Sustainability | A Lens on Insurance, Financing and Investment Patterns

August 6, 2020 | Jim Ottewill

“There will be no finance but sustainable finance in a few years time.”

Like many of this year’s conferences, EXECinsurtech was held online last month and featured Redsand’s Nicole Anderson in conversation with InsurTech investment partner and advisor Sabine VanderLinden discussing all things green finance in relation to insurance. Here’s some of the exchange and watch the video in full below…

Sabine VanderLinden (SV): How can we define sustainability in relation to financial services? 

Nicole Anderson (NA): In this context, it means how current and future financial systems aid the transition to a net zero/low carbon global economy. It represents the changes to products, architecture and services we need to have a positive long lasting reference point on the global economy.

There will be no finance but sustainable finance in a certain amount of time. 

The pandemic is the biggest use case for sustainability irrespective of where you sit in society, whether you be a consumer or a global multinational company. If we do not care for our environment, then the economic consequences are devastating. If finance is not going to get its act together, then we will face a very gloomy future. We need to get this right.

SV: What are the main challenges we need to be mindful of? 

NA: There needs to be structural changes in our financial services. Nothing can happen without this taking place. It’s an issue for frameworks, regulation and policy. Europe is definitely leading the way but this is a global condition. 

The other – the role of liquidity – this has been a challenge since 2008 and continues to be a big thing. The consequences of accessing capital are increasingly acute in the coming months. 

If we talk about insurance, then yes there are physical risks and risks around climate. One of the biggest implications is also about the transition. Insurers need to look at the movements of market players and how they become greener, alongside the fall out and cost of this transition.

SV: What are the things we have seen happening in finance insurtech can learn from? 

NA: The big systemic change and opportunity lies within the big walls of capital, so how the investment management industry looks at impact. This also touches both public and private markets. In public markets, how do fund managers get their heads around transparency in their investment portfolios?

There’s a lot of work to be done by the big fund managers in getting under the hood of public companies and working out if they are truly green and whether any money they get allocated in a cycle impacts the real world.

In private markets, transparency and the mechanism for projects in the world of sustainability is still an issue. The challenge for investors and founders is to create efficient cost effective ways of growing businesses to be more sustainable.

Watch the full exchange below:

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