Marsh Launches ESG Risk Rating to Assess Companies’ ESG Performance

Insurance broker Marsh announced the launch of its Environmental, Social, and Governance (ESG) Risk Rating, an assessment tool that can measure an organization’s ESG performance, enabling them to improve their ESG risks, and gain access to additional insurance market capacity.

Measured against more than 10 internationally recognized standards and frameworks published by leading organizations – including the Global Reporting Initiative, Sustainability Accounting Standards Board, Task Force on Climate-related Financial Disclosures, and the World Economic Forum – the ESG Risk Rating scores a client’s performance across 18 ESG themes. On completion of the free assessment, the organization receives an overall ESG risk score, as well as a rating for each ESG component.

Clients will use the results to identify their most critical sustainability and climate-related risks and opportunities to further develop their ESG strategies. As organizations are increasingly being asked to provide ESG metrics as part of the procurement process, the rating can be shared with the organization’s external stakeholders, Marsh explained.

As part of the offering, Liberty Mutual Insurance will offer its clients in the U.S. and Canada, who opt in to Marsh’s ESG Risk Rating, complimentary access to risk advisory services relating to sustainability and climate-related risks and opportunities.

“Embedding ESG is increasingly a source of competitive advantage to the organizations that do it well,” said Amy Barnes, head of Climate and Sustainability Strategy, Marsh, in a statement.

“With the ESG Risk Rating, we are providing our clients with a clear framework from which to better understand their ESG performance, make more informed investment decisions, and realize better risk management outcomes,” Barnes added.

Tracy Ryan, president of North America Global Risk Solutions at Liberty Mutual Insurance, commented: “We are excited to collaborate with Marsh on this important initiative to help firms improve their understanding of their ESG risks. Our risk advisory offer is in mutual recognition of the importance of ESG and Liberty’s commitment to help clients advance their sustainability journeys.”

As part of the development of the ESG Risk Rating and to support clients in managing their ESG risks, Marsh also plans to publish anonymized ESG risk insights by country and sector, deepening our understanding of how ESG ratings performance correlates with losses.

Last year, Marsh launched a new directors and officers liability (D&O) insurance initiative that recognizes U.S.-based clients with superior ESG frameworks. Following an independent review of their ESG frameworks, Marsh clients are then considered for preferred D&O policy terms and conditions on ESG-related exposures – such as climate change disclosures and representations – from four leading D&O underwriters.

Source: Marsh