Insurance industry in sustainable development agenda

Abstract

Subject. The article considers the role of insurance sector in promoting the ESG agenda and sustainable development issue. Objectives. The aim is to determine the place of insurance in the sustainable development concept, to consider core principles of the green agenda proposed by the UN and organizations established with its support in the financial sector, to review the activities of insurance and reinsurance companies of the European Union as to obligations arising from the requirements of sustainable insurance. Methods. The study employs general scientific methods of systems and comparative analysis, synthesis, and comparison. Results. The paper proves the key role of the insurance market in acceptance and transmission of changes related to sustainable development, shows the main vectors, through which insurance companies are connected with the concept, including climate risk, describes the existing supranational principles and potential ways of changes at the microeconomic level, which determine the circulation of green agenda through insurance and related mechanisms. Conclusions. The insurance industry is currently moving through a voluntary regime of ESG-oriented topics to a more regulated and compulsory one that provides for more sophisticated reporting rules, disclosure, and transparency. ESG principles change insurers’ risk-appetites both on underwriting and investment sides, making companies more sensitive to climate-related risks. This leads to revision of existing own risk and solvency assessments models. The path to sustainable insurance has already become visible and is performed via cut of investments from carbon-intensive industries, change of underwriting principles as to decrease in own emissions etc.