African Risk Capacity Limited awarded top ESG score in the insurance industry
Press Release issued by ARC Limited?
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African Risk Capacity Limited awarded top ESG score in the insurance industry?
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JOHANNESBURG, 16 JANUARY 2023 – African Risk Capacity Ltd. (ARC) has received the global insurance industry’s top overall environmental, social and governance (ESG) score.??
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The ESG evaluation by Morningstar Sustainalytics is a comprehensive assessment of a company’s preparedness to meet future risks and opportunities linked to ESG factors, such as climate change, regulatory risk and reputational issues.??
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I have just received the ESG rating and happy to advise that we have significantly improved. Our risk is 5.7 which falls in the negligible category , last year it was 10.2 in the Low Risk category. Last year we were 1st in the Diversified Insurance Sector and 3rd in the Insurance Sector. Now we are 1st in both. I have attached the report.??
Sustainalytics' ESG Risk Ratings also provide investors with third-party validation of the company's sustainability performance, along with insights into why certain ESG issues are considered material for a company and how well it manages those risks.?
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ARC Limited CEO Lesley Ndlovu says the organisation’s top ESG score in the insurance industry is reflective of the leadership role it plays in helping to mitigate and manage the effects of climate change on the African continent.??
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“We are proud to have earned the highest ESG ranking in insurance ahead of other prominent global insurance companies. This third-party validation of our business is a great asset for us as we seek to partner with ESG-conscious reinsurers and investors to make a difference on the African continent,” says Ndlovu.??
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Established in 2014, ARC Limited provides natural disaster insurance relief to African countries. Along with its partners, which provide premium support, the insurer has already paid over US$61m to seven countries to provide drought relief and address the economic concerns these countries’ most vulnerable citizens face.??
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Most recently, ARC Limited paid out US$2.1m to the Madagascar Government to meet the food security needs of over 600,000 people affected by the devastating drought.??
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“ARC Limited’s role as a parametric insurer is critically important in building resilience and ensuring a country is able to bounce back swiftly after a natural disaster,” says Ange Chitate, COO ARC Limited.??
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She adds: “Through this favourable ESG rating, ARC Limited positions itself as an even more attractive partner for like-minded organisations seeking to reach the most vulnerable people in Africa. Through these strong partnerships, we enhance our potential to provide rapid financial support to mitigate the impact of natural disasters.”?
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ARC Limited’s ESG score was calculated following an independent audit of the company's business practices and policies. Performed by Sustainalytics, a leading ESG research, ratings and data firm, the assessment focuses considers ESG risks of companies on a scale of 0-100, with 0 indicating the lowest risk.??
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At 10,3, ARC Limited’s risk rating is the lowest amongst its global peers. No events or policies were identified that may negatively impact stakeholders, the environment or the company's operations. In terms of ESG risk management, ARC Limited received a strong score of 66.3, indicating the robustness of the company’s ESG programmes, practices and policies.??
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In particular, ARC scored low or negligible risk ratings terms of Human Capital, Business Ethics, Corporate Governance and ESG Integration.??
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Focusing on the management of risks related to skilled labour, as well as labour relations, Human Capital as a category focuses on a company’s performance in terms of non-discrimination, working hours and minimum wages. In its assessment, Sustainalytics found that ARC employs highly qualified staff with specialised knowledge in finance, insurance, climate change and abilities to forecast climate risk realisation and to structure complex insurance deals.??
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The report further found, from a business ethics perspective, that ARC Limited has a comprehensive set of policies on ethical issues which addresses definition and prohibition of bribery and corruption, conflicts of interest and fraud. Moreover, the company maintains a detailed anti-money laundering policy.??
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“The independent endorsement of our ESG efforts and achievements is particularly timely as we raise our profile in the run up to COP26. We will remain firmly focused on continuing the good work and broad collaboration we have achieved with our partners to solve some of the pressing problems that our continent faces. We all have a role to play,” concludes Ndlovu.?
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The Nairobi Declaration on Sustainable Insurance was launched by the UN Environment Programme’s Principles for Sustainable Insurance Initiative (PSI) during the virtual 4th PSI African Market Event on 22 April 2021. Its importance lies in the key role that the African insurance industry members, including risk managers, insurers and investors, have to play in promoting all forms of sustainable development on the continent. ?
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Lindelwe Lesley Ndlovu , CEO of ARC Limited, advises that insurance leaders in general, and ARC Limited through the power it wields, have a critical role to play in promoting the values of the declaration. “We are frontrunners in the recovery of countries from pandemics (such as Covid-19) and devastating droughts and cyclones (through the payouts that members states receive) – and the hope is that many other companies headquartered on the continent will follow suit not only in signing, but also by playing an active role in promoting the economic, social and environmental sustainability that has become so crucial in the world today.”?
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While the declaration ties in strongly with the UN SDGs of a shared global vision to “end poverty, rescue the planet and build a prosperous and peaceful world”, it is generally understood that humanity is not advancing in these goals at the speed or scale required – to tackle climate change, biodiversity loss, ecosystem degradation and pollution, along with human rights violations, poverty and social inequality – within the UN’s Decade of Action up to 2030. ?
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Notably, the ravages of the Covid-19 pandemic, and the way in which resources had to be redirected into combating the virus, have slowed our global progress towards reaching the SDGs.?
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But ARC Limited’s head of Business Development, David Maslo, says that reaching the objective of 50 signatories within half a year is a tremendous achievement. It demonstrates how high this topic is on the agenda of most African insurers.?
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“The Nairobi Declaration has formed a united African voice. It will demonstrate, at COP-27 for example, the impetus of the African insurance industry in prioritising the goals of the Paris Agreement towards a Net Zero world. It makes a statement that we are taking practical steps to get on the same page as a continent; that we are playing our part en masse,” he enthuses.?
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While the declaration showcases a tangible first step from insurers towards increasingly more sustainable business, in which stakeholders will strive to better integrate ESG into their business models in alignment with the goals envisioned by the Net Zero Insurance Alliance, it is also important for leaders in this space to engage with other signatories and support them – so that they can better understand, assess and implement the massive changes required for a sustainable future.?
“Becoming more sustainable as an insurance business is a journey. More than just a signature on paper, those companies who become signatories will need to understand the full impact of this declaration on their operations; will need to engage with and educate their teams through webinars and other opportunities,” says Ndlovu.??
Adds Maslo: “I think that many of the requirements of transitioning to an ESG-compliant framework in risk management is more layered and complicated in Africa than it is, for example, in Europe and the rest of the world.”?
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Yet, as a leader in the space, an industry player known continent-wide for supporting more than 35 members states as they prepare and plan for the ravages that climate change will bring – ARC Limited has the opportunity to share, far and wide, the principles of conducting business in an ESG-compliant manner. ?
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“We encourage others in the industry to take this initial step, but also advise that it represents just the first footfall on a path towards numerous different activities and accommodations that will eventually add up to make sustainable business a reality. Everyone needs to do their part,” Ndlovu concludes.?
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Ends?
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For more information about ARC Limited, or to interview Lesley Ndlovu, contact Natalia Rosa on +27 83 449 4334 or [email protected] .??
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About ARC Limited??
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The African Risk Capacity Limited (ARC Ltd) is a financial affiliate of the African Risk Capacity (ARC), a specialised agency of the African Union (AU), an initiative designed to improve current responses to climate-related food security emergencies.??
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ARC Ltd is a mutual insurance facility comprised of its members, which have included Kenya, Mauritania, Niger, Senegal, Mali, Malawi, Gambia, Burkina Faso, Chad, Zimbabwe, Togo, Madagascar, and Zambia.?
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The membership also includes its capital contributors who have provided premium subsidies, including USAID, FCDO SWISS, KFW/BMZ, IFAD, AFDB, WFP and STARTNETWORK.?
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