Page 81 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 69

4.3.Environmental, Social and Governance

Environmental, social and governance continues to be an important topic across all industries, but
being ESG and promoting a company as being ESG is not without risks.

Credit rating agency Moody’s recently forecast heightened ESG credit risks this year. The risks
were heightened by economic and political turbulence caused by the COVID-19 pandemic and Russia’s
invasion of Ukraine.

According to Moody’s, company emission reduction efforts will come under increased scrutiny as
more ambitious, transparent and credible objectives are required by investors despite short-term energy
security concerns.

According to an article in the Insurance Journal, some lawsuits began to emerge last year over
companies overstating their ESG practices. So, if you are a company that aid that they were going to
invest in ESG-type entities but do not, that is when the liability could potentially be. While ESG seems
to be all the rage, it may not be as big a deal as some think.

Bloomberg recently reported the U.S. market for ESG-related products is less than half the size
previously reported.

The U.S. SIF Foundation reported sustainable assets totalled roughly $8.4 trillion in 2022, down
from the $17.1 trillion stated two years ago.

One reason for the drop could be tied to the risk of companies overstating their ESG attainments.

Europe has started stripping ESG labels from funds amid stricter rules in the region, and Asian
regulators have also set stricter standards, Bloomberg reported.

4.4. Crypto Market

Months of turmoil in the crypto currency sector has toppled several major crypto investors, lenders,
and exchanges as $1.3 trillion was wiped off the value of crypto tokens. Crypto exchange FTX headlined the
bankruptcies after billions of dollars were withdrawn in three days, and charges were levied against its CEO.

Recent developments have shined a spotlight on the crypto market, which typically means increased
regulation for the crypto industry.
The Securities and Exchange Commission is sharpening its teeth when it comes to crypto firms.
Federal lawmakers have introduced bills to tune crypto currency regulation.

The Federal Reserve, Federal Deposit Insurance Corp., and the Office of the Comptroller of the
Currency (OCC) said they are concerned about the safety and soundness of bank business models that
are highly concentrated in crypto and about fraud and misleading statements from crypto firms, as well.
A similar sentiment is being mirrored in many of the fast-growing economies such as India.

The insurance industry has been warming to the crypto market, introducing some solutions despite