Insurance

The initiative to develop the Principles started after UNEP FI conducted a series of research studies from 2006 to 2009. The research focused on risks and opportunities in the insurance business associated with ESG issues.1

The development of the Principles was overseen and managed by UNEP FI insurance industry member and observer institutions and the UNEP FI Secretariat (‘UNEP FI’).2 From late 2009 to early 2011, UNEP FI undertook an extensive process of in-depth deliberations to produce draft Principles.

In 2011, UNEP FI convened consultation meetings in Africa, Asia, Europe, Latin America and the Caribbean, Middle East and North Africa, North America, and Oceania to obtain global input on the draft Principles. The meetings engaged over 500 senior representatives from the insurance industry, government and regulators, intergovernmental and non-governmental organisations, business and industry associations, academia and the scientific community. Thereafter, UNEP FI produced the final Principles.

UNEP FI launched the Principles in June 2012 in Rio de Janeiro, Brazil, to support the aims of the UN Conference on Sustainable Development (‘Rio+20 Conference’). The launch event was co-hosted by the International Insurance Society and the Brazilian Insurance Confederation. The launch marked the start of the UNEP FI Principles for Sustainable Insurance Initiative (the ‘PSI Initiative’) to promote the adoption and implementation of the Principles globally.

No. The Principles are a voluntary and aspirational framework. They are not intended or designed to be legally binding and/or to create legally enforceable representations and/or commitments towards any signatory’s stakeholders or any third party. Consequently, the Principles are not intended to serve as a basis for legal or regulatory sanctions or any form of claim to be brought forward by the United Nations, the signatories, any other stakeholder or any third party.

Furthermore, actions taken by a signatory to implement the Principles are subject to applicable laws, rules and regulations and duties owed to shareholders and policyholders (see ‘Our aspiration’ in Section III of the Principles document).

Benefits of signing the Principles include:

• Publicly demonstrating your organisation’s adoption of sustainable insurance aims and its accountability and transparency to the public in managing ESG issuesAccess to UNEP and UN system expertise and resources on ESG issues, policymaking and science
• Access to UN events to dialogue with governments and other stakeholders on ESG issues, risk management and insurance
• Access to UNEP FI research, networks, events and capacity building services spanning ESG issues, insurance, investment and banking
• Access to the Annual General Meeting of signatories

To become a signatory of the Principles and a member of UNEP FI, your organisation must provide a letter and complete the PSI signatory application form.

The letter must be signed by your organisation’s Chief Executive Officer, Chair of the Board or equivalent positions. It must contain statements confirming your organisation’s approval of the Principles and its agreement to the following signatory requirements:

• Participation in the annual public disclosure process
• Payment of annual fees

A signatory is free to decide which actions it deems appropriate to implement the Principles. The possible actions under each Principle are only examples. A signatory may choose to consider other actions, taking into account its business model, circumstances across geographies and other factors. There may be reputational risks associated with signing the Principles and then failing to take any action at all, but implementing the Principles is generally a work in progress and a direction to head in, rather than a prescriptive checklist with which to comply.

The Board of the PSI Initiative (the ‘Board’) (see item 8 below) reserves the right, as the sole sanction envisaged by the PSI Initiative and the Principles, to delist your organisation if it does not fulfil any of the signatory requirements mentioned in item 5 above and explained in items 7 and 9 below.

If your organisation does not fulfil any of the signatory requirements, the Board will notify and discuss the matter with your organisation. Thereafter, if your organisation still does not fulfil any of the signatory requirements, your organisation can be delisted.

Your organisation can voluntarily withdraw as a signatory by providing a letter from an authorised signatory, stating its reasons.

Transparency is an integral form of accountability to the public, particularly in a voluntary and aspirational framework. Public disclosure of progress is important to the credibility of an organisation that has publicly adopted the Principles, which are meant to be implemented. This, in turn, can be important to the overall credibility of the Principles. Public disclosure will enable the public to better understand how signatories are managing ESG issues in their business as part of their implementation of the Principles. Transparency is also a motivator for continuous improvement.

To adhere to Principle 4, your organisation may choose to answer the following recommended guide questions to explain how Principles 1, 2 and 3 are being implemented:

• What are your aspirations and targets for this Principle?
• How do you plan to achieve them?
• What key actions have you taken to date to achieve them (i.e. demonstrate progress)?
• Your organisation may also choose to align or cross-reference its disclosure with current reporting (e.g. annual report, sustainability report, relevant disclosure or reporting frameworks).

Your organisation is free to decide the content of its disclosure. Regardless of the content, your organisation is required to:

• Disclose annually, from the date your organisation became a signatory, its progress in implementing the Principles. Your organisation is free to decide when its disclosure is completed each year.
• Make its disclosures public and allow them to be publicly available on the UNEP FI website.

The PSI Initiative was created to promote the adoption and implementation of the Principles globally. The PSI Initiative is administered by and set within the overall governance framework of UNEP FI, a global initiative involving UNEP and financial institutions (e.g. insurance companies, investment firms, banks).

The PSI Initiative will be directly governed by a Board comprising representatives from insurance industry signatory institutions and UNEP. Board members from the insurance industry will be elected by signatories. The Board will aim to have members from Africa, Asia, Europe, Latin America and the Caribbean, Middle East and North Africa, North America, and Oceania.

The Board will preside over the Annual General Meeting of signatories, where key issues concerning the PSI Initiative (e.g. material changes to signatory requirements) will be discussed and decided upon by signatories.

For the first year of the Principles, the PSI Initiative will be governed by a transitional Board comprising insurance industry and UNEP representatives.

Signing the Principles requires payment of annual fees to support the work of the PSI Initiative and its Secretariat at UNEP FI. The funds will be used to provide implementation support services to signatories through different work streams, and to promote the adoption and implementation of the Principles globally.

Annual fees for signatories are scaled according to insurance industry criteria (e.g. premiums, revenues) and are similar to the level of UNEP FI annual fees for financial institutions whose core business is not insurance (e.g. banks, investment firms). This information is available in the PSI signatory application form.

The Principles, PRI and UN Global Compact Principles are global, voluntary and aspirational frameworks supported by the UN and focused on the risks and opportunities associated with ESG issues.

The Principles are a framework for the insurance industry and their scope includes but is not only on investment management. On the other hand, the PRI are a framework for the institutional investment industry, which spans insurance and non insurance institutions (e.g. insurance companies, pension funds, government reserve funds, foundations, endowments, depository organisations, investment management companies). Accordingly, their scope is only on investment management, which they address more comprehensively.

The Principles and PRI are global frameworks within the financial sector. They are aligned with and complement the aims of the UN Global Compact Principles, which promote the adoption of sustainable business practices across all industry sectors. The UN Global Compact Principles are derived from universally-accepted principles in the areas of human rights, labour, environment and anti-corruption.

There is no obligation for signatories of the Principles to sign the PRI or the UN Global Compact Principles, and vice-versa.

Please address the letter to:

UNEP Principles for Sustainable Insurance Initiative
International Environment House
15 chemin des Anémones
1219 Châtelaine
Geneva
Switzerland

For more information on the Principles Sustainable Insurance please contact the PSI Secretariat at psi@unepfi.org