African Risk Capacity (ARC) is a financial firm that provides insurance to African countries to deal with climate disasters. The company consists of two entities: one is the private sector providing insurance (ARC Ltd); and the other is the public sector providing capacity building to African countries for climate disasters (ARC Agency). Since 2014, the company has provided customised insurance solution for drought (crops and pastoralism), tropical cyclones and floods. It currently covers around 14 countries in Africa and has transferred USD 1 billion risk and paid USD 185 million in claims, covering 30 million people per year.
ARC had no ESG strategy, so it was assessed by an independent rating agency (Sustainalytics) to understand where it stood. It wanted to be accountable to its investors, regulators, clients, and employees. The company’s focus was to understand what it was doing right and wrong in terms of ESG.
The evaluation is a comprehensive assessment of an organisation’s preparedness to meet future risks and opportunities linked to ESG factors, such as climate change, regulatory risk and reputational issues. In 2021, ARC received the global insurance industry’s top overall ESG score in the evaluation by Sustainalytics – which it has maintained for the past three years.
ARC’s value chain and practices were key elements that were assessed by the rating agency. It had to demonstrate how it creates and safeguards value through ESG practices and policies. The company’s ESG journey started with understanding its ESG risk exposure and management, and how ESG is integrated into its business. ARC had to show its value chain and practices throughout the ESG assessment process.
ARC is working hard to increase its coverage to more countries in Africa. The company’s journey towards ESG is ongoing, and it is committed to becoming more ESG-focused, to create value and safeguard value for all their stakeholders.
This presentation was delivered during the ICMIF Sustainability Forum. Please contact Liam Carter, SVP Sustainability, to find out more about these virtual member-to-member discussions for sustainability/ESG leaders.
