Re/insurers need a strong ESG strategy in order to thrive: RenRe

31-03-2021

Re/insurers need a strong ESG strategy in order to thrive: RenRe

Ian Branagan, RenaissanceRe

As RenaissanceRe places its new ESG strategy at the heart of its operations, chief risk officer Ian Branagan tells Bermuda:Re+ILS how the strategy was created and why it matters now more than ever.

The launch of RenaissanceRe’s new environmental, society and corporate governance (ESG) factors website underlines the company’s commitment to defining and delivering upon a clear ESG strategy. Its strategy is focused around three areas: Promoting Climate Resilience; Closing the Protection Gap; and Inducing Positive Societal Change.

While RenaissanceRe has long had a focus on driving progress in different areas of ESG, in 2019 the company invested in a dedicated ESG resource to work closely with its senior leadership team to drive the development and implementation of a global ESG strategy.

RenaissanceRe began this process by creating an inventory of its existing ESG-related activities; this provided the foundation for considering how to fully leverage what the company does as a business in order to meaningfully define its understanding of the term ESG. This work was driven by a strong sense of social conscience.

“We dedicate our time and resources to help solve some of society’s largest challenges because we believe it is the right thing to do,” says Ian Branagan, chief risk officer of RenaissanceRe.

“Our focus is on the problems that society is facing and we prioritise the activities where we believe we can apply our core business strengths to make a meaningful impact on society.

“The RenaissanceRe team has long sought to create value and innovation for our partners and we hope to find new ways to apply our energy and expertise to make an impact in our communities and for our fellow citizens.”

Placing ESG at the company’s core
The recent work to define the strategy and to give it full visibility reflects a commitment to shift the consideration of ESG from an investor or regulatory-led exercise to something that truly resonates with the company’s identity, maintaining its integrity and reinforcing its positive actions; the three strategic priorities at the core of the strategy focus on the areas where the company is expected to make a meaningful impact.

For instance, as part of pillar one—Promoting Climate Resilience—the company is working with carbon offsetting service provider ClimateCare to offset its carbon emissions. To do this, it has chosen to support three innovative projects that reduce global emissions and increase community resilience in the face of climate change: Rainforest Protection in Sierra Leone; Community Afforestation in Uganda; and Reforestation in Chile.

“We spent some time reviewing the projects offered by ClimateCare to ensure that they aligned with our ESG strategy and chose to invest in carbon finance that specifically aligned with the UN Sustainable Development Goals to create positive outcomes for communities in the face of climate change,” says Branagan.

“The overarching theme in all three projects is that they increase community resilience, encourage biodiversity, promote our diversity, equity and inclusion (DEI) values, and use innovative methods to secure sustainability for the future.”

The company has also committed to consider ESG factors within its investment strategy.

“Our activities in this area have been evolving over a number of years and our primary investment objective is to make informed investment allocation decisions that preserve capital, support our business obligations, and maintain our sustainable and diversified position across market sectors,” says Branagan.

“We have partnered with MSCI to help us analyse our investment portfolio and eliminate lower-rated ESG companies from our portfolio.”

Closing the protection gap
The second pillar of RenaissanceRe’s ESG strategy—its commitment to closing the protection gap—reflects its long track record of applying its risk expertise and leveraging its partnerships to increase the economic resiliency of vulnerable communities.

“We believe that reinsurance plays an important role in helping communities recover after a natural disaster, and have made significant commitments to reduce the protection gap and mitigate the impact of natural disasters on populations and economies in the developing world,” says Branagan.

“We have a dedicated global team focused on public sector partnership activities to support our continued work in this space.”

The company has long played an active role in the Insurance Development Forum (IDF), which applies insurance capabilities and resources to build resilience and protection for those communities, businesses and institutions most vulnerable to disaster and economic shock; Branagan chairs the IDF’s Risk Modelling Steering Group (RMSG).

“We are excited about our involvement with the IDF and our ability to partner with others to increase risk understanding among risk owners globally through the application of open risk modelling principles, technology and standards,” he says.

Since 2008, RenaissanceRe has also been running an award-winning series of 14 Risk Mitigation Leadership Forums, which is an example of an initiative to collaborate with and bring together cross-functional partners to advance natural hazards risk mitigation efforts and awareness.

“Our Forums are free events featuring world-renowned speakers and have involved over 4,000 attendees, including emergency responders, scientists, policymakers, academics and private sector representatives,” says Branagan. Previous forum topics have included Climate Change: Response and Resilience and Community Recovery and Resilience.

Caring for people and communities
The company’s third ESG pillar, Inducing Positive Societal Change, centres around creating a positive environment for its people and communities, and includes DEI initiatives.

“Socially and fiscally, DEI is a business imperative for any company and, at RenaissanceRe, our people and how we operate are core to our culture and our success,” says Branagan. “To foster diverse talent, we have applied a DEI lens to the selection process for our leadership and management development programmes. In our annual performance management process, every team member has a DEI goal to make sure we are all focused on this as a strategic imperative for our organisation.”

The company has a well-developed DEI programme and, among many activities over the past year, some of the most popular were its company-wide sessions with global experts on Unconscious Bias, Allyship and Mental Health Awareness.

“We invest heavily in our people, supporting their career growth and professional development amid our open and collaborative culture, because we want to continue to attract, hire, retain and develop the best talent available; it is imperative to be able to operate effectively and forge successful relationships in the global markets in which we operate; and we must continue to make strategic decisions which reflect the experience set of our increasingly diverse clients and partners,” says Branagan.

Corporate social responsibility (CSR) also sits within the company’s Inducing Positive Societal Change ESG pillar as a key focus area where RenaissanceRe can make a meaningful impact on its external communities.

“We give at a local and corporate level and focus on efforts that will make our communities more resilient,” says Branagan.

“Besides local CSR volunteer activities and financial support, we also give through corporate grants which fund programmes that align with our corporate values and operate a global employee matching program to support the causes that are important to our people. Over 75 percent of our annual giving is directed by our employees and a recent example was our 4:1 company matching initiative at the end of last year which raised $339,000 for charities in one day.”

The approach of the wider industry
Although the term ESG itself is relatively new, Branagan notes that there have historically been many positive activities across the re/insurance industry that would now be mapped under the ESG umbrella, such as around climate resilience, disaster risk reduction and rebuilding of lives and communities.

“The main shift since the term ESG has been a focus of our industry is that companies are now beginning to report more on these activities and various stakeholders are beginning to hold companies more accountable for what they’re doing or not doing in this space,” he says.

“At RenaissanceRe we think this is exciting—we view our ESG framework as a means of providing focus and clarity to how we apply our energy and expertise to make an impact in our communities and for our fellow citizens. It is also an opportunity to advance our industry’s value proposition.

“ESG ultimately helps make RenaissanceRe a more sustainable, resilient reinsurer which is critical to remaining successful and being a company our clients and brokers want to work with, investors wish to invest in and where talented people want to work.”

Looking at the wider industry, Branagan notes that for many companies, ESG was originally very much focused on asset management activities of companies as opposed to the entire activities of a company.

“That original narrow focus is only part of the story, however, and while external pressure from the likes of investors has played an important role in driving this topic, I think it is very important to consider the positive role that the insurance industry has played over many decades in some of the broader ESG elements,” he says.

However, he acknowledges that there is clearly much for the industry to do to in many areas—and that the additional internal and external accountability enabled by an ESG framework is a robust way of moving the meter on change.

“Re/insurers can continue to play an active role in supporting efforts to combat climate change risk through proactive decision-making on both the asset and liability side, using analysis of how the risk will impact society and providing solutions to support sustainability in the long-term,” Branagan says.

“We can contribute to this shift in several ways: through how our assets are managed; through our risk insight (being the industry at the global table that fully understands risk); and through our ability to understand contingent risk and provide risk financing to support it.

“Re/insurers’ contributions can complement and influence the medium-term actions that are needed by governments, policymakers, regulators, various economic sectors, and society to minimise the adverse impacts of climate change for the future.”

Branagan believes that if insurers—or any companies for that matter—fail to see the value in embracing ESG, they will ultimately be left behind, not least because public expectations are changing.

“Last year amplified the need for companies and society to consider this topic for a number of reasons,” he says.

“Notwithstanding the fact that investors and regulators are beginning to raise their expectations here, there’s a shift in public sentiment where people are assessing what they value and if companies aren’t taking this seriously then they will struggle to continue to be successful in the future.”

Future plans
Looking to the future, Branagan expects ESG to remain at the core of RenaissanceRe’s identity and activities, placing a clear focus on making a meaningful impact.
“RenaissanceRe’s value proposition to our partners is also enhanced by our ESG strategy, as it demonstrates our long-term commitment to good corporate citizenship and operating across our markets and stakeholders as a leader of integrity,” he says.

“Our three strategic priorities outline the key areas of focus for us as a business where we hope we can truly make a difference: whether we are developing better climate change mitigation methods, closing the protection gap, or creating an environment where our people and communities thrive, we intend to continue to apply our risk acumen to help solve some of the world’s largest challenges.”

RenaissanceRe, ESG Strategy, Environmental, Society and Corporate Governance, Risk Analysis, Insurance, Reinsurance, Ian Branagan, Bermuda

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