Insurers have always relied on data to understand risk. But as the world around us changes, so does the nature of that risk and the data that defines it. The spreadsheets and actuarial models that once told us everything we needed to know no longer tell the whole story. Climate volatility and supply chain disruption are now just as important to risk modelling as market data and loss ratios ever were, and they increasingly carry clear financial consequences for the businesses insurers underwrite.
Sustainability reporting regulations have played a large part in accelerating this shift in how we understand risk. Frameworks such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and the UK’s Sustainability Disclosure Requirements (SDR) have made it clear that understanding sustainability data is central to understanding risk itself. While insurers’ own disclosure obligations continue to evolve, the more urgent change is the data they now need from their enterprise customers.
So, what do insurers need to know about this new era of sustainability reporting? And how prepared are they to support customers?
The readiness gap
The harsh reality is that many companies are not yet equipped to meet these new reporting demands. According to Sphera’s research, 46% of businesses admit they are unprepared for sustainability reporting under the European Sustainability Reporting Standards (ESRS). For insurers, that lack of readiness is a risk in itself. Without credible sustainability data, it becomes increasingly difficult to assess the reliability of clients’ disclosures or the risks being underwritten.
In other words, insurers are being asked to price risks they can no longer fully see. And that lack of visibility is fast becoming one of the industry’s biggest vulnerabilities.
This growing opacity comes at a time when the wider risk landscape has never been more uncertain. Climate patterns are shifting faster than historical models can adapt, supply chains are increasingly fragile thanks to trade tensions, and the financial ripple effects are harder to quantify. In this environment, credible sustainability data offers insurers something rare: a measurable view of how exposed a business really is.
Sustainability reporting goes beyond emissions accounting. It tracks how companies manage energy use, resource efficiency, workforce conditions, and governance – all of which reveal how well they can withstand disruption and what that means for their financial exposure. A manufacturer with high energy dependency, for instance, is more vulnerable to carbon pricing shocks. A company with poor oversight of its suppliers faces higher operational and reputational risks that ultimately impact revenue.
For insurers, that visibility is invaluable. It turns abstract concepts like “resilience” into quantifiable indicators that can inform underwriting and long-term capital planning. In a world defined by volatility, the ability to measure and benchmark even part of the picture has become one of the few enduring advantages.
The roadblocks to effective reporting
Progress, however, isn’t simple. Many insurers and their clients are struggling with the same systemic challenges. Sustainability data often sits in silos, dispersed across systems and departments, making it nearly impossible to form a consistent view of performance.
Manual processes add another layer of complexity. Spreadsheets and static templates are ill-equipped for the pace and scale of modern reporting requirements. Each regulatory update demands fresh data collection and analysis – time-consuming tasks that increase the likelihood of errors and inconsistencies.
Accountability is also still murky. Sustainability, finance, and risk teams frequently operate in parallel, with no clear ownership of sustainability data. The result is duplication, confusion, and missed opportunities for insight. And even when internal data is well-managed, further down the supply chain can still be just one big blind spot.
These challenges too often send insurers on a wild goose chase for relevant data. But they also highlight where technology can make the biggest difference.
From information to intelligence
Modern, AI-driven sustainability platforms now make it possible to consolidate and verify information across entire organisations, creating an integrated, audit-ready view of performance. By connecting operational and supply chain data, insurers can translate compliance requirements into meaningful insights about exposure and resilience.
Automation reduces the friction of data collection, allowing insurers to focus less on form-filling and more on interpretation. When sustainability data flows seamlessly through business systems, it becomes actionable – a tool for foresight. It allows insurers to identify climate-related risks earlier, assess their materiality, and adjust strategies before those risks become costly realities.
Turning sustainability into long-term advantage
The next phase of sustainability reporting in insurance will be defined by how effectively the industry can move from collecting information to using it. The goal is not to produce more data, but to extract more meaning from it. That means identifying which sustainability indicators truly correlate with risk, and which signal opportunity.
Crucially, this is also where financial materiality comes into play. We now understand how climate exposures, supplier dependencies, workforce stability and governance issues map directly to financial outcomes. The insurers who can interpret these sustainability indicators as early warnings of potential losses, or as signs of operational strength, will be far better positioned to price risk accurately.
This requires insurers to think differently about their own resilience. As reporting frameworks mature, so too will expectations from customers, investors and regulators. Insurers who can demonstrate that credible sustainability data is embedded in their decisions will have an advantage in both trust and financial resilience.
It’s clear that sustainability and financial strength are intertwined expressions of stability. Insurers that embrace sustainability reporting as part of their core intelligence have an opportunity to redefine what it means to understand risk in a world that no longer behaves predictably.
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