Usman Khanzada
Client Project Manager @ in4mo
Published on November 9, 2022 | 3 min read

The sustainability risks and opportunities for insurance companies are getting more relevant with a robust potential to affect business units and risk types. In 2015, all UN member states endorsed the 17 Sustainable Development Goals (SGDs) as the blueprint for achieving a better and more sustainable future for all by 2030. As they address global challenges such as poverty, inequality, climate change, environmental degradation, and peace and justice.

Insurance companies aren’t any strangers to sustainability concerns. As the economy’s financial first responders, they are often called upon to pay for damages and defend those filing claims involving Environmental, Social, and Governance events (ESG).

There is a rising demand for insurance companies to focus on sustainable challenges. Stakeholders, consumers, and local environmental bodies are becoming more aware and demanding that environmental, social, and governance issues be disclosed and addressed. Because of this, there is an ample number of insurance companies that have appointed a chief sustainability officer (CSO).

As insurance companies learn to deal with sustainability issues, we will see that climate change will gain more attention among insurance companies. Modern natural catastrophes are arguably the biggest challenges for the roles of underwriters who cover property risks and investors in real assets.

 Challenges of being sustainable in their operations and supply chain

One of the primary challenges we’ll discuss includes the CSO’s issues with overcoming organizational hurdles “such as inefficient resources, and uncertain governance structure Because there is such a lack of individual accountability. There is another hurdle to implementing an efficient strategy for the sustainability agenda.

Although some insurance companies have embraced sustainability with open arms. We see that “Office Buildings and the vehicle fleet made available to executives and employees are involved in how their insurance products” are made.

You can only imagine how complicated this can become “Especially for large companies offering many various products, supply chains are complex beasts. A single product may have a myriad of different materials suppliers and manufacturers along its supply chain. On top of this, smart companies employ several suppliers per piece or product to ensure continued delivery in case one supplier drops out.

Challenges in their reporting about sustainability

There are key challenges in reporting about sustainability, in all of them include gathering data from your resources. An example of this would be when a corporation rent’s an office in a shared office space. It can be difficult to get the electricity measurements for this rented office. It can be difficult to implement renewable energy in places like this.

Even if you own your building, you still must understand the costs of implementing renewable resources like adding solar panels and developing solar power. Is the cost of adding solar panels more detrimental to sustainability? Or will it help with sustainability reporting? Or will it lower the rate of electricity enough to afford other renewable resources?

While energy is a huge issue with reporting sustainability, we also see that reporting waste can be difficult. There can be a lot of waste produced by a single office. How much trash is produced, or how much is recycled? This can also be correlated with the CO2 waste of employee travel.

Challenges in measuring the sustainability

The challenge in measuring sustainability is finding the appropriate metrics. If each company has a different metric for measuring its sustainability. “To expand sustainability beyond the realm of good corporate citizenship, insurer CSOs will likely need more tangible metrics, especially relating to return on investment. This can help them gain support among business line and functional leaders” (Sherwood & Sullivan, 2021). It also needs to be profitable for the insurance companies as well.

That’s where measuring can be valuable to convince insurance companies to bend over the barriers of beings sustainable. “Growth strategies usually involve equities, higher-yield debt, and even non-liquid alternative assets such as private equity, infrastructure, and real estate. The aim is to grow the value of invested assets over the long term to fund future liability needs.” Offering a way past the barriers to sustainability may help others face challenges.

While insurance companies aim for sustainability in the future, sticking with the same metrics. By staying with consistent metrics, it can be seen if the company is reaching modern sustainability standards. This also gives a reference for culture companies and how to get to that standard.


Demand for insurance companies to focus on sustainability challenges is growing. There is environmental responsibility that stems from things like social impact, or government policies, which will be a huge part of how insurance companies work in the future. One of these responsibilities includes hiring a chair of sustainability (CSO). A CSO with a broad remit and organizational stature can impact both strategy and operations with facts-based insights. In addition, they can make ESG risks and opportunities clear and address the challenges and keep up with the expectations of investors and consumers as well as the regulations and the competition.