More domiciles will follow Guernsey on ESG frameworks: CICA panel

More domiciles will follow the lead of Guernsey and develop ESG (environment, social, governance) frameworks, James Stewart, Representative, Guernsey International Insurance Association, suggested speaking on a panel covering this topic at the Captive Insurance Companies Association’s (CICA) annual conference, taking place in Tucson this week (March 6-8).

Stewart was speaking on a panel discussion called ‘Why are ESG Risks Relevant to Captive Insurers?’. It was moderated by Richard Cutcher, Founder and Executive Producer, Global Captive Podcast. Other panellists included Michael Douglas, Director – Business Development, Aon; and Karen Hsi, Program Manager, Fiat Lux Captive Insurance Company, University of California Office of the President.

Developed in May 2021 by the Guernsey’s International Insurance Association, the ESG framework was designed for member insurers operating on the island. It was intended to help organisations manage ESG opportunities and risks and to deliver a more positive ESG impact.

Stewart described the framework as a “handrail for licenced insurers” which can encourage them consider their operations and activities against the UN’s Sustainable Development Goals. He said the framework is far from a finished product, but it is designed to put ESG on the agenda of insurers’ boards. Companies can also be assessed on their implementation of the framework and secure a kitemark indicating their commitment to ESG.

“We wanted to get something out that members could use quickly – a real and realistic consideration of ESG. We did not reinvent the wheel. We understand that for captives specifically, their ESG considerations will fall within the strategy of the overall parent. But in some cases this represent a way for a board to get the conversation on ESG started. It might help start conversations around what opportunities there might be for a captive to help more, be it on new risks or other innovations.”

Stewart said that he now expects regulators in other domiciles to follow suit. “I expect in time others will look at this,” he said. “We are not precious or protective of our framework – we are happy to share and help the wider industry develop best practices. It is not the finished product either. We are now looking more closely at the investment side of it.”

He added that he also expects many more layers of nuance and complexity to come into play as ESG considerations develop. He noted the challenge so-called brown industries have in this regard – but noted that those companies still play an important role in society and the wider economy. “I think it will become more about the overall value a company brings to society; priorities will change,” he said.