Ferma: Is there any avoiding ESG red tape?

Companies have a duty to transition, but is there a risk of drowning under the growing raft of ESG rules. These were some of the questions asked by speakers at the Ferma Forum 2022 in Copenhagen.

Aurore Bardon, founder and CEO of the ESG Lab & Society, said that organisations had to adopt more sustainable models and integrate ESG risks into their broader enterprise risk management approaches. 

“We have to collectively work together to accelerate ESG issues into the strategy of companies and engage CEOs to invest in co-building solutions,” she said.

While sustainability goals are essential, Emil Fannikke Kiaer, EVP, Political Affairs, Confederation of Danish Industry, thought there was a risk that ESG could become a ’bureaucratic monster’.

“You will not be in the market in the next five to ten years if you do not take ESG standards seriously,” he said. ”But all the new rules are really very hard for companies to deal with.

”I know of some companies that have had to double the number of reporting staff they have just to deal with ESG.”

But for Marie-Claire Daveu, chief sustainability and institutional affairs officer at KERING, measuring and benchmarking performance against ESG criteria is simply a learning curve we have to go through.

She said her company had put sustainability at the heart of its strategy for the past two decades, well before it was ‘trendy’.

In order to manage environmental risks, you first must be able to measure them, she explained. By embracing such an approach there will be no room for greenwashing or social washing.

Insuring the transition

A big topic of this year’s Ferma Forum is how insurance companies can support insureds as they embark upon their transition journeys.

For instance, can the industry work more collaboratively to incentivise efforts to decarbonise and meet sustainable development goals? And will the industry innovate to offer solutions and meaningful capacity for new technologies?

Last month, the risk association published a whitepaper, Insuring the Transition, calling on the (re)insurance industry – and other stakeholders – to address urgently a number of insurance-related issues.

During the ’Insurance in Transition’ panel discussion on Day One of the forum, Mario Ramirez Ortuzar, risk and assets manager, Exolum, challenged insurance bosses on the decision to step away from offering capacity for heavy emitters.

Transition is a journey - he pointed out - and energy companies need financial support in order to put in place new, greener technologies. A process that cannot happen overnight.

“If we don’t receive support from insurers the transition will take longers,” he said.

Long-term agreements were seen as one option whereby insurers continue to offer capacity while monitoring companies’ progress towards more sustainable goals.

Xavier Veyry, CEO of AXA XL acknowledged that insurers had an essential role in the climate transition and said a partnership approach was essential at every stage.

”It’s in all of our interests to make sure we exchange more data,” he said. “Are we giving enough back? We can probably do better.”