Lincoln National Life Insurance Sustainability Report 2014
|Company||Lincoln National Corp.|
|Filer||Friends Fiduciary Corporation|
|Resolved Clause Summary||Sustainability Report|
|Status||Withdrawn; Company will address|
Managing and reporting environmental, social and governance (ESG) business practices helps companies compete in a global business environment characterized by finite natural resources, changing legislation, and heightened public expectations. Reporting allows companies to publicize and gain strategic value from existing sustainability efforts and identify emerging risks and opportunities.
ESG issues can pose significant risks, and without proper disclosure, stakeholders and analysts cannot ascertain whether the company is managing its ESG exposure.
The link between strong sustainability management and value creation is increasingly evident. A 2012 Deutsche Bank review of 100 academic studies, 56 research papers, two literature reviews, and four meta studies on sustainable investing found 89% of studies demonstrated that companies with high ESG ratings show market based outperformance, and 85% of the studies indicated that these companies experience accounting based outperformance.
Investors managing over $33 trillion have joined The Principles for Responsible Investment, and publicly commit to seek comprehensive corporate ESG disclosure and incorporate it into investment decisions.
The majority of large corporations also recognize the value of sustainability reporting. As of December 2012, 53% of the S&P 500 and 57% of the Fortune 500 published corporate sustainability reports; 63% of S&P 500 reporters utilized the Global Reporting Initiative (GRI) Guidelines. According to a 2011 KPMG report, 80% of Fortune Global 250 companies produce GRI based sustainability reports.
Bloomberg reports that the number of customers accessing ESG information on its terminals has increased on average 47.7% annually between 2009 and 2012.
Life and health insurers face a number of ESG risks, particularly related to climate change, including:
- Increasing incidence of stress and fatalities resulting from severe heat waves;
- Increasing number of injuries, fatalities, and contamination of water and soil resulting from natural disasters;
- Increasing incidence of vector and water borne illnesses and;
- Increased losses from investments in assets exposed to extreme weather risks
According to the National Association of Insurance Commissioners, “Disclosure of climate risk is important because of the potential impact climate change can have on insurer solvency and the availability and affordability of insurance across all major categories.”
Shareholders request that Lincoln National issue an annual sustainability report describing the company’s short and long term responses to ESG related issues. The report should be: prepared at reasonable cost; omit proprietary information; and be made available to shareholders by October 2014.
The report should include goals for managing ESG impacts of Lincoln’s business as well as a discussion of strategies to disclose and mitigate the risks of climate change to Lincoln’s underwriting and investing.
We recommend Lincoln consider using GRI’s Sustainability Reporting Guidelines to prepare the report. GRI is an international organization developed with representatives from business, environmental, human rights and labor communities. The Guidelines provide a flexible reporting system for environmental impacts, product responsibility, and community impacts.