AXA executive: Insurers are key to standardising ESG reporting
The insurance industry is a key player in driving standardising reporting on environment, social and governance (ESG) issues, a senior executive from AXA told AsianInvestor.
Several asset owners have told AsianInvestor that while they nurse ambitions to implement ESG frameworks into portfolios and operations, the lack of standardisation about what is measured or what is reported as ESG-compliant has hampered those efforts.
Some institutions also don't have the expertise to create these frameworks.
“We understand that this is an ongoing challenge and problem for the wider economy and public, said Chelsea Jiang, chief technical and innovation officer, general insurance, AXA Greater China.
“We are a key industry contributor on "The Green and Sustainable Finance Cross-Agency Steering Group" in Hong Kong and are providing insights to regulators on how this can be standardised,” she told AsianInvestor.
AXA
“In fact, regulators acknowledge that the insurance industry with significant investment in global data collection and climate science studies, as well as historical records of loss patterns is the key industry to help set the right standards for reporting and measurement.”
CLIMATE IS FRONT AND CENTRE
AXA’s Hong Kong and Macau unit recently announced a strategic partnership with technology and management consultancy Capco to offer climate-related risk management and reporting solutions to financial institutions and other organisations.
Across the world, climate change is increasingly sitting front and centre on the corporate agenda and pressure is mounting to ensure compliance with increasingly stringent climate disclosure regulations.
In particular, the International Sustainability Standards Board (ISSB) will make its first two sustainability disclosure standards effective from January 1, 2024. One of those is purely climate-related.
“We foresee a strong trend of standardisation of ESG disclosure requirements related to the International Sustainability Standards Board (ISSB) being launched this year,” said Alan Au, Asia Pacific ESG lead for Capco, noting that regulators across the region are indicating they will align with ISSB.
The Hong Kong Stock Exchange (HKEX) also plans to make it mandatory for companies listed there to make climate-related disclosures, as the city steps up efforts to become a sustainable financial centre.
Capco
Au said that HKEX’s new rules on climate reporting largely align with the ISSB climate standard.
The plan is open to public consultation until July 14; implementation is expected soon after.
ASSESSING IMPACT
Jiang believes AXA’s solution will help companies comply with Hong Kong’s upcoming climate-related rules.
She noted that the new climate-related benchmarks – which AXA also uses internally – are the product of decades of data collected and analysed. “…we have built our business on paying for the losses suffered by clients due to climate events.
"As a result, we are able to derive credible destruction and recovery curves which can help clients to understand their financial and operational impact from a client event,” she said.
Jiang said AXA employs more than 30 climate scientists studying the trends of climate change, and the insurer can incorporate these scientific findings into its models, Jiang said.
In the run-up to ISSB norms becoming mandatory, expect more asset owners to develop climate-related frameworks.
Singaporean state-owned investor Temasek's unit GenZero also teamed up with Boston Consulting Group to launch a climate impact measurement framework in early June.