Our inaugural re/insurance CSRD benchmark published in April 2024 captured data from 16 re/insurers and identified early trends in their CSRD journey. For this second edition, we interviewed 23 organisations across the insurance value chain over summer 2024. Our survey provides cutting-edge insights on industry readiness and emerging market practice on some of the most complex challenges across the following themes:
- Programme maturity and assurance
- Double materiality assessment
- Transition plan, policies, actions and targets
- Scope 3 GHG emissions
- Implementation and technology considerations
Overall, there is significant diversity in readiness, and we expect market practices to shift in the coming years as transition reliefs cease, new regulatory guidance is released, and market standards develop.
- Insurance CSRD readiness: a mixed picture emerges: Our survey reveals a sector grappling with the complexities of CSRD implementation, highlighting a gap between ambition and readiness. Amongst those reporting under CSRD for the first time in FY24 (74% of respondents), only 6% have completed a mock report at the time of this survey (Summer 2024) however this has been evolving fast since then.
- CFOs are taking the lead: 86% of respondents identify the CFO as solely or jointly accountable for CSRD programme execution, indicating a continued shift towards operationalising sustainability reporting within finance functions.
- Limited assurance prevails over reasonable assurance: 21% are considering voluntary reasonable assurance in the first year of CSRD reporting. Most see this as too challenging given current data and reporting maturity levels. Early adopters of reasonable assurance are focusing on a limited set of KPIs with existing assurance history. More broadly, early engagement with the external assurance provider and with the Audit Committee and the Board is deemed good practice.
- E1 and S1 are universally material: All survey participants deem E1 Climate Change and S1 Own Workforce as material topics, reflecting a sector-wide focus on these key areas. S4 Consumers and end-users and G1 Business Conduct follow closely in materiality, significant for respectively 92% and 85% of the survey participants. Beyond this, different business models lead to a divergence in what is considered material.
- Scope 3 emissions: A phased approach: The insurance sector is divided on disclosing Insurance-Associated Emissions (IAEs). While a few pioneers are forging ahead (25% of FY24 reporters) across commercial lines, personal motor lines and health insurance, the majority remains undecided on timelines and methodologies, hampered by data limitations and the lack of market standard for IAE accounting for many lines of business. Only a third surveyed plan to disclose IAEs within the next four years. Whether to disclose claims emissions, whether in Scope 3 category 11 or category 1, also remains actively debated. Many have voiced that they will monitor peer disclosures and draft sector guidance when available.
- Tactical solutions dominate in year one: Participants are favouring a phased approach, with 90% of respondents planning to apply transitional reliefs allowed by ESRS 1, and a majority (63%) opting for tactical solutions in year one, leveraging a reuse and extend approach to existing EPM, ERP and data hyper-scalers (70%). They aim at tackling the immediate compliance requirement and building valuable experience to inform the approach and plan for later years of reporting. Data emerges as a primary concern, with insurers facing challenges in collection, availability, quality, and knowledge. This is further complicated by the need for new and untested data sources, both internal and external. A "wait and see" approach is being especially taken with regards to pure-play ESG technology solutions. Leading firms are simultaneously building a strategic roadmap, while planning for a more sustainable future solution.
Contact our team to discuss these insights in more details and compare notes on how your organisation can achieve a cost effective value-adding CSRD implementation.