI advantage for companies that include ESG in their business strategies and operational practices.

Click here to learn more about the role ESG plays in insurance and that insurance plays in ESG.