The AAE view on insurance and sustainability

Published June 2023

 width= Jérôme Crugnola-Humbert
Chairperson AAE Sustainability and Climate-Related Risks Working Group


The times have changed: with growing understanding of the climate emergency and its far-reaching consequences, stakeholders on all sides are insisting sustainability is tangibly integrated across the full spectrum of products and businesses. In the insurance sector this is evident as a general expectation – now held by investors, policyholders, regulators and employees – that companies will make a clear transformation and become providers of sustainable solutions.

This shift in thinking is still relatively new, and the AAE has now shone a light on the debate by releasing a new discussion paper, “Sustainable Products in Insurance”. It recognises that the central challenge for insurers is about defining what makes a product truly sustainable? Rather than attempting to definitively answer that question, the new report takes an in-depth look at the current situation and direction(s) of travel, and makes some suggestions about next potential steps.


It is certainly clear that using “sustainability” as a vaguely sketched-out buzzword is no longer an option. To enable significant progress to be made, there needs to be an increasingly detailed concept that can – and should – be tracked and measured. The paper looks closely at what is already in progress here in the EU, including the Sustainable Finance Disclosure Regulation (SFDR) which uses “dark green” and “light green” classifications to meaningfully differentiate between ESG-focused investment portfolios, with the goal of reorienting the flow of capital towards sustainability. It also looks at the regulations and reporting taxonomy under development for traditional (i.e. non-investment-based) insurance products.


Policymakers have been tackling the broader topic for some time, so as the insurance industry pivots towards building sustainability into product design, the report illuminates how the sector should draw on what is available. For example, the UN has set out Principles for Sustainable Insurance; furthermore, there has already been reporting which uses the UN’s 17 Sustainable Development Goals (SDGs) to explore and describe how life and non-life insurance can drive social sustainability. We see a key role for more benchmarking and mapping of this kind, and particularly highlight the usefulness of an approach that considers all stakeholders as well as the entire value chain.


With environmental impacts already being felt, it is critical to acknowledge that insurance companies have an important part to play in managing and mitigating climate risks and ESG concerns. Actuaries must also be actively involved with this, applying their financial expertise and commitment to the public interest to contribute to the achievement of sustainability objectives.


Download the discussion paper here.


This blog is written on a personal title with the assistance of Yestrans.

30 June 2023


The European Actuary Magazine