Professional services firms, of all sizes, are predicted to benefit from the UK Government’s support of the sector, as Chancellor, Rishi Sunak, seeks to put it ahead of the global curve and help it to capitalise on businesses’ requirements with regard to Environmental Social Governance (ESG).
ESG is rapidly becoming regarded as a “critical pillar” for companies who rely on shareholder support and having solid investment backing. The Chancellor has both climate change and Sustainable Disclosure Requirements at the heart of his plans and it is thought that his actions will become a catalyst for forward-thinking approaches within these areas.
Much of this will be supported by professional services firms, particularly accountants. Interestingly, it is believed that medium and even small firms will do well from helping to manage clients’ corporate social responsibility and ESG strategies, because of their ability to offer clients a more specialised focus in this area.
With a new green bond being launched by the Government, to try to raise £15bn that will help propel the UK financial services sector forward in the provision of ESG strategy services, there is every reason to plan to use ESG consultancy as a means for business growth.
ESG is also set to become increasingly influential when it comes to insurance underwriting. Many aspects which contribute to ESG implement on claims, one great example being flooding caused by climate change. Flooding can cause significant damage insured properties, leading to major insurance losses and higher premiums.
Insurers are already demonstrating that they will not offer insurance cover to companies that are major generators of carbon footprint. How ESG is handled within a business is likely to influence both policy terms and insurance premiums, for far more insured commercial policyholders, in the very near future.
Willis Towers Watson has now developed WTW Climate Quantified
™ – a tool which produces informed risk management strategies which reference ESG. Using this enables an analysis of future and desired actions on the ESG front to take place, so that ESG-focused areas become an integral part of overall risk management.
Accountants and other business sectors can work on their own ESG strategies with their broker but also encourage clients to take up that broker’s expertise, as they seek to manage activities within the ESG sphere and help keep insurance premiums as low as possible. Careful management of ESG risks will help an insurer view a company as a well-managed one. A broker’s presentation of the facts and figures around risk control can make a big difference, at both policy inception and renewal.
Professional services firms can also talk to a broker about any enhancements they may require to their professional indemnity insurance, if they are offering consultancy around ESG. Bearing in mind its inherent links to shareholder satisfaction and market values.
To find a broker who can provide the insight into ESG that you require for your own professional services business or your clients, as well as robust professional indemnity protection, please get in touch.