"Every single one of you here have to make important business decisions every day," said Ms Claudia Salem, CEO of AIG Singapore. "And most of these decisions have environmental, social and governance considerations, and most of these considerations have ethical and sustainability implications."
Unfortunately, the mindset of current leaders within the insurance industry does not match with the mindset of the workforce and the future leaders – millennials. Speaking at the recent 18th Asia CEO Insurance Summit, Ms Salem referenced a Deloitte's survey that showed most millennials placed a high emphasis on sustainability and environmental protection, especially at the CEO-level.
“Millennials put personal values ahead of organisational goals. They are not going to work for an organisation or buy products from a company whose goals and values do not align with their own belief system,” she said.
This is important as sustainability in talent – the ability of a company to attract and retain talent today and in the future – is a core component of sustainability. In short, the future is millennials.
Moving towards sustainability also makes good financial sense. ESG integration is the second-most popular investment strategy, and “there has been a 61% growth in sustainable investments between 2012 and 2014, globally. That amounts to 8 trillion dollars in 3 years. That is a serious amount of money,” she said.
Add to that the rising frequency and severity of natural disasters across the globe, with 2017 being the second-most costly year on record for natural-disaster incurred losses. The many implications of climate change and rising sea levels should put sustainability on the top of everyone’s priority list, especially within the insurance industry.
Ms Salem, who has long been a champion for ESG, shared her 3 basic principles that guided her own decision-making process:
Doing good makes good business sense
In every crisis, there is an opportunity
You cannot call yourself a modern company if you are not an active contributor to the community
She also referenced the United Nations Environment Programme – Finance Initiative (UNEP FI) principles for sustainable insurance, which “aspires to build on the foundation the insurance industry has laid in supporting a sustainable society”. The four principles are:
- We will embed in our decision-making environmental, social and governance issues relevant to our insurance business.
- We will work together with our clients and business partners to raise awareness of environmental, social and governance issues, manage risk and develop solutions.
- We will work together with governments, regulators and other key stakeholders to promote widespread action across society on environmental, social and governance issues.
- We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the Principles.