Guernsey's insurance industry is working on a framework to develop a green kitemark for its insurance-linked securities (ILS) platforms to take a bigger stake in environmental, social and governance (ESG) issues.
Speaking at the We Are Guernsey-hosted ILS Insight webinar, Adele Gale, Head of ILS at Robus Group in Guernsey, confirmed the move when discussing what metrics the ILS fund industry were using to guide ESG compliance for development and growth.
The Guernsey International Insurance Association earlier this year signed up as a supporting institute of the United Nations' Principles for Sustainable Insurance Initiative, a global framework for the insurance industry to explore and address ESG risks and the opportunities that arise. A poll during the webinar showed that more than 95% of delegates agreed that ILS has the potential to have ESG credentials.
Mrs Gale described the kitemark as: "Something our ILS platforms could apply for that would create an independently-verifiable badge, which can really demonstrate that ESG credentials are at the heart of what is being done.
"Guernsey's insurance industry recognises its place in the ILS value chain. As the poll shows, ILS has the potential and is predisposed as an asset class to be chosen by investors looking to meet their own ESG agendas. Guernsey is aiming to be as proactive as possible in facilitating this. It is about independent verification and ensuring there is validity and that we are living and breathing ESG."
Bedell Cristin Partner Richard Sharp was confident that the Covid-19 pandemic had not diminished these aims, but in fact had the opposite effect: "One feature of the challenges the pandemic threw up was everyone assessing their footprint, their work practices, how their industry operates. It was a timely focus on those issues at the time of the introduction of Guernsey's green initiative. It has focused people's minds on these issues and brought them to the fore."
Mrs Gale added: "It only reinforces the legitimate and credible reason for moving towards a more ESG-friendly way of making decisions and living and breathing it. For me, they are complimentary."
Schroder Secquaero Head of Transaction Management Jutta Kath believes the insurance industry still has a long way to go to be truly ESG compliant, but said the ILS market was already supportive of certain activities in the field.
"For me, ESG has two components," she said. "There is the external view in terms of what we offer to our investors seeking these kinds of products, but there is also an internal view to make sure that the products we offer are not greenwashed for the sake of being in the field. That's very important to our investors - you need a credible approach."
Global Parametrics CEO Hector Ibarra added: "There's a working group, between the international development agencies and insurance industry, to look more carefully about how to monitor these indirect investments, mentioning the complexity and a lot of this is for example when you're creating an impact that goes beyond the insurance industry.
"We can have the discussions of what insurance and the product is and focus on what we can achieve for the more vulnerable groups in the world. As an industry, there is a home for a traditional ESG framework is an important challenge and hopefully we can step up to it."
Adele Gale, Head of ILS, Robus Group
Other topics discussed in the webinar included the response of Guernsey's finance industry to Covid-19, whether Covid-19 claims would result in the increased trapping of trapped collateral and how that would affect the future of the collateralised ILS market, and Brexit.
Moderator Steve Britton, Managing Director of Global ILS Management at Aon, concluded: "Guernsey is alive and well and continues to be resilient, innovative, flexible and pragmatic in its approach as it looks to provide best-in class ILS solutions and services."
To watch the webinar back in full on demand, go to: https://www.weareguernsey.com/finance-events/2020/ils-insight/.
Originally published 10 July 2020.
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