CSR - Green gold

Environmental issues are gaining a higher profile in businesses, with the threat of global warming (see pp.38-39) causing seemingly everyone from politicians to car manufacturers to flout their green credentials and claim to be more environmentally friendly than their rivals. The insurance industry has not missed this trend: Allianz has released a green-parts scheme for motor repairs, while the BGL Group's recent launch, Ibuyeco - a winner at the UK Broker Awards in September 2008 - is among the first UK intermediaries to offer carbon-neutral car insurance policies.

"In the past, insurers have dumped broken oil rigs in the sea when there are no cheaper options available and, while current regulations do not really have any teeth, we all need to look at environmental issues as we have a responsibility to do so," says Dane Loosley, divisional claims manager at Allianz.

However, there is far more than conscience dictating this drive towards helping the environment. Businesses can benefit from cheaper energy bills and greater workforce satisfaction.

In broking, staff satisfaction and motivation is an important part of a successful business. Steve Foulsham, technical services manager at the British Insurance Brokers Association, believes that with the growing public awareness of global warming and other environmental issues, implementing green policies is starting to make a significant difference to staff satisfaction. He highlights: "The whole of the workforce can be engaged and a team spirit approach taken to working together."

There can also be marketing benefits to a green policy. Kent-based broker Independent Insurance Services registered for ISO 14001 and ISO 9001 in 2001 after attending an environmental management systems course in conjunction with Kent County Council, and is regulated by the standards body twice every year. "Companies that are standardised also want to buy insurance from a company that is regulated," notes Ray Johnson, proprietor of the broker. Many county councils run similar schemes to help local business to become environmentally friendly and the Carbon Trust also offers free audits to give personalised advice.

"Going green can also help you save money and lead to increased cost efficiencies, including reduced energy and water usage," highlights Dr Cliff Warman, leader of the Environmental Practice for Europe, the Middle East and Africa at Marsh. Energy-saving measures are often easy to implement, such as turning off unused lights and computers, insulating the building properly and keeping windows closed when the central heating is on.

Gradual

Many of these measures may seem obvious but where there is no official policy there is no guarantee that employees are keeping energy consumption in mind on a day-to-day basis. Johnson advises: "Action needs to come from the top down for everyone to take it on board." However, he believes that it is important to take things slowly and implement policies piecemeal if they are to be successful in the long run. He continues: "The little things, such as buying recycled paper and turning unused lights off, can make a big difference."

Insurers also have an important role to play in helping brokers become environmentally friendly. "Insurer paper usage could be reduced significantly," notes Johnson, who notes that insurers helping broker partners to reduce the paperwork sent out to clients is a good place to start.

In November 2007, an important step was taken with the approval of electronic certificates for motor insurance, which will reduce the amount of paper sent out by participating companies. However, it is not yet certain when these proposals will be implemented as they have yet to be enforced by the Department of Transport. In the meantime, many brokers are doing what they can. Johnson comments: "We have assisted insurers by giving advice and information to help them become more conscious of the environment."

Environmental advice can also be offered as an add-on service for clients. "Everyone likes to feel good about themself," highlights Johnson, who believes that Independent has helped many of its clients to develop green policies. Foulsham also believes that environmental consultancy should play an important role in broker-client relationships: "Clients should be encouraged to assess their own levels of risk and adapt their businesses to climate change. This could form part of brokers' regular review meetings with clients as a part of a general risk-management strategy."

There are many environmentally friendly policies on the market and these often reward the insured for their efforts on behalf of the environment. "We can secure genuine discounts on premiums when we look at a client's environmental credentials," notes Johnson.

Warman notes: "There are a number of green insurance products on the market, which can be characterised as being reduced premium or additional benefit products. For example, some car insurance companies will offer to offset the carbon emissions of an insured vehicle through the procurement of green insurance. Similarly, there are a few travel insurance companies that will offset the carbon emissions associated with a defined travel plan in addition to offering travel insurance.

"Green buildings insurance also exists where premiums may be reduced on proof of construction to a green building standard, while the costs of refurbishment to a green building standard can also be covered by insurance in certain instances."

Meanwhile, Allianz's launch of its green parts motor insurance scheme offers repairs using second-hand parts to customers whose vehicle has been damaged.

Advocate

Brokers can help clients to go green by recommending such schemes. At Independent Insurance Services, Johnson implemented questionnaires for every customer at the point of purchase to establish what the customer does by way of recycling and making energy savings, among other factors; the customers are then put into one of three levels of environmental friendliness.

These surveys help the broker to recommend appropriate schemes to their clients, the benefits of which to private clients, for instance, can be seen in discounts ranging from five to 10% on home insurance premiums with environmental schemes. For clients that do not receive the top-level rating, Independent Insurance Services can then offer advice on how they can do more to help the environment.

Anthony Turck, managing director at Ensura, believes that having a well-publicised green policy can also help attract an improved client base: "Companies that embrace corporate social responsibility tend to be better run," he claims. "The use of performance measurements in a CSR context is indicative of their use in general business, (which is) always the sign of a well-run business."

Johnson comments: "Environmental credentials can bring genuine financial and business benefits. A catering company that was a customer of ours used to dump glass bottles. They now have the bottles collected and have won customers since on the basis of their environmental credentials."

He continues, highlighting that more conscientious personal lines clients can also be appealed to in this manner: "People that are more likely to recycle are generally a better risk, as they are likely to look after their own property."

Definition: carbon neutral

Carbon neutral refers to achieving zero carbon emissions net by balancing a measured amount of carbon released with an equivalent amount sequestered or offset. Best practice for organisations and individuals seeking carbon neutral status entails reducing and avoiding carbon emissions first, so that only unavoidable emissions are offset.

For more information and help on becoming more environmentally aware, go to climatewise.org.uk

Ray Johnson on energy efficiency

- Switch off equipment when you are not using it: turn off the copier and monitors when employees leave and switch off the lights when they are not in use. Using timers might help.

- Set printers and copiers to print on both sides of a sheet of paper.

- Try to purchase, reuse or refill toners where possible. Keep used toners in storage and dispatch them when you have sufficient quantities to give to charity.

- Purchase equipment with the Energy Star logo or power-saving features.

- Arrange for old equipment to be recycled.

- Fit energy-efficient light bulbs and use compact fluorescent lamps. The upfront cost is more but these types of lighting last up to 18 times longer than ordinary bulbs and use approximately 80% less power.

- When either the heating or air conditioning is on, ensure that the windows are not open. Also, do not heat any unused rooms.

- Buy recycled paper. Most brands carry recycling watermarks today but

try to ensure that the paper is printed with the recycled paper logo on it to pass on the message to your customers and suppliers.

- Ensure that you have suitable, dedicated waste paper bins beside each desk. Arrange an internal collection process and keep your waste within the collection bags for local collection or a waste paper merchant.

- When using vehicles, try to analyse and ensure the use of economic fuel.

- Consider liquified petroleum gas powered vehicles, car sharing, rail travel, cycling or walking.

- Endeavour to reduce vehicle usage through effective route planning.

- Instead of traveling to meet a client or insurer partner, try to use e-mail or video conferencing.

- Use A-rated, low energy fridges and freezers.

- Keep track of your bills to see what you are using. It is easy to do and will help you see the impact of the changes that you introduce when you put good energy-saving tips into place.