The report also assesses how insurers are embedding sustainability objectives across governance, culture, investment and risk frameworks; and examines the structural, regulatory and challenges shaping progress.

Our interviews highlighted regulation as a powerful catalyst for progress. Yet, regulation is not the only driver: insurers are increasingly viewing sustainability as a material financial risk with direct implications for investment returns, portfolio resilience and underwriting profitability. On the investment side, environmental, social and governance (ESG) considerations are now inseparable from risk management, with scenario analysis commonly used to safeguard long-term performance. Underwriting integration is at an earlier stage but is advancing, particularly in property and catastrophe lines, where physical risk modelling is starting to inform pricing and coverage. Opportunities are also emerging in renewables, green technologies and mobility solutions, underlining that sustainability is becoming a core driver of both risk management and growth strategy.

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DATA COLLECTION
Insights were drawn from 20 30-minute face-to-face interviews covering a broad range of segments including life, commercial, savings, mutual societies, reinsurance, annuities and group insurance.

• Insurance companies are broadly positioned as ‘responsible investors’.
• Most insurance companies remain focused on screening out or excluding certain sectors, rather than actively investing to generate positive impact, though there are some exceptions.
• Larger companies have more resources to build bigger teams and expand their sustainability efforts, whereas smaller teams, despite their commitment, have faced challenges keeping up with the rapidly evolving regulatory landscape.
• The environmental, social and governance (ESG) pushback in the US is not expected to affect the progress UK insurance companies have made.
• The integration of sustainability considerations in the investment side are generally more mature, while underwriting is still developing.
• Climate is the top priority: in investments, it is applied through stress tests, Taskforce on Climate-related Financial Disclosure (TCFD) reporting, risk registers, stewardship, engagement and, in more advanced firms, through allocations to transition assets and Article 8/9 funds.
• Insurers seek clear, principles-based guidance from regulators, including clarity on fiduciary duty, incentives for transition investments, reduction of reporting burdens, actionable scenario insights and consistent benchmarking, all of which would help translate sustainability ambitions into effective investment practice.

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