b'OTHER TOPICS OF NOTE|ESGLloyds of Londons first syndicate focusedintegration of climate risk management practices specifically on ESG was launched by Beazley,into insurers existing risk management offering additional capacity to organizations withframeworks. This illustrates how supervisory demonstrably strong ESG-related performance,expectations for managing climate-related risks with the carrier noting that evidencemove in only one directionthat isthey demonstrates that businesses with high ESGbecome more granular and more numerous.rating are likely to have a lower risk profile. Other industry-led initiatives, such as the AXA-led NetAsiaZero Insurance Alliance, and the Zurich Flood Resilience Alliances, have continued to emergeIn 2021, we observed increasing ESG-related and develop. Again, a marked change of focusinvestment activity in the Asia insurance market. towards sustainability, and ESG metrics, within theThere is a growing acceptance that considering insurance industry, was evident throughout 2021;ESG-related risks is a necessary investment criterion this will continue as we move into 2022. for long-term investors such as insurers. The long-term investment horizon of many ESG opportunities United States fits well with the long-term investment needs of insurers. It also appears that insurers that integrate The central role that participants in the insuranceESG risk considerations into their investment industry have to play in promoting the sustainabilityprocesses may be more competitive in winning agenda, and the progress towards Net Zero inthird-party investment mandates.particular, continued to draw much attentionIt is not only about investment returns. While throughout 2021. Highly significant regulations adapting to ESG risks is expected to reduce costs impacting many sectors, including financial servicesfor companies in the longer term, in the short term, and insurancecontinued to emerge whichas ESG related regulatory burdens increase there underlined the ascent of sustainability up thecould be additional costs to businesses, including corporate, social, legal and regulatory agendas;insurers. In addition, the expansion of sustainability most notably the Final Guidance on Managingprinciples can complicate an insurers ability to Financial Risks from Climate Change in New York,assess and accurately price insurance risk which will take effect in August 2022. coverage, potentially adding to their business risk. The US Final Guidance on Managing FinancialA number of key players in the Asia insurance Risks from Climate Change is targeted exclusivelysector arepromoting positive change by including at the insurance sector and imposes extensiveESG factors in their investments.risk management expectations on insurersIn terms of regulations, there has been a significant organized under New York law. While it largelyand evolving legislative and regulatory push in Asia parallels similar guidance that was issued in theto reflect changing societal attitudes towards UK in 2019, it also incorporates more recentsustainability and responsibility, and increased guidance from the Network for Greening theexpectation of accountability in business (including Financial System and prescribes a deep 174|Global Insurance Industry Year in Review 2021'