Ntheye Lungu, Head of Governance, Risk, and Compliance (GRC) Operations and Sustainability at Old Mutual Insure
Sustainability has rapidly shifted from a fringe topic to a defining force in the global insurance sector, reshaping how insurers assess risk, design products, and make investment decisions. This is the view of Ntheye Lungu, Head of Governance, Risk, and Compliance (GRC) Operations and Sustainability at Old Mutual Insure.
As climate change intensifies and social expectations rise, insurers are under growing pressure to integrate Environmental, Social, and Governance (ESG) principles into their operating models.
According to Lungu, responsible underwriting, the practice of integrating ESG criteria into risk assessment and pricing, is one of the most powerful levers insurers have to influence positive change.
Globally, insurers have already begun restructuring their portfolios by incorporating ESG data into risk evaluation. This shift allows insurers to improve forecasting accuracy, limit losses from climate-related events, and promote more ethical business practices.
In South Africa, where insurers face both economic volatility and climate-related pressures, the stakes are even higher. Lungu notes that the sector cannot continue prioritising short-term premium growth at the expense of long-term risk stability.
“For South Africa’s insurers to contribute meaningfully to national sustainability goals, the focus must evolve from chasing premium growth to creating long-term portfolio value,” he says.
Lungu identifies three core pillars of responsible underwriting that guide Old Mutual Insure’s approach. The first is avoidance, which centres on excluding high-risk industries or clients unwilling to adopt credible sustainability commitments.
“Avoidance is about establishing clear exclusion policies for universally non-negotiable risks, such as controversial weapons or systemic corruption. For high-emissions sectors, avoidance must be nuanced, targeting only entities unwilling or unable to commit to viable transition pathways,” Lungu explains.
The second pillar is integration, which includes embedding ESG data into underwriting decisions. Currently, climate-related data, such as flood mapping and catastrophe modelling, is most prevalent, but Lungu expects other metrics to grow in importance.
“In the near future, ESG data points such as water-use intensity and governance scores will play a much bigger role in determining risk,” he says.
The third pillar is engagement, a crucial component in the South African market where many industries face significant transition challenges.
“Beyond exclusion, insurers should actively partner with clients in high-emissions sectors to support their Just Transition plans,” Lungu says. This approach helps drive socio-economic transformation while also opening new growth opportunities in emerging green sectors.
External forces are accelerating this shift. Investors are increasingly scrutinising insurers’ ESG performance, with poor sustainability ratings now linked directly to higher capital costs.
“An insurer’s performance on sustainability questionnaires impacts both its ESG score and, critically, its core credit rating. This directly influences the cost of capital and access to ESG-focused investors,” he adds. This link between sustainability and financial performance is making responsible underwriting a business imperative rather than a voluntary exercise.
Regulators and global reporting bodies are also tightening expectations. In South Africa, guidance from the JSE and frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) are pushing insurers to improve transparency and integrate sustainability into risk management. These frameworks are helping standardise reporting, making it easier for investors and consumers to judge insurers’ long-term resilience.
There are, however, concerns that sustainability might conflict with profitability, but Lungu says the opposite is true.
“Sustainability is not a trade-off with profit. It is about aligning profit with purpose, and in doing so, insurers can achieve financial success while contributing positively to society and the environment,” he says.
Lungu believes that ESG integration will define the future of insurance.
“The future of sustainable insurance will see insurers not only embracing ESG data but also shaping new products and services that reward sustainable behaviour,” Lungu says. He adds that this evolution will further create a more resilient, transparent, and socially responsible industry, “one in which insurers actively contribute to environmental protection, social progress, and long-term economic stability”.
ENDS
