Companies with a captive have higher than average ESG risk rating scores, according to insurance broker and risk advisor Marsh.
Marsh affirmed the finding by analysing data from its ESG risk rating tool, launched in March 2022.
The risk rating tool enables clients to measure their organisation's ESG performance, understand their ESG risk profiles and gain access to risk and insurance benefits.
As more companies are using the tool, Marsh has been able to identify trends and correlations from the data, relevant to the management and mitigation of risk.
“Now, we are seeing early signs of a correlation between companies with captives and their ESG rating,” says Marsh.
The broker expected that companies would have higher ESG scores, due to their tendency to be more proactive in their risk management. It predicted that this would be the case for the ‘G’ component — governance.
Marsh’s analysis was based on more than 100 large companies with a revenue of US$1 billion or more.
Societal factors, (the ‘S’ in ESG) held the most statistical significance, found Marsh specifically concerning client and customers and employment and wealth.
This means captive owners are more likely to meet the criteria of people-related sustainability standards such as equitable pay policies, health, safety and upskilling of the workplace. Therefore they are more likely to positively engage with the local communities in which they operate.
Marsh says the key takeaway from the findings is: “companies with captives are in a good position to showcase how their existing processes and protocols feed into their ESG mitigation and management.”
