Incorporating environmental, social, and governance principles into business investments
Allianz Life, a Sustainable Growth Coalition member, hosted a panel conversation between Jasmine Jirele (current CEO) and Walter White (former CEO) which was facilitated by Bethany Esse on the past, present, and future of sustainability in the financial services industry. The conversation between the former and current CEOs of Allianz Life focused on their thoughts regarding sustainability, social responsibility, and how to be part of building a better future. Some key insights include:
- Sustainability is core competency for corporations.
- Consumers care about environmental, social, and governance commitments and are making product and brand choices based on a company’s practices.
- Change requires committed leadership.
An active Sustainable Growth Coalition member, Allianz Life has hosted a valuable conversation on global leadership related to incorporating environmental, social, and governance (ESG) principles into their investment process and policies and shared industry trends on sustainable investing in a blog.
How has the business case for sustainability in the financial services industry changed during your tenure?
Walter: I think it has changed from something that was political to something that is undeniable. That’s why you see such broad support across many different industries. We can see that if we stay on the current path, it’s just not sustainable. Companies have come to terms with that and as a result you see a broad coalition form.
We at Allianz Life have a parent company, Allianz. How has our parent company influenced those changes in the industry and here at Allianz Life?
We’re fortunate that our parent company has been involved since early on, and that makes sense because it’s the world’s largest property casualty insurer. They’ve got the data so they can see the effects climate change has had, I think we benefit from that. Allianz has influence through that data, and through meaningful investments into sustainability. You can see today that influence reaches our employees, they’re here and they’re interested in sustainability.
When you’re looking forward, do you see sustainability and ESG (environmental, social, governance) as still being important to Allianz Life? If so, how do you see us placing more of an emphasis on ESG work in the next three to five years?
Jasmine: As Walter said, I think this is a topic that is here to stay. It aligns very well with our values at Allianz Life, so I think it is a natural complement to how we go about executing our business strategy. I think the investment area is one where we’ve done a lot of work, and certainly there’s more that we can do. We have a six-pillar strategy for how we manage our investments pertaining to ESG and I think in a lot of ways that’s leading in respect to other U.S. companies. We can build on that framework, I think, to do even more.
I would add that we are seeing more and more data that suggests that this is a topic that really matters to consumers and is influencing their purchasing decisions and the types of companies they want to work with. I don’t think we’ve done as much work in product innovation or development, but I think that is an opportunity for growth if we can combine our history of product innovation and technical excellence with sustainability. I think that would be very appealing to consumers.
Looking back, what aspects of Allianz Life or Allianz’s leadership in sustainability and ESG are you most proud of?
Walter: Jasmine mentioned the six pillars, and I think two really stand out for me. One is where we find opportunities to invest in these new technologies that are designed to yield a more sustainable future, that’s exciting. The other area is engagement, using your leverage as an investor to encourage change at a company level.
Looking forward, what opportunities do you see for Allianz Life or Allianz in either the short or long term to provide leadership on ESG priorities?
Jasmine: One area that has been at the forefront of our minds lately and where I really think there is an opportunity for us to help is in racial equity. Addressing disparities in financial literacy and access to a safe, secure retirement is an area where we can help. Part of that is on the product side but it can also be done through education.
Another area where I think we can help is helping our financial advisors help their customers. We’ve taken a lot of pride at Allianz in being a thought leader on topics that really matter to consumers, topics like retirement risk and diversity and inclusion. Some of our team is looking at what we can do to equip financial professionals with knowledge of sustainability and ESG that they can use to work with consumers. We know that good financial planning is planning for an individual’s goals, dreams, and aspirations, and sustainability and ESG is really at the core of those values for many of our consumers.
What more can you and the other executives of the member companies of the Sustainable Growth Coalition do as leaders to further address climate change and promote climate resiliency?
Jasmine: I think it’s important to note that the change we want doesn’t happen overnight, but as leaders we stick with it. Something that you try once isn’t always going to work and you keep trying new things until you break through and get the results you want. I think it’s important to keep working towards our goals in this because it matters so much.
Another thing we can do is be vocal about what we’re doing, telling a story about ESG and sustainability as part of how we run the business. We can demonstrate through proof how we’re bringing ESG and sustainability to our communities and equip our employees to go tell those stories and make connections.
In addition to pushing ourselves to stay engaged and building ESG and sustainability into our stories, continuing to push and challenge our peers on this topic is a way leaders can further climate action. When we’re out having conversations with our peers we can share what we’re doing regarding sustainability and ask what they’re doing to keep sustainability top of mind and part of the conversation.
Walter: I mentioned earlier that this is a less political issue than it used to be, but we can still exert influence through government relations. We have the credibility and data of Allianz that is very influential, and I think we will see, as we’re seeing right now, fiscal packages under consideration that contain meaningful things. I think we can use our influence to make the case for those meaningful aspects.
I know we’ve had a longstanding relationship with our government relations team. Have you seen, Walter, in your tenure, that these conversations have gotten easier, harder or stayed the same?
Walter: Going back to what I said earlier, I think they’re easier because you don’t have the same camps that have formed on either side. We’ve seen some things become bipartisan as they gain momentum and that’s what you really want.
How does racial identity shape how you want to lead at Allianz Life and inspire others to lead in ESG work?
Jasmine: Diversity, inclusion, and equity are all part of our values that we share here at Allianz and that translates to what we do here locally in the U.S. for Allianz Life. I think this is an area where we can really put our money where our mouth is and take a stand on this issue, driving for change by getting our folks involved in influencing through government relations and other industry efforts. We’ve had employees on full time rotations working on policymaking pertaining to racial equity with other folks in the financial services industry. I think being vocal about diversity, inclusion, and equity is both our responsibility and a great way to show our values.
Do you have any thoughts on how racial identity shaped your leadership approach during your tenure, and did it change?
Walter: It definitely changed in terms of its priority. It becomes a lens you have to look at almost everything through, and that wasn’t always the case. It was a priority, but it was viewed as somewhat distinct from other issues, and now I think we understand, we use the term systemic a lot, but what that implies is that things are interconnected and you need to understand how they fit together. I don’t see this going away any time soon. I think there’s been a shift away from just investing for profit to really looking at how what we’re doing affects different groups of people, and that’s a lens we may not have been looking through ten years ago.
What advice would you give other CEOs navigating an uncertain future and increasing pressure to lead change on the environment and racial and social justice issues?
Walter: I think it’s a double-edged sword in a sense. I think some of these issues, because they’re important to employees and customers, you have to engage even if it’s distinct from the main mission of the company. I think we saw that with George Floyd, and just being part of the community required that you take a position on that. At the same time, I think we have to be careful that we stick to things we know and understand so our recommendations are meaningful rather than a kneejerk reaction. Sometimes I do see CEOs crossing that line and expressing a personal view but not mobilizing the company in any specific way. I think to maintain credibility we have to look at both where we are expected to take a position and what we can do to follow through with real action.
What advice would you give to newly appointed CEOs who are facing these same issues?
Jasmine: Two things come to mind. One is to really focus on what your core capabilities are as a company because that’s going to give you the ability to use your influence in the most impactful way. In the case of Allianz Life, we can have a bigger impact by going all in on things like financial literacy rather than focusing on things that don’t really fit with our strengths.
The second is, this change is going to happen whether we as companies or individuals want it to happen, so I think it’s always better to be part of how our future is created rather than watching that future get created and having to figure out how to adapt. I think we’re at a crossroads right now where we know change is needed, and good work has been done so far, but we can be part of making the future better.
Any final thoughts?
Walter: I think companies are in a unique position in this environment, we can make change and we have some skills and resources that can be impactful in a world that occasionally doesn’t move forward. Companies can be a big part of this solution. Business excels at looking at problems and thinking through complexities to come up with solutions that can work. I think companies have the advantage of being used to looking at every variable, finding root causes, and having very disciplined thinking.
Jasmine: We went through an exercise here recently to try to define sustainability and what that means for us at Allianz Life. It occurred to me while going through that exercise that sustainability can have a number of definitions, and it can mean building resiliency and staying power for the long haul. I think at the end of the day, that’s the goal of all of this. There are a lot of different tactics we can take but if we can figure out how to do this right as a company and as an industry, we’re going to continue bringing financial security and retirement to more people and we’re going to do a better job at doing that. The more that we can connect sustainability to what we do as a company and bring the voice of the customer into the conversation, I think we’ll be able to engage even more people in being part of the solution.
Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company name. Variable annuity guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions.
Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. 800.542.5427. www.allianzlife.com. In New York, products are issued by Allianz Life Insurance Company of New York, 1633 Broadway, 42nd Floor, New York, NY 10019-7585. www.allianzlife.com/new-york Variable products are distributed by their affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. Only Allianz Life Insurance Company of New York is authorized to offer annuities and life insurance in the state of New York.