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Corporate social responsibility in insurance faces the challenge of regulation

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While corporate social responsibility is a major topic in the insurance sector, regulatory issues are still relatively unknown and will have a significant impact on the sector in the coming years. We went with Valérie Loizillon and Sophie Laxenaire, co-founders of Assurance for good, to understand issues around CSR and in particular the increasing weight of additional financial reporting for the insurance industry.

What trends do you see from insurance players around CSR topics?
The commitment of insurers has evolved in recent years in line with the accelerating challenges that characterize the 21st century: climate change, of course, which is driving extreme events. But also demographic growth, the emergence of social inequalities and the multiplication of risks such as electronic, terrorist or health risks.
Another factor in the evolution of CSR strategies is the increasingly strong external pressure from stakeholders: document holders, employees, applicants and the regulator, with regulations that have accelerated in recent years.
In 30 years, we have moved from a commitment focused primarily on sponsorship, foundation financing and association support to a commitment policy that is progressively integrated into the core of the company’s strategy and expresses the entire insurance value. series.
Insurers understand the challenges that the current insurance model must face: increasing complexity in risk modeling, increasing cost of claims, and modifying the very nature of claims. By integrating their corporate social responsibility policies more and more closely into their activity and by developing it, insurance companies will be able to ensure the sustainability of their model.

What are the implementation steps to install the corporate social responsibility policy?

Insurance companies, like any company, operate on the three pillars of CSR: social, environmental and economic. Given the specificity of their activity, they will focus on 3 challenges: to be a responsible organization, a responsible insurance company and a responsible investor.
To spread a CSR policy aligned with development issues, the prerequisite is the commitment of senior management, which must show a sincere desire to integrate CSR into the heart of the company’s strategy and culture.
The first step is to take an inventory of current practices. This diagnostic phase includes an inventory of stakeholder expectations and organizational commitments.
CSR strategic directions, operational roadmap definition, quantitative targets and extra-financial performance indicators (KPIs) are the second structural step. KPIs make it possible to monitor and evaluate the effectiveness of CSR initiatives over time in relation to the ambitions set.
Once the roadmap is in place, the roll-out of the CSR policy can begin. To be effective, it must be experiential, dynamic, and fully integrated into the company’s operations. Training all employees on CSR issues is a real lever here to ensure their commitment.
Finally, the CSR policy is part of the continuous improvement process. It must therefore be challenged regularly to ensure its appropriateness and effectiveness over time.

What are the future regulatory impacts for insurance companies?

At the World Climate Summit at the end of 2019 (COP25 in Madrid), the European Commission launched the “Green Deal for Europe”. This plan aims to make Europe the first climate-neutral continent, with net-zero greenhouse gas emissions by 2050 compared to 1990 levels. Economic actors contributing to the environmental transition The EU has worked in recent years to create a classification and harmonize non-financial reporting practices To ramp up transparency requirements around the sustainability topics of private actors.
The Corporate Sustainability Reporting Directive (CSRD) is the new European directive on non-financial reporting. It replaces and expands on the NFRD (Non-Financial Reporting Directive), which was carried over into French law through the Declaration of Additional Financial Performance (DPEF). With the CSRD gradually coming into force from 2024, European regulations have taken their turn by strictly regulating publication obligations in relation to non-financial information. Then we’ll talk about sustainability reports.
What are the consequences for European companies and insurers?
First of all, resizing with an expanded application field. Because the thresholds for CSRD enforcement have been lowered compared to NFRD, it is estimated that around 50,000 businesses will be affected by this new regulation, compared to 11,000 previously.
The Sustainability Report will be published within the management report and reviewed by an independent external organization (OTI), with moderate assurance when it comes into effect to gradually move towards reasonable assurance.
The expected information is specific and standardized. The CSRD Directive introduces the new Common European Sustainability Standards, which require a large number of indicators, both quantitative and qualitative. For each sustainability topic identified, companies will have to publish their own policies, procedures or action plans, goals and measures. Objectives will have short, medium and long term deadlines, with annual progress monitored.
Finally, the directive reinforces the principle of dual materialism that was already in the embryo in NFRD. A real foundation for CSRD, this exercise allows companies to identify the company’s impact on sustainability issues as well as the impact of these issues on company development.
CSRD constitutes a major development for the companies that will fall within its scope of application: beyond issues of data availability and reliability, it implies a necessary increase in the strength of governance on CSR topics and a shift of activity towards a more sustainable model.

What is your vision for the next few years in the professions related to corporate social responsibility?
In the face of this organizational development and the ever-increasing social and environmental challenges, professions related to corporate social responsibility are developing and taking on great importance. These diverse challenges—climate, biodiversity, social inequality, and cyber risks—require cross-functional skills, ranging from risk analysis to strategy, including reporting and auditing.
The question arises: who bears responsibility for corporate social responsibility? Previously, she mainly reported to the CSR Director, and has historically often been associated with Human Resources. However, with accelerating regulations, such as CSRD, and increasing pressure from stakeholders, CSR has more strategic and cross-functional dimensions than ever before. It becomes necessary to integrate corporate social responsibility in all directions, including risk and finance.
A shift is underway in CSR-related professions. We may see a profound change in the CSR function or the emergence of new cross-functional roles, which combine skills in strategy, risk, finance and sustainable development.
This integrated approach will enable companies to effectively deal with the challenges of corporate social responsibility and contribute more effectively to the transition to a sustainable economy.

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