ESG-driven approach to managing insurance companies’ sustainable development

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Environmental, social and governance criteria (ESG) are considered to be the main factors in measuring the sustainability and ethical impact of companies. This article focuses on comparing the ability of insurance companies to use an ESG-driven approach to managing their sustainable development. The study is conducted using comparative analysis, statistical analysis, and a case study method. The study compares six ESG Ratings on four main criteria (dependent variables, independent variables, scale type, sample), that allows choosing the most appropriate rating for the analysis of insurance companies. As a result, 156 insurance companies are compared by the level of ESG risk (low ESG risk – 24 companies, medium ESG risk – 111 companies, high ESG risk – 21 companies) and by geographical affiliation (26 countries) using descriptive statistics. The assessment of effectiveness of the ESG-driven approach to managing sustainable development of insurance companies is carried out on the example of 16 companies by comparing their non-financial reporting (the sample is selected based on of the annual report for 2019-2020). The study identifies the most common guidelines for report development, as well as components of the ESG-driven approach: environmental (waste and pollution, climate change, energy efficiency), social (workforce and diversity, customer engagement, communities), governance (code and values, reporting, risk management). The study systematizes the best practices of insurance companies for applying the ESG-driven approach to manage their sustainable development and highlights the need for insurance companies to improve their reporting and disclosure practices related to the development of the ESG-driven approach.

Acknowledgment
Comments from the Editor and anonymous referees have been gratefully acknowledged.

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    • Figure 1. Correlation for 26 countries between indicators performance by SDG and mean of ESG Risk
    • Figure 2. Number of insurance companies from Company ESG Risk Ratings that provide non-financial reporting to the GRI database
    • Figure 3. Geographical distribution of insurance companies from Company ESG Risk Ratings that provide non-financial reporting to the GRI database
    • Figure 4. Best practices of insurance companies for applying the ESG-driven approach to manage their sustainable development
    • Table 1. Comparison of major ESG ratings
    • Table 2. Descriptive statistics for Company ESG Risk Ratings, 2020
    • Table 3. A sample of insurance companies for in-depth study of the effectiveness of the ESG-driven approach
    • Table 4. Comparison of non-financial reports of insurance companies
    • Conceptualization
      Inna Khovrak
    • Data curation
      Inna Khovrak
    • Investigation
      Inna Khovrak
    • Methodology
      Inna Khovrak
    • Validation
      Inna Khovrak
    • Visualization
      Inna Khovrak
    • Writing – original draft
      Inna Khovrak
    • Writing – review & editing
      Inna Khovrak