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Inside in Full: ESG becomes a recruiting tool in tight talent market

While expanding regulations and shareholder activism have received the lion’s share of attention in the ESG space, the principles under this umbrella are being used by insurers as a recruiting tool to attract younger talent, sources said.

Millennials, who started turning 40 in 2021, have long driven the growth of ESG investing – about one-third often or exclusively use investments that take ESG factors into account, according to a CNBC poll released earlier this year.

Their younger counterparts, dubbed “Generation Z”, are likewise taking their concerns about these issues into consideration not only as they invest, but also as they establish their careers.

“People are being very intentional in their hiring efforts because to younger generations, [ESG] really does matter, and they want to make sure they’re part of an organization with this focus,” said Kristin Downey, chief administrative officer at Amwins.

Nearly two in five respondents to Deloitte’s 2022 Gen Z and Millennial Survey said they had rejected a job or assignment because it did not align with their values, including 46% in senior positions.

Seeing values in action matters even more when it comes to staying with a company.

“While societal and environmental impact, along with a diverse and inclusive culture, are not always at the top of the priority list when choosing a job, these continue to be critical issues in terms of retention,” the study said.

“Those who are satisfied with their employers’ societal and environmental impact, and their efforts to create a diverse and inclusive environment, are more likely to want to stay with their employer for more than five years.”



That echoes the ESG approach at Alliant Insurance Service, said chief human resources officer Jennifer Martin. “We look at this not only as a recruiting tool, but as a retention tool,” she said.

And it’s one that is becoming increasingly important as competition for talent remains high, with 79% of P&C companies expecting to increase staff in the next year, according to the latest iteration of the Jacobson Aon Insurance Industry Labor Market study.

ESG-related regulation and shareholder activity increase

The federal Securities and Exchange Commission (SEC) is expected to soon adopt proposed rules that would require more disclosure from publicly traded companies on climate-related issues.

The insurance industry has balked at the planned expansion, which would require public companies to share information with investors on climate-related risks that are “reasonably likely” to have a material impact on financial results, and to detail greenhouse gas emissions created by the company’s operations.

In comments submitted to the SEC during the summer, multiple insurers and industry groups lauded the goals of the proposed rules, but broadly panned the specific language and requirements they contain as impractical and, in some areas, impossible.

The concerns ranged from the regulatory agency demanding information that is unattainable to worries that the disclosures could create “serious competitive concerns for P&C insurers”, comments from the industry said.

The Insurance Information Institute (III), for instance, said the proposed rules didn’t consider the “fundamental differences” between insurance and other industries, including the fact that it is already regulated by each state, and that assessing emissions from the plethora of personal and commercial assets and activities that insurers cover but do not control would be onerous.

Travelers submitted more blunt comments, including criticism of the proposal for not distinguishing between “weather” and “climate” and asking for calculations that are impossible to determine.

“The science and technology necessary to achieve the stated goals of the proposal to provide ‘consistent, comparable, reliable information for investors,’ especially in the property casualty industry, do not presently exist,” Travelers said. “As a result, the adoption of the proposed rule, as drafted, would result in requiring disclosure that would be misleading.”

Allstate noted that part of the proposal would require reporting risks that are likely to have a material impact on the business down to the ZIP code level, creating “an operational burden” that would produce an excessive amount of information of little use to investors.

Moreover, for P&C insurers, “the information may represent confidential business information that should not be required to be disclosed for competitive reasons”.

Meanwhile, the National Association of Insurance Commissioners (NAIC) also broadened the scope of its annual Climate Survey Disclosure. And individual states, including California, New York and Connecticut, have also moved to require more details.

At the same time, several of the largest insurers were fending off shareholder proposals calling for greater climate-related disclosure.

In May, Chubb shareholders turned down a proposal to adopt underwriting practices that do not support new fossil fuel supplies but approved one requiring reporting on how the insurer intends to measure, disclose and reduce greenhouse gas emissions associated with underwriting and investment activities.

Travelers shareholders likewise approved a similar proposal on greenhouse emissions but nixed the fossil fuel supplies proposal. Berkshire Hathaway shareholders gave two similar proposals the thumbs down.

But while these objections may suggest the industry is dragging its feet, Jared Wilner, partner at the law firm Locke Lord, whose practice centers around the insurance industry, said that he does not sense any sort of ESG fatigue among his clients.

“I think this continues to be very much top of mind, for multiple reasons,” Wilner said. He noted that there’s no sign regulators will let up anytime soon, but rather that it appears this is just the early stages of the requirements that will be put in place over time.



“Everyone’s trying to figure this out,” agreed Kia Javanmardian, leader of McKinsey’s North American P&C practices. At the same time the companies are batting away at proposed regulations, they’re also trying to determine whether to beef up or leave certain lines of business and geographies that are seeing significant climate impacts, from wind to wildfire.

Need for fresh blood

Beyond environmental concerns, the most significant part of ESG for employee retention may be the “social” part.

"It does seem to be something that folks are focused on, and that’s consistent with the broader currents in our society,” Wilner said. “More and more, companies are expected to have positions on hot topics and social issues.”

He noted that in the aftermath of the Supreme Court’s overturning of Roe v Wade, for instance, many companies took stands on providing benefits for women who need to travel to other states for reproductive care.

“There’s an increasing expectation among consumers and employees that companies have a brand that reflects values,” Wilner said. “Over time, this may be a strategic differentiator, those who are doing ESG well, and managing risks well, and those that do not.”

Javanmardian echoed the thought: ‘Particularly for the new generations, that’s really important,” he said. “It’s less around press releases and things like that, it’s more around helping articulate why working at a company matters.”

It’s particularly important because the insurance industry has traditionally skewed older and whiter than the working population as a whole.



While the average age in the industry has crept down in recent years, it remains in the upper 40s or low 50s, despite a wave of baby boomer retirements amid the pandemic.

Diversity statistics have also improved, which could serve as a lure for younger people.

“This is an issue that the entire industry is facing,” Alliant’s Martin said. “And we’ve been aware of it for quite some time.”

But insurance isn’t a top-of-mind career option for many in Gen Z.

“Over the last many years, we have tried to implement programs, resources, opportunities to address what we saw was happening,” Martin continued. “There were a lot of folks who were aging out and not necessarily young people seeing insurance as a sexy career to pursue.”

Marguerite Tortorello, managing director of the Insurance Careers Movement, can rattle off the initiatives various companies are undertaking to attract younger people to the industry and said many of those programs present insurance as a “purpose driven” career.

“It’s really across the spectrum of how we operate where you’re seeing ESG embedded,” she said. “And that is being marketed to potential recruits.”


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