Organisations that rely on carbon-intensive production are struggling to find the insurance cover they need, according to an ESG report published this week by Global Insurance Law Connect.

GILC's Risk Radar Report found that organisations are coming under increasing strain as they aim to strike the right balance between ESG investments and managing increasing costs; and that it is increasingly difficult in many parts of the world to underwrite business for frequent and severe natural catastrophe events.

Gillian Davidson, chair of GILC, commented: “It is unsurprising that the consensus from our member firms is that ESG has become an increasingly important issue for insurers and the wider business community.

“We are already seeing the significant impact of ESG on the insurance industry, for example with the dual governmental and social pressures of new regulation and stakeholder activism. The increased scrutiny of ESG strategies in many jurisdictions is also impacting directors’ and officers’ and financial institutions’ coverage, as well as professional indemnity policies for firms advising on climate related financial disclosures.

“There is recognition within the insurance industry that embracing appropriate ESG policies can lead to significant growth opportunities, the creation of long-term value and risk management benefits. While insurers have made advances in this area, more needs to be done to meet governance and climate change risk assessment obligations.

“One of our member firms emphasised the importance of taking the right stance in the current debate, citing that it is no longer just about mitigation but adapting our way of living. Insurers can contribute to this transformation by being early adopters of ESG best practices and supporting ESG principles in their policies.”

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