9 February 2023Analysis

WCF: Captives can help with ESG issues

Captives can help organisations to manage their environmental, social and governance (ESG) goals and obligations, according to a panel discussion at the recent World Captive Forum.

The panel, which was recorded by Business Insurance and entitled ‘How can captives support improvement of ESG’, took place on the second day of the conference.

Participants of the panel included Alan Buckley, partner, Mercer , Santiago Garcia, director – global risk management & insurance, The Brink’s Company, Brian Quinn, founding director, Granite Management and Adriana Scherzinger, vice president, head of captives sales & execution, US National Accounts & Middle Market, Zurich North America.

As Scherzinger pointed out, recent years have seen multiple global crises, ranging from the rapid rise and spread of Covid-19, the sharp increase in inflation in many countries, causing a cost of living crisis, and finally the Russian invasion of the Ukraine, which has had its own impact.

However, Buckley pointed out that one issue about some of the short-term risks is how quickly humanity moves on from recent events, with worries about infectious disease risks (such as Covid-19) becoming less prominent according to the latest Global Risk report, released by the World Economic Forum working in conjunction with Marsh McLennan and Zurich.

The panel addressed the rise of the polycrisis – a set of interconnected crises that can occur sequentially or all at the same time. However, Buckley added that there is some optimism, as innovation and having better developed tools like captives allow companies to be able to manage some of those component risks.

Environmental risks were particularly highlighted, with risks such as drought being mentioned as something that might not be covered by insurance – but which could be handled by a captive. The recent rise in environmental losses from a wide range of weather-related events was something that again can be helped with the use of captives.

Quinn also underlined how employee benefits can handle the social part of ESG issues, adding that the former is something that has seen more and more interest in recent years.