If has incorporated the UN Global Compact principles into its underwriting standards
If, Sampo plc’s largest subsidiary, has included sustainability principles in its corporate customer selection and risk assessment from 1 June 2021.
The new underwriting standards are based on the UN Global Compact, an international initiative focusing on 10 principles for sustainable business operations. The principles cover the areas of human rights, labor, environment, and anti-corruption.
Integrating the UN Global Compact principles in insurance underwriting is one of the measures If is taking to increase sustainability in its business practices. Sustainability requirements have previously been applied to suppliers through the Supplier Code of Conduct and to If’s investment activities through norms-based research. Now If also expects its corporate clients to comply with the same principles.
Implementation of the New Standards
If has prepared for the implementation of the new standards by establishing assessment teams specialized in environmental, social and governance (ESG) issues and educating employees on the principles of the UN Global Compact, norms-based research, and the new ESG framework.
At If, the principles of the Global Compact have been directly integrated into the underwriting standards and into the existing Customer Due Diligence process for corporate clients. In practice this means that new and existing customers undergo ESG screening based on an internal model. If uses research from an external partner specialized in monitoring ESG compliance to assess how corporate clients respect the UN Global Compact in their operations. The internal ESG assessment teams make decisions about client relationships based on the external partner’s research, as well as other relevant material.
If a corporate client is found to be in breach of the Global Compact principles, If will notify the company and ask them to improve their operations. However, if the company is not willing or able to change its practices, the client relationship can be terminated.
To date, a small number of corporate clients have been notified that their ESG grading is not satisfactory. So far, no client relationships have been terminated due to breaches against the UN Global Compact principles.