Marsh introduces the ESG Risk Rating to assess companies' ESG performance

Published on: 20 March 2022
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The Environmental, Social, and Governance (ESG) Risk Rating, a tool that can measure an organization's ESG performance and help them reduce their ESG risks and gain access to more insurance market capacity, was just launched by Marsh, the top insurance broker and risk advisor in the world.

Marsh, the world's leading insurance broker and risk advisor, today announced the launch of its Environmental, Social, and Governance (ESG) Risk Rating, a tool that can measure an organization's ESG performance, allowing it to improve its ESG risks and gain access to additional insurance market capacity.

The ESG Risk Rating scores a client's performance across 18 ESG themes by comparing it to more than ten internationally recognized standards and frameworks published by leading organizations such as the Global Reporting Initiative, Sustainability Accounting Standards Board, Task Force on Climate-related Financial Disclosures, and the World Economic Forum. When the free assessment is completed, the organization receives an overall ESG risk score as well as ratings for each ESG component.

The findings will be used by clients to identify their most critical sustainability and climate-related risks and opportunities for further developing their ESG strategies. The rating can be shared with the organization's external stakeholders, as organizations are increasingly being asked to provide ESG metrics as part of the procurement process.

Liberty Mutual Insurance will provide complimentary access to risk advisory services relating to sustainability and climate-related risks and opportunities to its clients in the United States and Canada who opt in to Marsh's ESG Risk Rating as part of the offering.

"Embedding ESG is increasingly providing organizations with a competitive advantage,"

said Amy Barnes, Marsh's Head of Climate and Sustainability Strategy.

"With the ESG Risk Rating, we're giving our clients a clear framework for better understanding their ESG performance, making more informed investment decisions, and realizing better risk management outcomes."

"Marsh is adamant that insurers should consider organizations with strong ESG frameworks to be better risks. Liberty Mutual's risk advisory benefit is a positive step forward on this journey; we look forward to collaborating with other segments of the insurance industry on this critical initiative."

"We are excited to collaborate with Marsh on this important initiative to help firms improve their understanding of their ESG risks,"

said Tracy Ryan, President of North America Global Risk Solutions at Liberty Mutual Insurance.

"Our risk advisory offer reflects both the importance of ESG and Liberty's commitment to assisting clients in their sustainability journeys."

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

Marsh launched a new directors and officers liability (D&O) insurance initiative last year to recognize clients with superior ESG frameworks in the United States. 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 following an independent review of their ESG frameworks.

Source: Marsh news

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