Can Insurers use Procurement to Boost Sustainability?
As consumer and stakeholder expectations around sustainability evolve, organisations are beginning to embrace ethical standards and social responsibility across their procurement operations to catalyse the transition to a greener future.
Insurance firms are among those which must structure their procurement processes to enhance sustainability as they play a vital role in managing risk, including climate-related risks.
Insurers can support ethical supply chains, reduce their carbon footprint and align with regulatory frameworks by adopting sustainable procurement practices.
Here, Procurement Magazine explores how Zurich Insurance and Allianz are effectively integrating sustainability into their procurement operations to ensure long-term operational efficiency and support industry-wide change toward greener operations.
Commitment to sustainability
Sustainability commitments in procurement operations align with investor and regulatory expectations while ensuring long-term resilience by minimising environmental impact.
Zurich Insurance Group views tackling climate change as a risk and an opportunity. It is committed to reducing emissions across its operations to engage and support stakeholders across the value chain while meeting science-based targets.
Its sustainability efforts work towards its goal of becoming net zero by 2030 (ahead of its original target of 2050).
Zurich’s Climate Transition Plan features four pillars:
- Enabling an economy-wide transition to net-zero
- Making society more resilient
- Advocating for supportive policies
- Evolving how it operates
Mario Greco, Group Chief Executive Officer at Zurich Insurance Group, states: “Supporting a successful transition offers the prospect of a stronger, more prosperous future that will ultimately benefit our customers, the companies we invest in and our own business. There will be setbacks and challenges, but the price we pay for inaction is far higher than the price of protection.
He continues: "As a global insurer, Zurich will be part of a collaborative solution. We are supporting the net-zero transition while helping make society more resilient, so that together, we can build a better future for the next generations.”
Allianz also embeds ESG standards across decision-making to ensure it has a positive economic and social impact on communities.
The financial services giant has been carbon-neutral since 2012, highlighting its commitment to creating a greener future.
Piril Kadibesegil Yasar, Head of Sustainability at Allianz Trade, explains: "Our sustainability roadmap is based on objective and measurable criteria, according to which we can track our progress and see where there is room for growth.
"I am proud to share that, as of 2023, we are sourcing 100% of our electricity from renewable sources and we are on track to cut 50% of our GHG emissions per employee by 2025 from our own operations.
"We are EcoVadis platinum certified in the DACH region, hold EDGE certification and Great Place to Work certification in six countries and continuously working with credible third parties to assess our sustainability performance.”
The importance of sustainable sourcing
Zurich Insurance Group has continued to focus on the integration of ESG considerations into its procurement operations to secure sustainable change through its Supplier Code of Conduct and Sustainable Sourcing Programme.
Its supplier code of conduct provides guidance to its suppliers to ensure they act in a way that aligns with Zurich’s sustainability ambitions and is built on three core pillars:
Environmental
Zurich expects all its suppliers to have a governance body or person responsible for helping reduce the negative impact its operations have on the environment and actively take measures to improve these.
It also expects suppliers who have more than 250 employees and/or annual revenues of more than $50m to collaborate with its suppliers and entire value chain to improve the environmental impact of its operations.
Social
Zurich Insurance expects all suppliers to meet the International Labour Organisations' conventions, the relevant Principles of the UN Global Compact across its labour standards.
Phil Soderberg, Former Global Head of Procurement and Vendor Management at Zurich, explains: “We encourage our suppliers to establish a diverse supplier programme with the objective of providing fair access to supply opportunities for companies that are owned and operated by at least 51% by one or more minority, woman, LGBTQ+, veteran, service-disabled veteran, person with a disability, aboriginal-indigenous person or a historically underutilised business defined under applicable country specific rules.
"We encourage our suppliers to establish a social procurement programme which the objective of proving fair access to supply opportunities for social enterprises. Social enterprises are businesses with a social or environmental mission. Like traditional businesses they aim to make a profit, but they reinvest them so that society benefits.”
Linda Freiner, CSO at Zurich Insurance, states: "“Sustainability is about how we do business today in a way that safeguards the future of our company and our society."
Ethical
Zurich remains committed to working with suppliers who utilise ethical business practices and share its values.
It expects its suppliers to:
- Comply with data protection and privacy laws
- Be anti-bribery and anti-corruption
- Comply with regulations and laws on anti-money laundering, tax and finance
Allianz mirrors this commitment to sustainability by working with its suppliers to improve diversity and sustainability in its supply chain and procurement processes through a sustainable procurement charter.
This charter explores ESG goals and makes sure processes consider social and economic wellbeing while helping to achieve net-zero emissions.
It encourages all vendors to:
- Procure environmentally-friendly services and products
- Use sustainable heating and cooling in premises and offices
- Switch to renewable energy
- Consider biodiversity elements
- Aim to reduce water usage
- Organise sustainability initiatives employees can participate in
- Change to an electric fleet
Suppliers must report on emissions, adopt sustainable practices and adhere to ESG criteria through its vendor code of conduct (VCoC).
By integrating sustainability into procurement, Allianz helps enhance resilience, transparency and long-term competitiveness.
How will this impact the future of the procurement industry?
Allianz and Zurich Insurance continue to showcase its commitment to a greener future by integrating sustainability into their procurement processes to promote ethical sourcing across their supply chains.
By setting ESG targets for suppliers, the organisations help reduce risks related to regulatory compliance, climate impact and human rights.
These two organisations set a benchmark for other organisations to integrate sustainability into their procurement practices, adopt greener practices to ensure long-term resilience and align procurement with broader sustainability commitments.
Explore the latest edition of Procurement Magazine and be part of the conversation at our global conference series, Procurement & Supply Chain LIVE.
Discover all our upcoming events and secure your tickets today.
Procurement Magazine is a BizClik brand.