What is going to be the “new normal” post covid-19 for society and business? Many commentators such as McKinsey are saying there needs to be a shift from economies being driven by shareholder value to being driven by a much wider stakeholder value. The term “triple bottom line” (profit, people and planet) is coming back after nearly ten years, when it was in popular use after the financial crisis of 2008.
It has also been widely noted that organisations that already have a stakeholder view of the world, which are purpose-driven and have a sustainability business plan, have fared better as businesses whilst playing a crucial role during the pandemic and they will continue to play a crucial role as we “build back better”. These businesses have been more resilient to the challenges presented by the Covid-19 pandemic, more agile in responding and are most likely to be the leaders when we emerge from the inevitable global recession.
Sustainability is core to stakeholder value
The three core stakeholder values are: the sustainability of the business (profit); customers, staff and communities (people); and the betterment of society (planet). The term sustainability can mean many things to many people, but the term “triple bottom line” brings in all the key drivers for a successful and sustainable business.
Many ICMIF member organisations have been on a sustainable journey for many years. In fact, sustainability was a key topic when I joined ICMIF 25 years ago and it has gathered momentum at our leadership conferences over the years. The key topics from the 2009 ICMIF Biennial Conference for example included:
- Impact of climate change on insurance business
- Mutual/cooperative insurers playing a proactive role in managing environmental risk
- The business case for corporate responsibility in investment policies
- A sustainability framework for mutual/cooperative insurers
- Sustainability at the heart of corporate strategy
- CSR as a tool for retaining and attracting high-calibre staff
These were very relevant topics back then and even more so now. The difference now is that the whole world is focused on these areas, areas that used to be unique differentiators for the mutual/cooperative sector.
In 2015, the United Nations (UN) really got behind the sustainability agenda with the global agreements signed by all nation states; the Sendai Framework for Disaster Risk Reduction; the Sustainable Development Goals (SDGs); and the Paris Climate Agreement, now collectively known as the UN 2030 Agenda.
Now, in 2020, both the business world and political world are slowly getting behind the sustainability agenda due to the fact that public opinion is strongly in favour of this societal change. Even more so following the coronavirus pandemic, where inequalities around the world have been so glaringly highlighted. Consequently, what used to be our mutual/cooperative differentiators are now being embraced by all. I think that is a good thing as global problems are never going to be solved by small groups, it takes leadership to start finding solutions but broad collaboration to achieve.
The first five years of the UN 2030 Agenda have seen all the leaders in the sustainability arena getting to know each other in public-private and mutual partnerships and breaking down the silos that used to exist. Many great initiatives started in this period, such as The Insurance Development Forum (IDF), of which ICMIF was a founder member; The Task Force on Climate-related Financial Disclosures (TCFD); Insuresilience; World Benchmarking Alliance; Climate Action 100+; the Net-Zero Asset Owner Alliance co-convened by the Principles for Responsible Investment (PRI) and the United Nations Environment Programme Finance Initiative (UNEP FI); and the Insurance SDGs (iSDGs) through the UNEP FI Principles for Sustainable Insurance.
Many of our members have signed up to these initiatives including Achmea (Netherlands); Desjardins (Canada); Folksam and Länsförsäkringar (both Sweden); MAIF (France); Royal London (UK); Sancor Seguros (Argentina); Securian Financial Group (USA); The Co-operators (Canada) and Unipol (Italy). The next 10 years are being dubbed the “Sustainability Decade” and its success will be measured on how we move from getting to know each other as organisations to action and results achieved collaboratively.
The sustainability challenge
The challenge now is not what to do, but who to do it with. How do we know which initiative to engage with? There are so many of them now. Last year, ICMIF signed three important partnership agreements, the first of these is the United Nations Development Programme (UNDP) which we are working with primarily in the area of inclusive insurance and towards achieving the SDGs. Secondly, we have partnered with the UN Office for Disaster Risk Reduction (UNDRR) to move from protection to prevention within the auspices of the Sendai Agreement. Our third partnership is with The Prince’s Accounting for Sustainability Project (A4S), working towards the implementation of the TCFD. All three partnerships are progressing well, and their leaders have contributed to the ICMIF series of blogs recently. To help our members understand the complexity of the new ‘sustainability world’ we are developing a ‘sustainability map’ which will highlight all the key current initiatives and this will be shared with members soon.
As insurers, we can impact the SDGs from both the asset and liability side of our businesses, and I believe we need to be involved in both. After a recent survey of our members, we can see which SDGs ICMIF members are reporting against and we found that 11 member organisations are reporting against 14 of the SDGs, ranging from SDG 3 to SDG 13 being used by many as strategic deliverables.
The most popular SDGs amongst the ICMIF membership are numbers 3 (Good health and wellbeing); 8 (Decent work and economic growth); 11 (Sustainable cities and communities); and 13 (Climate action). This is closely aligned to the top five SDGs which were announced recently based on the findings of a UNEP PSI and Swiss Re survey that discussed the Insurance SDGs (iSDGs), an initiative we are involved in already and one that will set the benchmark for the industry as a whole.
The other new initiative which will support the achievement of the SDGs is the Net-Zero Asset Owner Alliance that Folksam and Supporting Members Aviva Investors and Swiss Re were founding members of last year. This aims to green investment portfolios towards net-zero by 2050, although Folksam is aiming for 2030.
Whilst many ICMIF members started their sustainability journey a long time ago, we now need to continue the journey collectively, in partnerships that will have impact (which coincidentally is one of the SDGs, number 17 – Partnerships for the goals). The coalition of the willing still needs to show true leadership in this new post-pandemic world as we tackle the next big issue, the sustainability of our planet and its people. We can and should play our part in building back better and creating a fairer, more equal society. A society in which not only people are equal, but nature is too, one where prevention is more important than protection, and the insurance industry is seen as having a societal benefit.
This is the moment when we, as mutual and cooperative insurers, can step up and play our role in rebuilding a society though the lens of our sector’s values. The opportunities are there, ready for the taking, we just need the courage of our commitments to make the difference. In the words of the explorer Ernest Shackleton, “optimism is true moral courage”. Optimism and courage, these qualities are needed more than ever, as political and business leaders make the critical decisions that will shape the new normal, and ICMIF members are critical in making their voices heard and their actions seen.