A sustainable future for marine insurance
In the Spring of 2021 Alandia became a signatory of the UN principles for sustainable insurance (UN PSI), a global framework for sustainability that has led to the most comprehensive cooperation initiative to date between the UN and the global insurance industry. It centralises around four principles that frame how we make decisions, how we raise awareness of issues, how we work together with governments/regulators/key stakeholders, and how we demonstrate accountability and transparency.
This article accompanies a three-part series of podcasts on ESG where we have looked at sustainability from an overall perspective, from a claim’s perspective, and from a loss prevention perspective. Please follow the yellow link at the bottom of the page to listen in!
To enhance the podcast series, we provide some additional information through a short Q & A session with the podcast guests:
Q&A with Marina Stenfors
Q: What ESG legal requirements should we be aware of? I understand that there are new regulations being implemented soon.
A: Yes, that is correct!
There are new rules on corporate sustainability reporting from the EU, which concerns more than 50 000 companies in Europe, including us. These new rules are defined in The Corporate Sustainability Reporting Directive (CSRD), which entered into force on the 5th of January 2023. This new (EU) directive modernises and strengthens the rules concerning the social and environmental information that companies must report. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability.
The new rules will ensure that investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment and for investors to assess financial risks and opportunities arising from climate change and other sustainability issues. Finally, reporting costs will be reduced for companies over the medium to long term by harmonising the information to be provided.
The first companies will have to apply the new rules for the first time in the 2024 financial year (for reports to be published in 2025). For Alandia this will mean that we must submit for the first time for the financial year 2025 (first report to be published 2026).
Q: Why is standardised mandatory ESG reporting so important?
A: The standards cover the full range of environmental, social, and governance issues, including climate change, biodiversity, and human rights. They provide information for investors to understand the sustainability impact of the companies in which they invest. They also take account of discussions with the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI) to ensure a very high degree of interoperability between EU and global standards and to prevent unnecessary double reporting by companies.
Personally, I think that it is very important that reporting now becomes mandatory for most EU companies and that we have one common standard that we all report according to. It should make it easier to compare and evaluate the ESG data from different companies, and it also puts the companies in the same situation – everyone is obliged to disclose the data and put in an effort drive sustainability in a strategic and proactive way, while at the same time developing the business in each company! It’s nothing but a win-win situation, I firmly believe.
Q&A with Johan Henriksson
Q: How do you see the future of marine insurance in relation to ESG?
A: Times are changing, and we all need to change our behaviour. Information to staff and service providers will be focused on a change of mindset in order to make ESG embedded in the decision-making process. Good governance is the key to controlling and driving efforts to improve environmental and social sustainability. You have to have a solid foundation and structure to develop and be compliant with ESG.
Q: What can marine insurers actively do to promote the values of ESG?
A: The world will be divided into those who comply with ESG and similar legislations, and those who do not. We need to have a dialogue with service providers on the benefits of managing ESG issues, convey our expectations and requirements on ESG issues, and provide suppliers with information and tools that may help them to manage ESG issues. We also need to favour the suppliers which have proper ESG practices in place.
A closing statement from Loss Prevention:
There is no future scene for the marine insurance industry that does not entail a significant commitment to a more sustainable way of working. This is no longer “business as usual”, this is a time of great change, and whilst we have only recently begun our journey, we must embrace the challenge of the climb ahead.
Risks are always multidimensional, but now more than ever we need to question and analyse where the environmental, social, and governance aspects of the risk lie. Understanding the relevance of ESG issues and how they apply is vital. Our thinking must be long-term, with a permanent change of mindset that integrates ESG considerations into all decision making.
Marine insurers need to be a stable support for assureds in the steps that they are taking to operate greener ships and meet sustainability targets; at the same time insurers must also commit to lowering any negative impacts of their own business both environmentally and ethically. Loss prevention are in a unique position to be able to help, and it feels very reassuring to know that Alandia have sustainability firmly in their focus.
