Environmental, social and governance issues are playing and will play an increasingly important role in the South African insurance sector which should be proactive in contributing to, influencing and being part of ongoing discussions on integration of ESG principles into risk management, underwriting, capital adequacy processes, investment decision making, underwriting and underwriting disclosures, capital adequacy processes and reporting.
Regulators around the world are becoming more active in this area and reinsurance placements will be materially affected.
Corporate sustainability due diligence requirements are gathering momentum. See for example The European Union Commission’s draft directive on corporate sustainability due diligence. The directive will create a substantial corporate duty to identify, prevent, mitigate and account for external harm resulting from adverse human rights and environmental impacts in a company’s operations, subsidiaries and value chains. *See NRF note on European Commission tables long-awaited human rights environmental due diligence law HERE.
Norton Rose Fulbright internationally can provide insurance role players and insureds alike assistance in the development and implementation of ESG toolkits for identifying and assessing ESG risks and integration of those risks, and the development and implementation of appropriate ESG audits with the benefit of the protection of legal privilege.
Environmental, social and governance audits should include consideration of impacts on ecosystems; exposure to extreme weather; energy efficiency; carbon management; use of scarce resources; pollution sourcing material; management of waste and recycling; use of water; approach to diverse and equal opportunities; human rights risks; relationships with workers and communities; worker safety, supply chain risks; employee retention; level of customer satisfaction; protection of customers’ data and compliance with privacy laws; marketing and communications; product safety; compliance with accounting standards; anti-competitive behaviour; audit committee and board structures; bribery and corruption measures; executive remuneration; succession planning; lobbying efforts; whistle blower and grievance mechanisms.
