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Everyone talks about sustainability, but do we all mean the same thing? We do not currently have a universal definition that is accepted in the academic community and in society more generally. So when is a company sustainable? Is it by having beehives in the courtyard or going paperless? Or is there more to it?

In the past, sustainability, as it was generally understood, related primarily to a company’s impact on the environment. Two major pillars have now been added, meaning that sustainability is now evaluated on three dimensions. These are referred to as the ESG (Environment, Social and Governance) criteria. A further change has been made to meet the needs of current and future generations alike, with the addition of aspects like (intergenerational) equity and longtermism.

You may now be asking yourself how an insurance company can be sustainable in the first place. Let’s take a look back into the past: Sustainability as it was initially understood by companies chiefly related to compliance with legal or internal company requirements and minimum standards. Today, in addition to these requirements, it also encompasses the expectations of internal and external stakeholders that shape the image of a sustainable insurance company. Before we take a closer look at the different fields of action, we’ll be presenting a few examples of global trends as further proof that sustainability is not only important – it’s also an area where urgent action is increasingly needed. This should drive home the point to insurers of just how urgently important sustainability is and nudge them on to draft a corporate sustainability strategy.

Global trends

Climate change

In 2020, climate change was listed for the first time ever as one of the top ten business risks in the Allianz Risk Barometer. The number one concern of insurance companies is an increase in property damage due to rising sea levels, prolonged periods of drought, destructive storms, massive flooding and so forth. The social debate on climate protection also adds weight to the issue of sustainability, with more and more external stakeholders (for example customers and potential employees) demanding that additional measures be taken to protect the climate and environment.

Demographic change

Demographic change will also lead to an increasing shortage of skilled workers at insurance companies in the coming years. With that in mind, it is all the more important for companies to now position themselves as an attractive employer through sustainable activities in order to attract and retain qualified staff. Employees are also paying closer attention to the sustainable awareness and actions of their employers and take this into account when choosing who to work for.

Impact of technical progress

If you were to view the megatrend of digitalisation as a process of change that is a direct result of increased use of digital technologies that leads to new ways of working and new paths of action, the main upshot would be that customers are increasingly emancipated and less willing to accept obfuscation and a lack of transparency from companies. Being able to provide simple, precise information is therefore becoming increasingly important. This means that insurers have to use clear, easy-to-understand language in their corporate communications. Digitalisation should also support the transition to a sustainable society in a time when traditional media is becoming less relevant as the central source of news. As the media landscape shifts, the way in which people form opinions is more direct, and it is moving increasingly online away from centralised institutions. Transparency and dialogue are the order of the day. In view of these changes, digitalisation is an effective way to communicate a sustainability strategy to the outside world.

Agenda 2030

At the very latest when the 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals (SDGs) it sets out were adopted by the United Nations, sustainability has been an issue that concerns everyone, including governments, the public and, most of all, companies. As drivers of economic growth, they play an essential role in the sustainability debate and are now called upon more than ever to pursue not only economic interests but also ecological and social goals.

Fields of action in the insurance industry

Many insurance companies already understand that creating a sustainability strategy and implementing it are not just cost drivers. Doing so also delivers a number of financial and social benefits. For instance, a company can enhance its reputation by addressing the public’s growing environmental concerns and become a more attractive employer through sustainable corporate governance. Looking at it from this perspective, you could argue that meeting the public’s expectations in terms of sustainability produces positive spillover effects, though the primary benefit is to be seen on the profit front. Companies not only boost their earnings, mainly by cutting costs (for example, by using fewer resources such as work materials or through the money saved on leases for office space), but they also heighten their appeal as an employer at the same time.

Once they recognise that corporate sustainability helps drive higher profits and generates added value, the costs associated with environmental and social measures will then be set against the economic benefits it creates. But what are specific areas where the insurance industry can improve in terms of its sustainability? The three ESG criteria mentioned above can be divided into four fields of action:

  • 1. Regulation
  • 2. Customer journey
  • 3. IT and infrastructure
  • 4. Sustainability strategy

Each of these fields of action is full of potential and creates competitive advantages. The growing expectations of internal and external stakeholders mentioned at the beginning are reflected in all four points. Of the four fields of action, I personally see the greatest potential in terms of the sustainability strategy, more specifically in the sub-categories of employees and social affairs. Measures that fall under this sub-category (for example, subsidised employee benefits, health programmes or campaigns such as cycle to work and so on) are relatively easy to implement and allow a company to quickly gain an edge over its rivals. According to recent market research studies, including StepStone’s 2019 study titled ‘Nachhaltigkeit als Attraktivitätsfaktor’ (Sustainability as a Tool to Attract Employees), respondents are now more likely to include at least one sustainability factor in their assessment of a company, such as its treatment of employees or commitment to environmental protection. Knowing this, it becomes quite clear that internal and external stakeholders need to be made aware where the company’s outshines its competitors. In addition to putting sustainable activities in action, it is equally important for the company to clearly communicate and disseminate this information true to the saying: ‘Do good and talk about it’.


Putting beehives in the courtyard and going paperless are important first steps towards sustainability. However, there is much more an insurance company can do. The insurance industry can use its prominent position to make a major contribution to sustainable action. This is happening not only because of the internal shift towards more sustainable use of resources, especially by the company’s own employees. It’s also a result of the influence that insurers have because of the large amounts of money they manage. If they use this influence for targeted investments in sustainable financial assets and companies, they can bring about significant change. Insurance companies can set a good example and help contribute to a more sustainable and mindful use of resources by supporting sustainable behaviour in society.

By taking a pioneering role, an insurance company can set itself apart from competitors on domestic and international markets. If a company is perceived by the public and its own employees as a responsible and sustainable business through clear and transparent communication, customers will trust the company more, which in turn has the potential to increase long-term customer loyalty. Another potential positive effect is increased motivation and satisfaction among company staff. If employees are happy, they will be more loyal to the company, which is critical to counteracting the effects of demographic change and the serious consequences this brings with it. Having the reputation of being a sustainable employer also increases the chances of attracting qualified employees, especially skilled workers.

Is this a topic that interests you? Do you want to find out what further action insurers can take, especially in the four fields of action outlined above, what potential has yet to be tapped in terms of sustainability and how it can become a major competitive advantage? Then read more about current activities at adesso on adesso’s ‘Green Insurance’ landing page. There you will also find a white paper on sustainability published in early July, which describes in detail the fields of action for insurers in the area of sustainability already presented in this blog post.

You will find more exciting topics from the adesso world in our latest blog posts.

Picture Svenja Schröder

Author Svenja Schröder

Svenja Schröder joined adesso in January 2021 as a consultant in the Line of Business Insurance. Before that, she gained a lot of experience in the field of InsurTechs and ecosystems in the insurance industry as a working student during her Master's degree in Risk and Insurance Management. She is also involved in the topics of environmental protection and sustainability.

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