The ESG divide: Is business size impacting brokers’ commitment to sustainability?

Speak to most larger brokers and they can reel off a list of their sustainability practices as long as a wind turbine’s mast.

For example, JMG Group – which has 700 employees – commits to everything from flexible working and vetting suppliers’ environmental, social and governance (ESG) policies to providing electric car schemes, plant a tree initiatives and allowing employees time off to help local charities.

Among smaller brokers, however, the picture is much more fragmented because they lack the same resources as the big firms. Plus – unlike many larger counterparts – these brokers don’t have to satisfy equity investors with formal ESG policies.

Kathryn Knowles, co-managing director at Cura Insurance – a broker employing 19 people based in North Yorkshire’s Filey – has a Doctor of Philosophy (PhD) in sustainable business practices.

She told Insurance Times: “Any small firm’s managing director has limited time to focus on non-core areas, so you either have to import external expertise, do nothing, or try and do it yourself, which can drive you crazy and result in getting it very wrong.”

Glowing ESG examples

Where smaller brokers do boast zealous sustainability commitments, this is typically because they are involved in business areas highly vulnerable to climate change.

For example, Ash Tree Insurance Brokers – a predominantly agricultural broker based in Selby, North Yorkshire, that has three employees – speaks to farmers daily about environmental issues.

Its client meetings are mostly conducted using video calls, but any in-person visits are made via a low emission 1.6 litre diesel car. All office equipment is bought second-hand and the business is largely paperless. But, for clients that want communications in writing, the broker is starting to charge £10 for anything posted – this money is used to plant a tree.

Thomas Jones, director at Ash Tree Insurance Brokers, said: “Selby is very prone to flooding and a crop can’t survive more than four or five days underwater. So, [a focus on ESG is] central to our risk management and business interruption planning.

“Any small steps anyone can take will help produce important marginal gains.”

Family businesses can also be highly conscious of the impact of climate change on the next generation.

This has been a major consideration for Pantaenius, a Plymouth and Southampton-based yacht and boat broker with 30 employees, which commits to avoiding putting toxic substances in the water by subscribing to the Green Blue Boating Pledge.

The Green Blue Boating Pledge – created in 2022 – is a joint environmental programme between trade associations the Royal Yachting Association and British Marine, designed to encourage a more sustainable recreational boating sector.

Furthermore, one member of Pantaenius’ staff has specific responsibility for looking at ways of limiting its internal carbon emissions, meaning the office has refillable water bottles, as well as ethically sourced and sustainably packaged coffee beans.

Signs outside the toilet also ask people to turn off the lights.

Not enough time?

Even though the majority of small brokers do not go to anything like such lengths when considering ESG, that doesn’t mean they aren’t interested in these issues.

Nick Houghton, chief executive at JMG Group – which has acquired 46 small businesses in the last four years – told Insurance Times: “I believe smaller brokers care about doing the right thing with regards to sustainability and they do bits like supporting local businesses and charities. But the key difference from us is that they probably don’t have a formal written policy.”

Most small brokers are likely to make at least some basic effort when it comes to ESG – even if it’s just limiting paper usage – but the difficulties with measuring sustainable steps means that success statistics vary.

Research by insurance comparison portal Multi Quote Time estimated that approximately 60% of regional brokers understand the importance of sustainability, but they feel overwhelmed by the perceived complexity of implementing related action plans.

Eamonn Turley, chief executive at Multi Quote Time, continued: “The sustainability engagement among regional UK insurance brokers presents a complex and nuanced challenge that extends beyond simple environmental compliance.

“While larger brokers have been more proactive in developing comprehensive sustainability strategies, smaller regional firms are encountering significant barriers to meaningful implementation.

“Through our extensive network of insurance professionals, we’ve observed that smaller brokers face three primary challenges in sustainability adoption: limited financial resources for implementing green initiatives, a lack of clear regulatory guidance and uncertainty about the direct business value of sustainability investments.

“Many regional brokers view sustainability as an additional cost rather than a strategic opportunity for differentiation and long-term value creation.”

Appointed representative (AR) network Movo Partnership estimated that around 20% of its 107 members are seriously thinking about ESG.

Lea Cheesbrough, chief executive at Movo Partnership, said: “Without client pressure, these brokers probably wouldn’t do anything about [implementing ESG measures]. Not because they don’t think it’s important, but because they’re so busy fighting regulation they [do not] have a chance to actually start.

“But customers becoming more aware of ESG is driving brokers into action.

“Brokers are increasingly placing business with insurers striving for zero emissions and this is beginning to feature alongside considerations like price and cover. But we’re not there yet.

“The networks are educating members about sustainability issues and Biba is also leading the way. But some brokers may have more time to listen than others.”

Small steps

Brokers that want to up their game around sustainability but are worried about cost should realise that some sustainability practices cost virtually nothing, while others actually save money – like using glass rather than plastic cups, cutting back on food wastage and having lights that turn themselves off at night.

Judy Kuszewski, chief executive at sustainability consultancy Sancroft, explained: “There are plenty of no regret, non-costly moves [brokers can take], like basic energy saving on your own premises and reducing paper usage.

“Databases and services for businesses through local authorities can also provide advice on things like waste, employee commuting and possibly the purchase of materials.”

Voluntary platform Third Planet Collective runs free 60-minute online workshops that provide practical sustainability advice. Business owners stand to gain the most from attending these types of sessions because they have ultimate control and can make decisions.

Abigail Ireland, co-founder at Third Planet Collective, added: “An all or nothing approach often goes wrong with small businesses, so it’s best to start with small initiatives that don’t seem an effort – then there will be something to naturally think about and build upon. Just choose one thing to improve each quarter.”

Brokers should think of marginal gains in a similar way to compound interest. If they save 1% every day, it can roll up with great effect over time.