Ntheye Lungu, Head of Governance, Risk, and Compliance Operations and Sustainability at Old Mutual Insure
Sustainability is no longer a peripheral concern in insurance. It is rapidly becoming a defining force that is reshaping how insurers assess risk, design products and deploy capital. For short-term insurers in particular, ESG is moving beyond policy statements and into the core of business strategy, where it can serve as a powerful driver of long-term growth and resilience.
According to Ntheye Lungu, Head of Governance, Risk, and Compliance Operations and Sustainability at Old Mutual Insure, the real opportunity lies in converting ESG ambition into measurable and meaningful action.
As climate risks intensify and societal expectations evolve, insurers are uniquely positioned to influence outcomes through the way they underwrite risk and allocate capital. “This gives us a unique ability to influence outcomes, not only by protecting against loss, but by enabling more sustainable economic activity,” Lungu says.
This shift is most evident in underwriting. Responsible underwriting, which integrates environmental, social, and governance considerations into risk assessment and pricing, is emerging as one of the most effective levers for change. It allows insurers to better anticipate emerging risks, improve portfolio stability, and influence client behaviour.
Lungu outlines three key pillars that underpin this approach.
The first is avoidance. This involves setting clear boundaries around risks that are fundamentally incompatible with sustainability objectives. “There are areas where exclusion is necessary, particularly where there is no credible pathway to responsible conduct,” he explains. However, in sectors that are carbon-intensive but economically significant, the approach must be more balanced and must focus on whether businesses are willing and able to transition.
The second pillar is integration. This is where ESG data becomes embedded in underwriting decisions, moving from a reporting exercise to a practical tool for risk evaluation. While climate-related data such as flood mapping and catastrophe modelling is already widely used, the scope is expanding.
“We are moving towards a more holistic view of risk. Metrics like water usage, supply chain practices, and governance standards will increasingly inform how risk is priced and managed,” says Lungu.
The third pillar is engagement. In a market like South Africa, where economic and social challenges are closely intertwined with environmental risks, collaboration is essential. Insurers have a role to play in supporting clients as they navigate transition pathways, rather than simply withdrawing cover.
“Engagement is about partnering with several stakeholders to improve risk identification, management and outcomes. This is where you unlock both societal value and new areas of growth,” Lungu notes.
Beyond underwriting, ESG is also reshaping product development, investment strategies and internal operations. Insurers are rethinking how products can respond to evolving risk protection needs, while also using their investment portfolios to support sustainable industries. At the same time, there is increasing focus on aligning internal practices and supply chains with the standards expected of clients.
A critical enabler across all of these areas is data. The challenge is not necessarily access to information, but the ability to translate it into insight and action. Embedding ESG data into decision making processes and performance measurement is what ultimately drives credibility and impact.
“External pressures are accelerating this transition. Investors are placing greater emphasis on sustainability performance, with ESG ratings increasingly linked to the cost of capital and access to funding. Regulatory frameworks and disclosure standards are also evolving, pushing insurers towards greater transparency and accountability,” Lungu explains.
Despite this momentum, some organisations still view ESG as a compliance requirement rather than a source of competitive advantage. Lungu challenges this perspective.
“Sustainability is not a trade off against profitability,” he says. “It is about aligning profit with purpose in a way that strengthens long term performance”.
For insurers that get this right, the benefits extend beyond risk mitigation. ESG integration can enhance innovation, open new markets and build stronger relationships with clients and investors. It also positions insurers to play a more active role in addressing some of the most pressing challenges facing society.
As the industry continues to evolve, one thing is becoming clear. ESG will not be a differentiator for long. It will be the baseline.
“The question is no longer whether to act but how quickly and effectively insurers can translate ambition into action, and in doing so, create lasting value for their businesses and for society,” Lungu says.
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