Insurance industry to have a Final Sustainable Finance Roadmap before year-end
At a business breakfast last week, FSD Africa and the Financial Sector Conduct Authority issued a call to action to commit to the Nairobi Declaration on Sustainable Insurance as a first step toward creating a sustainable insurance industry and building resilience for the continent.
The Financial Sector Conduct Authority (FSCA) plans to host stakeholder engagements and public workshops with the aim of releasing a Final Sustainable Finance Roadmap during the course of this year. It is estimated that South Africa holds 70% of the African insurance industry’s market premiums.
Formally launched in April 2021, the Nairobi Declaration on Sustainable Insurance (NDSI) is a declaration of commitment by African insurance industry leaders to support the achievement of the UN Sustainable Development Goals (SDGs).
With backing from more than 10 inaugural signatories, the declaration brings together senior leaders to accelerate solutions to a set of major sustainability challenges — ranging from climate change and ecosystem degradation to poverty and social inequality — that have assumed even greater urgency in a post-Covid-19 world. Currently, 102 organisations across the continent have signed up to the declaration.
Kedibone Dikokwe, a divisional executive at the FSCA, explains that an enabling environment for sustainable finance includes a financial system that is able to:
- Evaluate product, portfolio and transaction-level ESG risk exposures and opportunities;
- Improve transparency with accurate reporting to a wide stakeholder base;
- Effectively and reliably mitigate these risks; and
- Ensure customers receive fair outcomes in the design, marketing and sale of financial products and services, related to sustainability.
Some of the current conduct risks she identified in the South African market included a lack of standardised terminology; inaccurate or misleading information; a lack of suitable products, services and markets; inconsistent or unreliable or even no reporting and disclosure; and a weak or undeveloped understanding of sustainability concepts.
Ultimately, the FSCA is hoping that it will become easier for market players to conduct due diligence, including accurately assessing risks and opportunities. Other goals are to implement effective conduct regulation without constricting the growth of sustainable finance markets; and empowering consumers to successfully navigate a sustainable finance market. DM/BM