Sustainability strategy and financial performance in the insurance company

Abstract

Insurance companies are demonstrating increased sensitivity to environmental, social and governance sustainability issues (ESG - Environmental, Social and Governance). Products in the insurance sector are naturally attractive for social and environment goals as they respond to the requirements of customer protection and the growing need for stability in society. For this reason, activity in the insurance sector can contribute to the UN Sustainable Development Goals (SDGs) and be used to support the goals of climate neutrality by 2050. This study investigates sustainability-oriented management practices to determine whether they impact the financial performance of insurance companies. An international sample of 167 insurance companies, over the period 2018–2022, was analyzed to reveal whether investments in sustainability produce returns in terms of an economic advantage. Results show that American insurance companies are characterized by quality governance that is committed to environmental, social and governance sustainability policies which is linked to good financial performance. These results are robust to arbitrary heteroskedasticity and cluster correlation. Our findings add to the literature on Insurance Company by shedding light on the relationship between financial performance and sustainability.