10 November 2022Reinsurance

Aon: Captives can benefit from ESG

A new report by Aon looks into how many companies are facing increased pressure from investors, governments, regulators and consumers to address sustainability, and are taking action to assess and enhance their environmental, social and governance (ESG) profiles and define their organisations’ ESG strategies.

The report, titled ‘Using a Captive Insurance Company to Drive Positive ESG Outcomes’, highlights what Aon says can be the meaningful role captive insurance companies can play in supporting their parent organisations’ ESG strategy, providing insights for captive owners, insurers and regulators.

The report starts with a foreword from the Program Lead of the UN Environment Program's Principles for Sustainable Insurance (UN EP PSI) initiative, who provides a vision of the PSI and the important role captives can play in delivering sustainability.

The report further discusses the practical ways a captive can support sustainability objectives through four key pillars:

  • Underwriting
  • Investment
  • Risk management and risk improvement
  • Societal resilience and transition support

It also looks at how the PSI can serve as a global framework for the insurance industry — including captive owners — to address ESG risks and opportunities, how to embed ESG and sustainability concerns into a captive insurance strategy and how to prepare for the evolving responsibilities of the insurance industry.

The report also includes a case study from Enel Insurance NV (EINV), the captive insurer of Enel, Europe’s largest utility company and world’s second largest power company. The case study highlights how the captive supports Enel’s ESG strategy, why they decided to become the first captive signatory of the UN EP’s PSI initiative, and advice to other captives seeking to build sustainability measures into their programs.