Beyond the promise – what makes ESG meaningful in insurance?

Five years ago, ESG discussions across the insurance sector were focused on commitments. Firms announced net zero ambitions, published sustainability strategies and introduced environmental targets.

But today, the conversation has evolved.

Rather than asking whether organisations have an ESG strategy in place, the industry and its governing bodies are necessitating that companies demonstrate ESG initiatives are making a difference.

That shift has been driven by a combination of regulatory pressure, evolving customer expectations and greater scrutiny of sustainability claims. Since the FCA introduced its anti-greenwashing rules in 2024, for example, firms have been required to ensure ESG communications are clear, fair and backed by evidence.

This rule requires that all claims made by FCA-authorised firms about environmental or social impact must backed by evidence, while statements must also be easy to understand and avoid vague terminology.

It has been broadly welcomed too, with the the ABI arguing that robust reporting frameworks have helped insurers strengthen governance and sustainability expertise while demonstrating their role in the transition to a lower-carbon economy.

Akarsh Chalasani, financial and corporate reporting policy adviser at the ABI, told Insurance Times: “Many [insurers] provide vital climate resilience and adaptation support to communities and invest in projects that underpin our journey to net zero.

“Clear, evidence-based sustainability reporting is used to demonstrate this progress. The UK’s robust sustainability reporting requirements have driven investment in governance, expertise and reporting capabilities.”

Talking the talk is no longer enough where ESG is concerned. ClimateWise is a global insurance industry collaboration founded in 2007 to promote action on addressing climate change risk.

Its programme director, Felicity Alvey, believes that meaningful ESG impact increasingly comes down to evidence, rather than simple ambition.

“Anyone can say they care about climate change,” she said.

“The challenge is being able to say we really care about climate change and nature. We care because of the threat it poses to our business and the risks it brings, but also because of the opportunities.”

Looking across ClimateWise’s 33 insurer, broker and reinsurer members, Alvey said the organisations performing strongest are not necessarily those making the boldest claims.

Instead, she explained: “One of the things those making the most impact really stand out for is that they’re able to articulate not only what they’re doing, but the outcome of those actions and why that matters.”

Indeed, that ability to connect commitments with measurable business decisions is becoming one of the clearest indicators of ESG maturity.

Moving beyond reporting

For Aviva, an insurer member of ClimateWise, meaningful ESG impact begins with governance rather than communications.

Chief sustainability officer Claudine Blamey argued that credible sustainability strategies require detailed transition plans backed by clear accountability.

She said: “It’s not just saying what the commitment is, it’s an actual plan outlining how to get to that commitment.”

At Aviva, sustainability is overseen through board committees, executive meetings as regularly as every six weeks and working groups spanning across senior management.

The insurer also integrates ESG reporting throughout its annual report, rather than producing a separate sustainability publication.

“Everything’s integrated into what we do, so We don’t really need a separate sustainability report,” Blamey said.

The insurer measures progress against long-term decarbonisation targets, publishes regular transition plans and reports annually against those objectives.

That transparency, Blamey argued, is more important than simply announcing new ambitions.

“The rule we follow is transparency,” she said.

Embedding ESG into everyday

Governance is clearly vital to embedding ESG across a business and Gayle Bennouir, risk management director at Verlingue, argues that meaningful ESG is ultimately reflected in everyday business decisions.

She said one of the firm’s biggest priorities has been embedding sustainability into procurement, asking employees to consider whether purchases are necessary, whether products can be reused and whether suppliers meet sustainability standards.

“Before making any purchasing decisions, we want to think about sustainability,” she says. 

“First, does it actually need to be done, or do we even need to buy it? Second, can we use something reused rather than purchasing new? Third, look closely at the provider – are they sustainable? This is what we are asking everyone to do in their day-to-day jobs.”

For Bennouir, that illustrates the difference between treating ESG as a reporting requirement and embedding it into business culture.

Verlingue has trained all UK employees on ESG, incorporated sustainability clauses into supplier contracts and built ESG considerations into office refurbishments, recruitment and employee engagement.

Bennouir said the firm’s guiding principle had become remarkably simple.

She explains: “One small change. We can all make one small change.”

That philosophy, she argued, has helped move ESG from a compliance exercise into part of Verlingue’s culture.

Collaboration in the industry

There is almost uniform agreement across the insurance sector on the importance of ESG issues, but there is one area where perspectives begin to diverge – collaboration.

While ESG is increasingly seen as a shared challenge, there is less consensus over how effectively the industry is working together to address it.

ClimateWise believes collaboration has become one of the sector’s greatest strengths. Alvey said insurers increasingly recognise that many sustainability challenges cannot be solved by individual firms alone.

“I would say in our group we have a huge appetite for collaboration,” she said.

For example, ClimateWise hosted its first-ever member gathering in Cambridge this spring, bringing members together for in-person discussions.

Alvey added: “The golden thread [throughout the discussions] was collaboration and how we as a platform can facilitate greater collaboration in the industry.”

However, she acknowledged that some barriers remain, particularly around data.

While insurers recognise the value of sharing information to improve climate resilience, commercially sensitive data and competitive considerations can make collaboration difficult.

“Everyone knows we need to get better at sharing data,” Alvey said. “But it’s just naturally quite difficult because there’s also a big competitive advantage to the data that you sit on.”

Chalasani agreed that improving data availability is critical for insurers seeking to produce meaningful sustainability disclosures.

“High-quality reporting depends on reliable data being available across the wider economy,” he said.

“We are working closely with our members, policymakers and wider stakeholders to improve data sharing and support measures to facilitate decision-useful reporting.”

Aviva shares the view that collaboration has become an increasingly important part of ESG delivery.

Blamey pointed to initiatives such as the Flood Action Coalition, which brings together insurers, banks, infrastructure providers, landowners and public bodies to develop nature-based solutions to reduce flood risk.

“I don’t think there are any issues with collaboration across the insurance sector,” she said.

Yet the view from Bennouir is a bit more cautious.

She said collaboration often falls short when it comes to practical insurance solutions, arguing the market still mainly works in silos and lacks ESG-focused products that brokers can confidently take to clients.

“We would really love some products that our clients would say, ‘Yes, that’s worth investing in,’” she said.

For Bennouir, the challenge is not willingness, but delivery.

She questioned whether insurers are holding back because they believe demand is limited, or whether clients have yet to be offered products compelling enough to create that demand.

“Is it a chicken-and-egg situation?” she said.

“Is it the insurers that don’t want to provide it, because they think the clients don’t want to buy it? Or is it that clients won’t spend that money, so the insurers are not looking into it?”

This conversation suggests the industry’s ESG debate has entered a new phase. Publishing targets and sustainability strategies is no longer enough. Instead, credibility increasingly rests on whether firms can show that ESG is influencing decisions and delivering measurable outcomes.

That shift may ultimately become the sector’s biggest test. As scrutiny grows, meaningful ESG will be defined not by the ambition of commitment, but by the evidence that sits behind it.