Insurance regulators and operators in Africa have been enjoined to adopt ESG Environmental-Social-Governance (ESG) to drive sustainable growth of the market on the continent.
Philip Lopokoiyit, CEO of the ICEA LION Holdings made the remark at 2022 Insurance Directors’ Conference held in Lagos, Nigeria with the theme: Transforming the Insurance Industry through ESG Principles: Directors’ Roles.
Speaking on ESG Integration in the African Insurance Industry, Lopokoiyit said the key substance of the Nairobi Declaration on Sustainable Insurance was a declaration of commitment by African insurance industry leaders to support the achievement of the UN Sustainable Development Goals (SDGs).
He emphasised that the declaration is “an Africa-focused initiative designed to encourage and support African insurance market players.” He further added that “It is a convening tool that signals their willingness to develop ESG principles and solutions within their businesses as insurance players become change agents in light of the biggest challenge facing humanity.”
The ICEA LION Group executive said the declaration is important because while the UN Sustainable Development Goals (SDGs) are gaining momentum, progress to meet these SDGs from a financial services perspective was not yet at the speed or scale required.
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Lopokoiyit added that the ICEA LION Group went to COP 27 in Sharm El-Sheikh-Egypt 2022 as a founding signatory to the Nairobi Declaration on Sustainable Insurance (NDSI).The Group co-hosted a Climate Adaptation event together with UNFCCC, FSD Africa and Namib Re as representatives of the NDSI on 9th November 2022.
At this event, the signatories announced the launch of the Africa Climate Risk Facility. According to the ICEA LION Holdings CEO, the signatories made a commitment to insure cumulatively more than 1.4 billion people by 2030 as well as provide $14 billion insurance capacity for flood, drought & cyclones in Africa. He described the $900 million multi-donor-trust fund facility, which when fully set up and resources mobilized, will be available for NDSI signatories.
The facility will drive premium subsidies, product development and capacity building. According to the executive, other significant milestones for the continent at COP 27 included the launch of the Africa Carbon Markets Initiative as well as the decision by developed countries to establish a loss and damage fund.
In terms of challenges of enthroning the ESG model in Africa, Philip identified six major roadblocks as heavy carbon-driven economies, few African voices on the issue, considerable lack of knowledge & awareness, uneven playing field for early-adopters of ESG, short-term planning models and lack of green finance instruments to quickly facilitate the adoption of ESG principles.
It is imperative to emphasise that the ESG model suggested by the executive was reflected prominently in the 16-point communique released at the event, underlining the importance and strength of the Group’s participation at the event.