At the end of March, the open consultation period for Susep’s draft circular that requires the inclusion of sustainability risks in the traditional risk management structure of insurance companies will end. The document envisages the creation of a sustainability policy and the preparation of an annual report, presenting risks and opportunities related to ESG (environmental, social and governance) and climate factors.
The draft provides for the introduction of processes and controls for the management of sustainability risks and even the possibility of establishing limits for risk concentration and/or restrictions on conducting business. For the executive director of the National Confederation of Insurance Companies (CNseg), Solange Beatriz, the superintendence will not impose any limits or restrictions, but it will provide guidelines that may help with the companies’ business decisions.
‘Sustainability risks must be integrated into the management of risks that have already been regulated’, explains Beatriz. The document also considers the assessment of sustainability criteria for investment selection. These benchmarks are to be included in the companies’ investment policies, and indicate in which portion of the portfolio they will be applied.
Solange states that concern with the topic of ESG is nothing new for insurers. ‘According to the last 2020 Insurance Sector Sustainability Report, prepared annually by CNseg since 2015, 90.5% of participating companies already integrate ESG issues into their strategic plans and 47.4% include sustainability criteria in investment management and in risk underwriting processes’.
The regulatory requirements that impose that insurers take sustainability factors into consideration are a key element for establishing an oversight model that fosters the sustainable development of the national financial sector. These aspects have recently been required by the Central Bank and also by the Securities and Exchange Commission (CVM).