Exploring Corporate Sustainability in the Insurance Sector: A Case Study of a Multinational Enterprise Engaging with UN SDGs in Malaysia

Abstract

Multinational enterprises (MNEs) are increasingly expected to integrate sustainability into their core business activities, moving beyond philanthropy or public advocacy. In particular, the financial sector is expected to support the Sustainable Development Goals (SDGs) as it plays a critical role in promoting sustainable development through its key roles as risk managers, insurers, investors and lenders. It has been acknowledged that the sector has the power to direct investments towards sustainable activities, encourage sustainable business practices, and promote sustainable development more broadly. However, for MNEs, including insurance companies, examining sustainability practices across subsidiaries operating in expanded geographic contexts becomes complex. Implementing corporate sustainability strategies is challenging, particularly when their globally-developed strategy intersects with local operations. However, limited attention has been given to the sustainability practices adopted by the financial sector at the subsidiary or local levels. This study aims to fill this gap by examining how multinational insurance companies operating in emerging markets manage their sustainability practices, particularly in aligning their global sustainability strategy with local operations. Utilising a corporate sustainability assessment process framework and focusing on the case study context of Allianz in Malaysia, this study provides a comprehensive picture not only of the sustainability practices that have been implemented but also of the important role that global and local operations play in translating global strategies to achieve sustainability into meaningful and contextualised local agendas for sustainability.

1. Introduction

Over the last decade, multinational enterprises (MNEs) have been expanding their involvement in the international agenda for achieving sustainable development [1]. Increasingly, they are expected to take actions in fostering sustainable development beyond just philanthropic or public advocacy [2]. MNEs are expected to integrate sustainability into their core business activities [3] through a range of sustainability practices. In doing so, it is common for MNEs to create frameworks, guidelines and standardised procedures to direct their sustainable business conduct [4]. This is typically established at the headquarter level by the parent organisation and is informed by their commitment to a range of international sustainability principles, standards and guidelines [5,6].

While this is appropriate for understanding the context of the headquarter operations of MNEs, it becomes increasingly complex when examining the sustainability practices across their subsidiaries, which are operating across expanded geographic contexts [7]. A previous study identified four typical ways adopted by MNEs to drive sustainability across their subsidiaries, including through principle-based, certification, reporting and process-based approaches [7]. These approaches allow MNEs to not only oversee the adopted practices of their subsidiaries but also help to direct and control their activities in contributing to sustainable development [3].

While the potential of MNEs to drive sustainable development across their subsidiaries has been identified [3], the implementation is not without challenges. Previous studies highlight significant complexity when implementing corporate sustainability strategies, especially when it comes to the intersection between the globally-developed strategy and with local operations [7,8]. Shapiro et al. [8] suggest that MNEs’ global sustainability strategies need to be contextualised within each specific local context to ensure meaningful impact at their local operational level. While Burritt et al. [7] argue that there is still a lack of theoretical and empirical insights informing the effective methods of sustainability that should be managed within the global–local context, as well as how to deliver the best outcomes across environmental, social and economic issues.

Along with challenges arising within the global–local context, MNEs face multifaceted pressures when it comes to demonstrating their real contributions to sustainable development [3,9]. On the one hand, MNEs are expected to improve their sustainability performance across their business operations, but they are also expected to demonstrate how their product and services provide actual contributions to the sustainable development of society. The discussion about the direct and indirect impacts of MNE’s business activities is especially murky within the management and financial services sector [9]. As the businesses within this sector tend to make less direct environmental and social impact from their day-to-day operations, it has been postulated that more significant indirect impacts occur through their clients’ and/or external partners’ social and environmental performances [9].

More recently, there has been clear evidence of companies in the financial sector putting sustainability into action. In particular, for insurance companies with global assets in excess of USD$30 trillion, there is an expectation to foster a sustainable development agenda through their key roles as risk managers, insurers and investors [10]. Within this context, insurance companies are progressively exploring how to best align their actions with international commitments to be more conscious of the environment and make a more positive impact on society [11]. For example, sustainable investing is viewed as a desirable way of investing because of the demand for the adoption of sustainability in the investment process. Despite this situation, it nevertheless remains important to understand the practices of these sectors, including for insurance companies, from a broader perspective by capturing both their direct and indirect impacts in a holistic and integrative process framework [9]. This will help MNEs avoid being accused of greenwashing and reputation-related practices when promoting sustainability.

However, there remains limited attention within the extant literature on the practices adopted by the financial sector at the subsidiary or local levels. Nogueira et al. [12], for example, specifically highlight the need for a framework of sustainability management for insurance companies on a global scale. In addition, the study argued for further research to improve knowledge on how sustainability should be managed between developed and developing markets for the insurance sector to ensure sustainable business activities. This paper aims to address this gap by answering the research question: how do multinational insurance companies operating in emerging markets manage their sustainability practices? When examining this research question, an emphasis is placed on how companies align their global sustainability strategy into their local operations. Adopting an in-depth qualitative case study approach, this paper will significantly enrich the empirical evidence of the sustainability practices in the financial sector with a particular focus on insurance companies that are normally excluded from in-depth qualitative research [13].

In order to address the research question, this study adopts a corporate sustainability assessment (CSA) process framework [14]. The following section will examine the extant literature on CSA, with a specific focus on the three key aspects of CSA typically adopted in large multinational enterprises. Following this, the methodology is discussed before proceeding to an examination of the case study context for this study—Allianz in Malaysia.

2. Literature Review: Understanding Corporate Sustainability Practices through Corporate Sustainability Assessment (CSA) Process Framework

A corporate sustainability assessment (CSA) is a management process including tools and techniques that are adopted by companies to address sustainability within their business activities [15,16]. It has emerged in response to the practical challenges faced by companies in managing sustainability practices across their business operations. Within the business and management research domain, the emergence of CSA is specifically aimed at addressing the ‘how’ aspect of the ways companies initiate, manage and report their sustainability initiatives [14,17].

The potential of CSA as a process framework to support companies in fostering sustainable development has been recognised in a range of literature (for example, [18,19,20]). This includes guiding how companies develop their sustainable strategy [5,6], prioritising sustainability issues to be addressed in local operations [21], measuring sustainability performance [22,23] and guiding disclosure for the adopted corporate sustainability initiatives [24,25].

An examination of extant literature on CSA and broader corporate sustainability highlights three integrated aspects of the CSA supporting companies to manage their sustainability practices including the sustainability governance system, measurement for corporate sustainability performance, and reporting for corporate sustainability. A recent study focusing on CSA has argued that these three aspects are interconnected and circular [14]. Sustainability governance systems are about strategy, structures, and systems required by companies to address sustainability issues across their business operations. Measurement for corporate sustainability relates to capturing the ongoing performance of implemented strategies through meaningful indicators, which are ideally linked to a reporting standard. Reporting for corporate sustainability is theorised as a management decision-making tool that integrates the company’s sustainability strategy and presents the performance of sustainability initiatives undertaken.

Along with the growing research interest in CSA, an extensive systematic literature review on CSA by Pranugrahaning et al. [14] calls for more empirical publications covering different sectors and geographical foci. This is due to the significant potential of the CSA identified to provide guidance in how companies engage with sustainable development. More empirical studies across industry sectors and geographical areas are expected to provide more significant value in the research domain as the existing empirical studies in CSA are dominated by the manufacturing sector (for example [6,22]). More in-depth information was identified that examined the intersection between global strategy and local operations, with a specific focus on the Information Communication Technology sector [16]. Empirical studies focusing on financial services, and especially the insurance sector, are needed to support global initiatives related to this sector and its contribution towards achieving sustainable development.

Building from the existing empirical and theoretical publications (i.e., [14,26,27,28]) across the CSA and CS domain, the next section will elaborate more on the three key concepts underlying the CSA process: sustainability governance system, measurement for corporate sustainability performance, and reporting for corporate sustainability.

2.1. Sustainability Governance System

A sustainability governance system is considered a foundational element underlying the corporate sustainability practices adopted by companies supporting their effort to contribute in sustainable development (i.e., [27,29]). It is the pre-condition to support corporate sustainability performance [27] and sets a specific context for how a company achieves a positive impact for sustainable development [29]. The sustainability governance system not only directs internal sustainability practices but also external actions taken by the company to ensure a meaningful impact on society [29]. It is within the sustainability governance system, and companies’ commitment to sustainability is translated into a relevant sustainability strategy by the companies’ leadership structure [30]. The commitment to sustainability and the sustainability leadership structure directs the sustainable governance system in a company [14].

Looking more closely at how a company can establish their sustainability governance system, previous studies indicate that it is the company commitment to a range of sustainability principles, standards and guidelines that set the foundational base to embark on the journey towards sustainability [14,16,17]. This determines the broader corporate sustainability strategy, including the sustainability goals and issues to be addressed [5]. Some examples of international sustainability principles include various principle-based initiatives that provide specific norms to be adopted in companies’ operations [3], such as the UN Global Compact (UNGC) and The Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, which can be applied across different industry sectors. Some industry-specific sustainability principles are also identified, such as: the Sustainable Manufacturing Initiative [31] for companies in the manufacturing sector; the Equator Principles in the financial sector; the Principles for Sustainability Insurance (PSI), the emerging guidelines for the insurance sector. The Global Reporting Initiative (GRI) is identified as the most common of sustainability standards and guidelines seeking to advance the disclosure of companies’ sustainability performance across environmental, social and economic issues [19].

Most of these sustainability principles, standards and guidelines are voluntary. While some sustainability principles direct more on the day-to-day operations and sustainability guidelines such as GRI G4 focus more on reporting, they share a similar role when it comes to the establishment of corporate sustainability governance systems. Sustainability principles, standards and guidelines inform the sustainability issues to be addressed [5]. GRI, in particular, provides direction on how to prioritise the issues according to companies’ stakeholder concerns through its materiality analysis framework. This initial stage is critical because it determines the company’s policies and procedures to contribute towards sustainable development. While a company’s commitment to sustainability informs the issue identification and refinement process, it is the companies’ sustainability-dedicated leadership and committees that typically translate the company’s commitment to sustainability into more contextual sustainability strategies, including sustainability goals, issues, and a range of associated indicators.

The importance of sustainability-dedicated leadership and committees across high-level management to executive functions has been highlighted across extant literature. The presence of sustainability-dedicated leadership and committees is suggested as a necessary organisational structure when companies aim to adopt sustainability practices into business activities [32]. Especially in a complex corporate environment, which is typical of MNEs, Metclaf and Benn [33] argue that leadership and organisational structure link and can be powerful mediators to translate the complexity of the adaptive systems environment of the organisation and a key factor in driving the successful implementation of sustainability within the corporate context.

Engert and Baumgartner [34], from their empirical study of the automotive industry, identify two levels of sustainability-dedicated committees: the “sustainability board” that consists of the whole management team including the Board of Directors, and the “sustainability circles” that consist of all the heads of the business units. In addition, other studies have also identified operational-level committees that are responsible for executing initiatives designed by the higher management level in the sustainability team [32]. Within the financial services sector, an empirical study undertaken by Amidjaya and Widagdo [35] shows a significant link between corporate governance, ownership structure and sustainability reporting processes adopted by banks operating in Indonesia.

Looking more closely at the role of sustainability-dedicated committees, it is evident across empirical studies that companies with dedicated sustainability committees have more effective corporate sustainability strategies (for example [36]). Quantitative studies also show that the presence of sustainability expertise increases the corporate sustainability performance in companies that were already strong performers [37]. What is not clear in these studies is how sustainability-dedicated committees work at the subsidiary level within the intersection of the global sustainability strategy and local operations, particularly within the finance sector.

Some insights are evident in previous qualitative case studies, which tend to indicate the role of the headquarters’ commitment to influence subsidiaries’ commitments and actions, and these insights tend to be limited to the manufacturing sector (for example, [5,21]). While studies in the financial service sector have been identified [38]—highlighting how sustainability principles in India influence the corporate behaviour of banks—this study failed to demonstrate the link between sustainability principles and how the adopted initiatives are measured. The implementation and measurement of these principles is critical in a holistic approach to sustainability management and will be explored in the next section.

2.2. Measurement for Corporate Sustainability Performance: Direct and Indirect Impact

Once the sustainability governance system is established, companies adopt a holistic process to implement sustainability measurement systems. This aims to efficiently manage the sustainability strategy developed [27,39,40]. By adopting different measurements, companies will have better clarity when translating the sustainability strategy into actionable practices [40]. This will allow companies to capture the ongoing performance and measure progress towards their sustainability strategy.

The question is how to set an efficient measurement system for corporate sustainability performance that reflects the commitment to a range of sustainability principles, standards and guidelines, while at the same time efficiently informing the reporting practices required [14]. Previous studies point to the role of sustainability principles, standards and guidelines in addressing this. A clear example can be drawn from how GRI-G4 inform a set of indicators that can be adopted by companies to measure, manage and disclose their performance, as demonstrated by Roca and Searcy [23] and Kumar and Prakash [38]. These studies show how companies can select relevant indicators provided through the GRI reporting standards in order to monitor and report their corporate sustainability performance. Indeed, it is a set of indicators that typically underpin the measurement system by serving as tools to control, plan and implement corporate sustainability initiatives [41].

While these international standards and guidelines provide a wide range of indicators across environment, social and economic issues, it is worth nothing that specific industry principles, standards and guidelines may also be necessary for consideration. The authors of [38] highlight some variations that occur in the sustainability-related indicators adopted by Indian banks. The study shows that in addition to adopting GRI-G4, some banks also adopt the National Voluntary Guidelines (NVGs) and the Indian national sustainability guidelines [38]. Within the insurance sector, the Financial Services Sector Supplement (FSSS), developed by GRI and the United Nations Environment Programme Finance Initiative (UNEP FI), is available to support sustainable financing practices in the sector. The FSSS provides 16 indicators covering five major aspects, including product portfolio, audit, active ownership, community, and product and service labelling. However, how the FSSS is actually implemented at the company level is not known from an examination of the extant literature.

Other metrics and indicators to measure sustainability performance are identified across the insurance and broader financial sector [42,43]. For example, Khatib [44] examines the practice of a sustainable balanced scorecard amongst Lebanese banks. Leksono et al. [45] propose a combined approach utilising a balanced scorecard (BSC) with a decision-making trial and evaluation laboratory (DEMATEL) and an analytical network process (ANP) to determine the sustainability performance of the health insurance sector in Indonesia. However, none of these studies elaborate upon the specific use of identified metrics and measurement systems to support either the mandatory or voluntary sustainability reporting procedures companies must undertake.

It is worth noting that while the sustainability balanced scorecard is identified as an option to link sustainability with business strategy, its utility is more applicable for internal measurement rather than external reporting. This has been practised amongst Brazilian insurance companies to measure their internal sustainability performance [42]. Regarding the complex structure within the insurance industry, the authors of [12] highlight the need for insurance companies to adopt some managerial perspectives that link sustainability strategy, measurement metrics, and disclosure. This is clearly an area where further empirical examination is needed on the actual implementation of sustainability performance measurement systems, particularly within the context of a larger system-based perspective like through CSA.

2.3. Reporting for Corporate Sustainability

Turning to the final aspect of the CSA, and more closely related to corporate sustainability disclosure, there are increasing expectations for companies to report on their corporate sustainability initiatives and demonstrate their performance outcomes [14]. Increasingly, there are mandatory requirements emerging for sustainability disclosure such as those are provided by the Sustainability Accounting Standards Boards in the United States. In Europe, listed companies are required to disclose environmental and social aspects within their annual reports through the 2014/95/EU Directive [15]. More recently, it has been reported that sustainability-related disclosures in the financial services sector (SFDR) is set to come into force by 10 March 2021. The SFDR applies to all EU financial market participants [46] and provides sets of ESG disclosure standards, helping companies to achieve sustainability targets established through the EU sustainable finance strategy.

From a voluntary perspective, several reporting frameworks are available providing companies’ options to disclose information about their sustainability initiatives and governance systems. The GRI is identified as one of the most globally used guidelines for corporate sustainability reporting [19,42]. Beyond this, the Integrated Reporting (IR) framework developed by the International Integrated Reporting Council, is a reporting tool for companies to produce sustainability public reports within the context of companies’ value creation. In addition to these two, UNGC also provides a reporting tool driven by a self-assessment basis, allowing companies to identify and assess impacts, risks, and opportunities related to sustainability.

In the financial services sector, producing sustainability reports that meet stakeholders’ expectations is essential. This increasing interest is not only relevant in more developed countries, but is also increasingly necessary in developing countries. A recent study by the authors of [13] highlights the growing trend for businesses in the financial sector to engage with higher standards of sustainability reporting practices. While the study explains that the trend is influenced by growing institutional expectations and regulatory pressures, the content analysis approach adopted by this study fails to inform the management process adopted at a company level to produce sustainability reporting. Another study by Amidjaya and Widagdo [35] highlights the relevance of ownership structure and corporate governance on the sustainability reporting practices in Indonesian listed banks. This study highlights a rising awareness amongst high-level management personnel for the need to adopt sustainability practices and disclose their corporate activities. However, how and what to disclose remains unclear.

While there are other recent empirical studies (for example, [47,48,49]) that evidently focus on sustainability reporting practices within the financial sector across different countries, there is a tendency to focus on country-level analysis instead of the actual practices adopted within individual businesses. An example of this is evident in the work of Pillay [48], who evaluates the integrated reporting adopted in the financial sector in Kenya, or in the study by Vitolla et al. [49], who assess the quality of South African financial institutions’ sustainability disclosures. Again, it appears that there is significant scope for understanding the practices of not only the financial sector, but more specifically the insurance sector, when considering the sustainability practices being implemented.

3. Methodology

While there are a range of empirical studies that have sought to reveal insights into CSAs, these may not be representative of the practices within a particular sector. An exploratory qualitative study is particularly suitable for this research because it can be used to understand how the CSA informs or frames specific practices [50]. Within this case, it will help reveal the practices of a multinational company operating in an emerging market context within the insurance sector. The CSA process framework detailed in the previous section serves as the starting point for case study research [51], which also “provide[s] direction, reflect[s] the theoretical perspective, and guide[s] the search for relevant evidence” [52] (p. 287).

The use of a single case study is also recommended for examining a specific phenomenon in its real situating setting within a certain specific context that has to be taken into account [51]. Ridder [52] (p. 283) argues that “case study research scientifically investigates into a real-life phenomenon in-depth and within its environmental context”. The in-depth qualitative case study is considered appropriate, especially where the research intent is to examine the use of a conceptual framework or theory [51,52] in a topic area about which little is known [53,54].

Furthermore, a range of studies in business and management demonstrate the value of single in-depth case studies for extending current theorising or advancing theoretical explanations. For example, the authors of [55] utilised a single in-depth case study when exploring the use of a sustainability assessment framework at the project-level with the Asian Development Bank. Likewise, the authors of [56] adopted a single case study when studying leadership structures and CEO succession in a small community bank. More recently, Pranugrahaing et al. [26] have argued for the particular value of in-depth case studies when examining corporate sustainability practices—in particular, the use of corporate sustainability assessment frameworks.

3.1. Selection of Allianz Malaysia Berhad as the Case Study

Allianz Malaysia Berhad (AMB) was selected as the case study for this study. AMB operates within Malaysia and is the subsidiary of the Germany-based, global insurance company the Allianz Group. In non-banking assets, the Allianz Group is considered the largest insurance company in the world, making them a particularly relevant company for case analysis with both global operations and a leading role in the insurance sector. In focusing on AMB as the focal point for the study of the Allianz Group sustainability practices, this case has the potential to illustrate the intersection between the global sustainability strategy established by the Allianz Group and the local sustainability practices operated by AMB within an emerging market.

The Allianz Group demonstrates a strong commitment to participating in the international agenda for achieving sustainable development. The Group has consistently led the Dow Jones Sustainability Index in the insurer’s category since 2017. More recently, they have also been involved in global sustainability initiatives with the United Nations to establish a global partnership platform for investors that promotes reducing the greenhouse gas emissions of their investment portfolios to achieve net zero by 2050. Indeed, even at the leadership level, there is a clear commitment by Allianz to sustainability, with the Group CEO now acting as the Vice Chairman of Global Investors for Sustainable Development.

This global commitment is also evident in the operations in Malaysia. Since 2012, AMB has disclosed their non-financial performance, following the establishment of a dedicated corporate responsibility (“CR”) department called Allianz4Good. The department reports directly to the CEO, underscoring that sustainability is a major agenda within the company. In 2016, AMB committed to the adoption of the Sustainability Reporting Guide and Toolkits issued by Bursa Malaysia Securities Berhad (“Bursa Malaysia”). More recently, the company has also prepared their sustainability reporting with reference to GRI, following the Allianz Group sustainability reporting framework. A dedicated sustainability department was also established at a later stage of the AMB sustainability journey to specifically manage the integration of ESG internally, while Allianz4Good retains their focus on managing the external community outreach initiatives.

3.2. Data Collection and Analysis

As this study utilises a corporate sustainability assessment framework to guide the data collection, a “pattern-matching logic” [52] is appropriate for the analysis of the collected data. This type of analysis approach compares “empirically based pattern[s]–that is, one based on the findings from your case study–with a predicted one made before you collected your data” [51] (p. 143). Furthermore, Ridder [52] argues that “the comparison of propositions and the rich case material is the ground[s] for new elements or relationships within the tentative theory”, which allow further exploration of the usability of the framework to a selected case study. Therefore, modification, extension or enhancement of the proposed framework might be expected as an outcome.

Data for this study is collected through semi-structured interviews as well as publicly available information from sustainability reports, annual reports, the companies’ websites, companies’ press releases and other relevant mass media publications. The key informants were identified and approached through a set protocol for case studies suggested in [57,58]. This includes developing case study protocols including sending invitations for participation, interview guidelines, as well as consent forms. As illustrated by Gaya and Smith [59], as well as Pranugrahaning [16], the key informants were chosen based on their position and knowledge of the adopted sustainability practices and corporate responsibility initiatives within the company. The key informants who provide primary data includes the Allianz4Good and the AMB sustainability department teams.

While the main data collection process was undertaken until 2020, further follow-ups occurred as part of the review process for this article in 2021–2022. The primary data collection process includes discussions, semi-structured interviews and email correspondence with AMB representatives. This was focused on charting the evolution of AMB sustainability practices. In doing so, it was evident that The Allianz Group and AMB are actively pursuing and developing their sustainability strategy and the way they engage with sustainability, including how they structure their sustainability governance system. In AMB, this includes seeing the evolution of the sustainability function within the company, from being based within the Corporate Responsibility Department to becoming an independent area dedicated to driving internal sustainability initiatives with Allianz4Good focused externally on community engagement [60].

4. Result: Corporate Sustainability Practices in Allianz Malaysia Berhad

This section presents the findings of this study (illustrated in Figure 1). Utilising the conceptual framework for corporate sustainability assessment (Pranugrahaning et al., 2021), this section presents (1) the sustainability governance system in Allianz Malaysia Berhad; (2) the measurement system for sustainability performance in Allianz Malaysia Berhad; and (3) the sustainability reporting at Allianz Malaysia Berhad.

4.1. Sustainability Governance System in Allianz Malaysia Berhad

As noted above, the sustainability governance system drives company behaviour to integrate and address sustainability across the core business activities and operations [16,26] It is the critical aspect where sustainability values, principles, and approaches are embedded before being subsequently translated into operational strategies. As part of a multinational enterprise, the sustainability governance system adopted by Allianz Malaysia Berhad (AMB) shows a clear connection to the Allianz Group’s sustainability governance system. This is especially reflected in how both Allianz Global and AMB commit to addressing sustainability in their core business activities as well as their operations. With regards to the core business activities, this refers to integrating sustainability considerations into decision-making processes across Allianz products and services, including in insurance, proprietary investment and asset management. In contrast, sustainability in operations is more about incorporating sustainability issues into day-to-day operational activities, including internal environmental management, fair employment practices and responsible sales conduct.

Underlying the Allianz sustainability initiatives to foster sustainable development across their worldwide operations, including Malaysia, the Allianz global sustainability strategy sets the foundational base for the sustainability practices across their operations through the establishment of the Allianz Group Renewal Agenda in 2015 [61]. The Renewal Agenda serves as a global strategy, reaffirming the group’s voluntary commitment to the range of sustainability principles, standards and guidelines. At the global level, Allianz has committed to a range of global agendas and initiatives for achieving sustainable development, including the UN Sustainable Development Goals (SDGs); the United Nations Environment Programme Finance Initiative (UNEP FI); and GRI-G4. On top of this, as a European company, the group is committed to follow the TCFD (Task Force on Climate-related Financial Disclosures) requirements, which were developed by G20 Financial Stability Board.

A clear alignment is evident in Allianz Global commitments to sustainability and the framing of the AMB sustainability governance system, while at the same time efforts have also been put in place by AMB to contextualise the implementation of global strategy within local operations. AMB’s concern to incorporate sustainability in an effective and meaningful way through both a global and local perspective are emphasised by AMB:

“Our sustainability strategy—exemplified by our roles as a responsible business, employer of choice and responsible corporate citizen—is driven across the organisation by the five dimensions of Allianz Group’s Renewal Agenda. In this sense, the Renewal Agenda is a mechanism for realising the group’s corporate sustainability strategy and not the other way round. As highlighted, though we are guided by the Allianz Group’s sustainability direction overall, there is a need for local contextualisation in order for initiatives to be effective and meaningful within our operating environment”.

In order to contextualise the global strategy to meet AMB stakeholders’ expectations, AMB conducts a stakeholder prioritisation exercise followed by a materiality analysis. The stakeholder prioritisation exercise aims to map which stakeholder groups have high influence and dependency on AMB, as well as to identify a range of materiality concerns for each stakeholder group. These identified materiality issues are subsequently built into the development of a materiality analysis.

Looking more closely at the materiality analysis that was undertaken by AMB, it is clear that it extensively involved different methods and platforms. Since 2016, AMB has undertaken two materiality assessment exercises. While the first materiality assessment was based on 27 material issues, developed together with a sustainability consultant, the latest assessment consolidated these issues into 15 key material issues. As explained through their sustainability report, the refinement of earlier sustainability issues has allowed AMB to provide more clarity to their stakeholders within the stakeholder engagement process.

The stakeholder engagement process was undertaken through multiple steps and methods involving both external and internal stakeholders. At first, a ‘Sustainability Megatrends and Solutions Form’ was distributed to shareholders during AMB Annual General Meeting in May 2017. Respondents were requested to identify 13 Sustainability Megatrends in order of importance and expected prioritisation by Allianz. A total of 149 shareholders participated in this exercise, and the outcome was utilised to develop a Sustainability Survey in 2017 to engage wider stakeholders. The sustainability survey was subsequently distributed to stakeholder groups including customers, employees, business partners, investors, industry associations, communities and media.

In addition to the survey, meetings and interviews were conducted, including with shareholders and NGOs to capture stakeholders’ concerns and interests. Throughout these processes, identified sustainability issues were rated on a scale from Low Importance (1) to High Importance (4). This was followed by a sustainability risk assessment exercise, based on AMB existing internal risk assessment criteria. It aimed to determine the probability of occurrence and level of impact each sustainability issue has on AMB. The risk assessment exercise is aimed to determine the probability of occurrence and level of impact each sustainability issue has on AMB. The risk analysis is subsequently tabulated according to assessments made by members of the Sustainability Working Group (“SWG”) in collaboration with an external sustainability consultant.

The identified issues are then prioritised, considering the top 10 most significant issues for stakeholders. They are then cross referenced with the Group’s Renewal Agenda to ensure that addressed issues are aligned with the Group Sustainability Strategy while also remaining meaningful to the local operational context. The 10 prioritised issues included customer satisfaction, regulatory change, technological innovation, business innovation, talent attraction and retention, ethics and compliance, integrating sustainability, quality of risk management, fair employment practices and community development, which are subsequently translated into a more actionable target to be implemented. AMB’s current approach to sustainability is illustrated below (See

Table 1. AMB Sustainability Approach Focus Area and implementation at core business and operation. Source: Adapted from AMB Sustainability Report [62,63,64].

	Implementation in Core Business	Implementation in Operation
Responsible Business Adopted sustainability standards, principle, guideline: Bank Negara Malaysia (“BNM”); Allianz Group Information Security Policy and Standard	Develop business innovation; new product and services development to tap new segments/markets. For example: Insurance for Speedhome customers (one-stop platform for homeowners, from advertising properties to selecting tenants, generating paperless agreements and even managing rental payments).	Digitalisation to support waste management. Committed to addressing Cyber risk. Incorporate relevant recommendations from Allianz Global into Malaysian operational strategy to manage the financial risks from climate change.
Employer of Choice Adopted sustainability standards, principle, guideline: Allianz Standard for Protection and Resilience (“ASPR”) Allianz Renewal Agenda	Implemented in operation	Provide employee learning and development. Having fair employment practices, fostering diversity and equal opportunities
Responsible Corporate Citizen Adopted sustainability standards, principle, guideline: Bank Negara Malaysia (“BNM”) Allianz Standard for Reputational Risks and Issues Management (“ASRRIM”) Allianz Standard for Protection and Resilience (“ASPR”)	Developing Sustainable Solutions. Providing appropriate/needs-based services, including insurance and investment. For example: SolarPro All Risk PV Insurance (“SolarPro”) is Malaysia’s first comprehensive insurance protection scheme that is catered for home, commercial and industrial solar photovoltaic (“PV”) systems Taking environmental, social and governance matters into consideration in business and investment decision-making.	Reduce societal risks and equalise opportunities of underserved communities through community development initiatives Adopt Environmental Management directed by Allianz Global

(developed by the authors)):

As respondents from AMB explained, the contextualisation of the global strategy is mainly undertaken by the Senior Management Committee. It is the Senior Management Committee that subsequently translates global strategy into the AMB sustainability strategy, including contextualising and prioritising sustainability-focused areas and delineating them down into relevant issues to be addressed within the Malaysian operations.

It is the Senior Management Committee that drives the sustainability practices at the company. The Senior Management Committee, supported by the SWG, translates the Allianz global direction to the local implementation. It is part of the AMB commitment to foster sustainability practices into Malaysian operations, and one of the first actions is establishing their own robust leadership structure in managing sustainability. The AMB’s sustainability leadership structure consists of the Allianz Board (The Board), which is accountable for the overall corporate sustainability strategy. The Board is supported by the Risk Management Committee, which oversees and ensures the integration of the strategy that has been approved by the Board into their business operations.

Meanwhile, the SWG is responsible for the implementation of sustainability initiatives undertaken by AMB, as well as monitoring relevant performance through a range of measures and indicators. The SWG is chaired by the Head of Allianz4Good and supported by other members of the Senior Management and designated officers. Allianz4Good is the department within Allianz Malaysia responsible for corporate responsibility initiatives and is also tasked with reporting and monitoring the sustainability progress across the company. The SWG follows the SWG’s Terms of Reference, which has been set out to guide the management processes in the area of corporate sustainability, including the membership and responsibilities of the SWG.

In a later stage of AMB’s sustainability journey, a Local ESG Board was established to drive the integration of ESG topics into business and operational considerations [60]. The Local ESG board is chaired by the Chief Executive Officer of AMB and comprised of top management personnel. The Local ESG board is responsible for the decision-making process related to ESG matters and reports to the Board of Directors, who oversee the sustainability matters within the Group.

Reflecting on the AMB sustainability journey, the AMB sustainability leader emphasised that having the Local ESG board as a formal management forum and decision-making body is important to ensure that sustainability initiatives are getting management buy-in and top management support. In addition to the establishment of the Local ESG board, direction and communication from top management to the organisation across different functions and departments helps the implementation of the sustainability strategy. In this way, sustainability matters can be seen as a management project where every member needs to take ownership, not only the sustainability department. As the sustainability department leader states, “it needs to be seen as a change management project as well, because we’re trying to get away from a conventional business mindset. So, communication is important and should not be underestimated”.

Looking at both the sustainability governance systems underlying the corporate sustainability initiatives at the global and local levels, it is clear that there is heavy alignment on global direction before the host country operations contextualise it into their local operations. Guided by the commitment to a range of international sustainability standards, principles and guidelines, the global sustainability strategy provides the bigger picture of which sustainability issues are relevant to be addressed within the local country operations. The practices adopted by AMB show that it is through GRI guidance in conducting materiality assessments that AMB can prioritise the relevant issues to be addressed and subsequently establish their measurement system for sustainability performance, which will be discussed in the following section.

4.2. Measurement System for Sustainability Performance in Allianz Malaysia Berhad

While the sustainability governance system sets the foundational base for sustainability practices both in the Allianz’s core business activities as well as in their operations, the implementation requires measures and set indicators to make the strategy more actionable. What is measured is typically informed by commitment to various sustainability standards [14]. The examination of practices adopted at Allianz Global and AMB indicates that the company adopts various approaches to integrate their commitment to sustainability standards into their measurement system to inform what the actual actions are to be implemented, measured and monitored.

By first examining the Allianz Global Sustainability Report [65,66,67], the adopted measurement system can be differentiated into: metrics and indicators to measure the direct impact of sustainability initiatives in business operations, and those that measure the indirect impacts through core business activities. These are aligned with the sustainability strategy set through the sustainability governance system, which also splits the sustainability initiatives into sustainability practices across business operations and sustainability practices in the core business. This split is also reflected through the practices adopted in AMB. Again, there is an influence on the Allianz global strategy on the implementation in AMB.

Looking more closely on how measures are set to translate the corporate sustainability strategy into actionable indicators to be implemented at AMB core business and operations in Malaysia, an intersection between Allianz global sustainability direction and contextualised sustainability issues established at the local level is identified. Utilising the result of the materiality analysis, the top materiality issues are delineated down into targets and indicators guided by a range of company commitments to sustainability and industry standards, made both at global and local levels. This includes the GRI Sustainability Reporting Standards, the United Nations Sustainable Development Goals (“SDGs”) and the Bursa Malaysia sustainability reporting guide.

4.2.1. Metrics and Indicators to Assess Impact of Sustainability across Business Operation

Looking first at the metric and indicators adopted to measure the business operations impact on sustainability, an example can be drawn from how AMB set metrics and indicators to measure their impact in environmental areas. In line with the Allianz global sustainability strategy, environmental management is also identified as a critical material aspect to be addressed in AMB local business operations. A five-year environmental target has been set to be achieved by 2022 [62], reflecting the Allianz Group’s Climate Change Strategy, which is influenced by a range of global sustainability standards adopted at the HQ level.

The five-year target is subsequently delineated down into some measurable yearly indicators, such as total of CO2 emission, energy consumption, water consumption, and electricity consumption. For example, AMB have set their target to reduce the consumption of energy by 34% and paper by 40%. This endeavour to continually improve their operational practices to ensure energy efficiency, for example, is achieved through changing their office lights to LED bulbs and the implementation of FSC paper usage across their head office (see

Table 2. Quantitative indicator to measure direct impact. Source: Adapted from AMB Sustainability Report [64].

Material Aspect	Prioritised Issues	Target	Indicator
Environmental Management	Managing carbon footprint	Reduce energy consumption by 34%	CO2 emission per employee (kg) Total amount of electricity consumption (m3 per year)
		Reduce paper consumption by 40%	Total amount of paper consumption (kg per year) Total amount of paper recycled (kg per year)

below). By delineating down the broad company global climate change strategy into more specific target and indictors that allow AMB to capture their on-going performance, evaluate the performance over a certain period of time and provide the necessary data for disclosure purposes.

Looking more closely into the actual practices adopted by the AMB to meet their targets, a partnership with an NGO called Wild Asia Foundation was established to help the company work on reducing resource consumption and environmental impact by maximising the efficiency of operations, facilities, and engineering systems. In order to do so, an eco-efficiency assessment was conducted by the NGO, which resulted in 17 recommendations that aimed to reduce the environmental impact and utility bills of the operations for the two main office buildings used by AMB.

These recommendations were drafted through a co-creating process by the consultant and the management. Consultants from Wild Asia Foundation spent time in the facilities to measure different parameters (such as energy and water consumption, temperature, air quality, lighting levels, etc.) and thoroughly understand the operations (working hours, resources consumed, waste management, mechanical and electronic components commonly used, etc.).

After Wild Asia Foundation drafted the recommendations, they conducted a presentation to the relevant staff involved in the implementation of the measures. AMB has now started implementing the first set of recommendations and is on its way to draft an action plan in order to successfully implement all suitable recommendations in order to decrease the environmental impact of its operations. In addition, another initiative was aimed to reduce energy consumption. A session was conducted by a guest speaker from the Centre for Environment, Technology and Development Malaysia to teach 35 employees at their head office on conducting an energy audit to reduce electricity consumption at home. The session also addressed the topic of Renewable Energy Tariffs in Malaysia (Net Energy Metering), the effects of pollution and examples of energy efficiency practices that can be adopted at the company.

Other than environmental impact, a range of targets have also been put in place to address social issues. While the set targets are qualitative and refer to general trends, these are underpinned by specific quantitative measures. For example, to address the community development issues, initiatives are undertaken to meet specific targets, including to reduce societal risks and equalise opportunities of underserved communities. While the specific amount of reduction has not been set, indicators are set in quantitative measures to allow progress monitoring. This includes total number of beneficiaries, total volunteering hours, total amount allocated for beneficiaries through corporate responsibility (RM allocated yearly), total amount of donations company-wide to support local communities (RM yearly), and number of community partners.

4.2.2. Metrics and Indicators to Assess Indirect Impact of Sustainability in Core Business

In this section, we look at the measurement system adopted to assess the indirect impacts of core business activities. At AMB, a heavy reliance on the internal Allianz global ESG Integration Framework is identified within AMB. The ESG integration Framework determines their impact on the sustainability that their external partners may have. This effort is an integral part of the Group commitment to become a sustainable insurance provider. The commitment reflects the fact that the Allianz Group is a signatory to the United Nations Environment Programme Finance Initiative (UNEP FI) PSI.

Allianz has actively co-led the PSI initiative to develop a standard for the industry in integrating environmental and social issues into the insurance business. Engagement with insurers, reinsurers, brokers, academics and regulators was undertaken by the Group to identify most of the material ESG risks in the insurance business. It is clear that these international associations and engagements inform the establishment of Allianz ESG Integration Framework, which are utilised as a guideline for Allianz operating entities world-wide, including developing new products and services that support sustainable development.

The Allianz ESG Integration Framework informs how AMB is embedding sustainability through their core business and decision-making processes. This initiative involves a systematic integration of ESG into their business considerations, which aims to reduce risks and capture opportunities in their investment management. The systematic integration includes assessment and screening of external business partners and their exposure to sensitive business areas. Regarding the responsible investment, during the back-to-back data collection process, the AMB respondent informed:

“In Allianz, responsible investment refers to the incorporation of ESG related considerations, through assessment and screening, namely for our underwriting and investment standards for direct financing, as well as our risk management framework. This process is initiated on a local level and escalated on a case-by-case basis to a group-level when required. ESG screening is an integral part of due diligence by our underwriters and investment managers and reflects our organisational commitment to our long- term sustainability strategy.”

Furthermore, the integration of the ESG process is guided by the Allianz Standard for Reputational Risks and Issues Management (“ASRRIM”), which serves as the group-wide guidelines:

“ASRRIM is a group-wide standard which guides the group’s reputational risk assessment process and considerations. It is developed by the Allianz Group and is continually updated, and periodically updated. ASRRIM guides the company’s business considerations in relation to potential reputational and ESG-related risks. Each sector is provided with its own set of guidelines outlining key ESG considerations to be taken into consideration. This includes our group-wide commitment to divest from businesses that derive 30% of revenue from coal mining or 30% of energy through coal and will continue to be reduced in line with Allianz’s coal phase-out plan”.

Other than mining, which has been identified in their guidelines, there are 13 sensitive business areas that may present reputational and ESG risks to the Group. Mandatory ESG screening is required for any investment and transaction that falls into the thirteen sensitive areas including: oil and gas; nuclear energy; hydro-electric power; infrastructures; agricultural commodities; agriculture, fisheries and forestry; animal welfare; human rights; clinical trials; animal testing; sex industries; betting and gambling; and defence.

The mandatory ESG screening itself is an integral element of the Allianz’s underwriting and investment standards for direct financing and risk management framework. The ASRRIM gives due consideration to potentially unmitigated ESG impacts and reputational implications in the business processes. Transactions are determined on a case-by-case basis to ensure a detailed assessment of any potential risk and appropriate mitigations. This further allows for the comprehensive and targeted management of ESG risks and opportunities. It seems clear that ESG risks and opportunities also play critical roles in providing guidance for the company to determine the indirect impacts of their business operations, especially by examining the impact of their external partners.

Examination to the measurement system adopted at both HQ level and in Malaysia gives clear examples of how the choice of the sustainability approach at HQ level influences the operations at local levels. By following the Allianz global sustainability strategy, it allows AMB to go beyond minimum requirements in Malaysia. Furthermore, both practices adopted at global and local levels also demonstrate how sustainability governance systems underlying the corporate sustainability practices are closely linked with the measurement system. In the case of day-to-day operations or the direct impacts, the sustainability team set the measurement system by delineating down the identified sustainability issues into sets of indicators. While for the indirect impacts, the measurement of external parties is established and guided by the Group's internal framework informed by their commitment to a range of sustainability platforms. Both the direct and indirect impacts examined by these sets of measurement systems are subsequently utilised for the reporting process. The next section will specifically focus on the reporting process.

4.3. Sustainability Reporting at Allianz

Examination of the reporting practices adopted by Allianz at the global level and its operations in Malaysia indicate a clear connection between the three key aspects of CSA. The company’s commitment to global sustainability principles, standards and guidelines that underpin the sustainability governance system not only provide direction in what to measure and the impact of the implemented sustainability strategy, but also direct how to utilise this information for external reporting purposes. The range of sustainability principles, standards and guidelines that inform the Allianz global sustainability strategy are clearly reflected on the Allianz annual sustainability report, especially GRI G4, TCFD and the SDGs.

Supporting the sustainability purpose, the company adopted more specific approaches related to the reporting practices, such as SDG evaluation and Allianz internal reporting content assessment. The SDG evaluation is conducted to demonstrate how the sustainability initiative’s core business and business operation contributes to the SDGs. In doing so, the Group first conducted an initial process focusing on mapping Allianz business activities and sustainability strategies against the SDGs. This was followed by a process determining which SDGs Allianz’s activities and targets contribute to most, guided by “Business Reporting on the SDGs: An Analysis of the Goals and Targets”. This allows Allianz to map their strategy, sustainability targets, policies and disclosure against the business indicators of the SDGs.

In order to generate the data required for reporting their impact on SDG, the Allianz Group utilises the Trucost evaluation method. This tool is based on a quantitative method developed by external consultants and applied to more than 70 countries where Allianz operates (Allianz group 2019). This process allows Allianz to identify where the Group has its greatest positive impact and plan the next step exploring how Allianz can contribute to the SDGs. For example, four SDGs are identified, to which Allianz makes significant contributions: SDG#1; SDG#7; SDG#8; and SDG#13. By understanding this, Allianz is committed to encouraging their industry peers and other sectors to jointly promote cross-sector collaboration as well as improve transparency on their contributions to the SDGs. Furthermore, they are also working with investors to develop an approach to finance the SDGs, especially through the U.N.-convened Global Investors for Sustainable Development (GISD).

Another approach to support the sustainability reporting process is the internal reporting content assessment that adopts a participatory process. The reporting content assessment serves as an integrative tool for the Group to determine what to measure and simultaneously what to disclose based on what report users need. The reporting content assessment is conducted with the aim to determine what the most important content is for Allianz sustainability report users such as reporting experts, ratings agencies and Socially Responsible Investment (SRI) analysts. The assessment rank crosses what matters most for sustainability report users and what is important for the company’s other stakeholders [68]. This informs Allianz on additional topics beyond the strategic materiality assessment, which is necessary to meet requirements and expectations of the Allianz report users. While this actual process was conducted at a global level, results are also reflected through the AMB sustainability reporting practices.

Guided by the Allianz Group’s Sustainability Report and Bursa Malaysia Securities Berhad’s (“Bursa Malaysia”) Sustainability Reporting Guide, AMB sustainability reporting demonstrates the actual outcome of AMB’s approach to sustainability. For example, the AMB sustainability reporting [69] contains AMB’s sustainability targets and indicators that were delineated down from AMB’s three sustainability key areas through a materiality assessment process. Yearly quantitative indicators are also utilised to inform how the measurement and monitoring practices are presented together with its annual performance, allowing report users to monitor the progress from when the activity initiated.

Examining the actual outcome of the reporting process, both the Allianz Global and AMB report the impact they make through sustainability initiatives in core business and in business operations. Looking first at how they report their impact of sustainability in operation, in order to produce Allianz’s global impact on environmental issues, AMB and other subsidiaries are required to report their environmental performance through the Allianz Environmental Management System (EMS). The EMS not only allows data collection, but also provides clear standards in measurement systems as well as supporting transparent reporting of environmental impacts across the Group.

The intersection between global and local reporting practices is also identified in reporting their impact of sustainability in core business. As part of Allianz Global, AMB is required to report their performance on the ‘Sustainable Solutions’ Programme to support the global reporting process in order to measure Allianz Group’s global sustainability performance in core business. AMB provides a range of quantitative data that are externally assured at Allianz Group level.

In addition to quantitative indicators that are utilised in the reporting processes both at the global and local level, AMB also utilised a more descriptive narrative to elaborate upon their local initiatives in supporting sustainable development. Examples can be drawn from the community development initiatives implemented at AMB. Contextualising this from the Group direction to drive social inclusion, AMB is partnering with local organisations to address social issues in Malaysia such as empowering and equipping youth with special skills to improve their employability and quality of life; empowering children of vulnerable backgrounds, housewives and single mothers with low-income through interventions implemented with partner organisations. Qualitative indicators can be found in AMB sustainability reports describing how the activities were conducted, by whom and how that helps meet the expected targets. The descriptive aspect of the report is presented to give context and to compliment quantitative indicators that have been set at a local level [69].

The examination of both the Allianz Group and AMB reporting practices shows that while annual sustainability reports are produced separately, they are actually interdependent. The international sustainability reporting standard adopted by the Group at global level indirectly frames and informs what to report and how to present the performance at AMB. While AMB do not present their impacts on sustainability like Allianz global, who explicitly separate their sustainability disclosure by “sustainability in core business activities” and “sustainability in operation”, the approach is still reflected through the reporting process adopted by AMB but with a range of local contexts.

Following the global direction and utilising Allianz Group Reporting framework allows AMB to adopt reporting practices beyond the regulatory expectation, stated in Bursa Malaysia Sustainability Reporting Guide. More importantly, the participatory approach through engaging with relevant stakeholders adopted at a global level that underlies the Allianz Group Reporting framework benefits AMB to produce reports that matter not only to report users but also to the broader industry sector. While guidance from the Allianz Group has been able to support AMB to have better tracking on how they are progressing with the sustainability matters, the data collection process for reporting purposes is identified as one of key areas of improvement.

5. Discussion

This study has specifically sought to address existing issues in understanding how multinational companies in the insurance sector engage with sustainability when operating in emerging countries. Using the lens of a CSA process framework, this study examines the management practices adopted by a European multinational insurance company operating in Malaysia to promote sustainability within their core business activities and the day-to-day business operation. In AMB, influence from the Allianz global sustainability direction is identified, informing the decision-making around the sustainability governance system, the set of measurement systems for ensuring impact on sustainability as well as the sustainability reporting process. The following sections discuss the specific insights from the case study and how it contributes to the extant literature across the key CSA components, starting with the sustainability governance system, moving on to the measurement for performance, and with the corporate sustainability reporting process.

5.1. Sustainability Governance System: Critical to Initiating Corporate Sustainability Practices in a Company

This study supports previous assertions in the extant literature that the sustainability governance system is the foundation for a company to initiate their corporate sustainability practices (i.e., [14,27,29]). Within the sustainability governance system, organisational structures and sustainability strategy are arranged. The organisational structure for corporate sustainability relates to an arrangement of “who does what” within the management practices of integrating sustainability into company functions.

The organisational structure arrangement in AMB is reflected through the sustainability decision-making that sits across the company Board to the executive functions. This includes the AMB Board, who play a key role as an intermediary when aligning the Allianz global strategy into AMB functions; the Risk Management Committee, who support the AMB board in ensuring the integration process for developing the AMB sustainability strategy; and the Sustainability Working Group, who oversee the implementation of the identified sustainability strategy.

The examination of the corporate sustainability practices adopted in AMB provide empirical data to support the intersection between global sustainability directions established at the headquarter level and the local implementation by its subsidiaries in an emerging market country. While heavily influenced by the parent company (Allianz), AMB demonstrates their autonomy in approaching corporate sustainability specific to their operations by providing a foundation for informing the subsidiaries about where to embark on their sustainability journey. This is reflected through the contextualisation practices when identifying AMB’s sustainability strategy. The AMB sustainability strategy includes sustainability goals and objectives that subsequently delineate into a range of sustainability issues to be addressed within Malaysia.

In establishing the AMB sustainability strategy, several instruments are utilised, considering international principles, standards and guidelines such as GRI and UN SDG; sectoral guidelines such as UNEP FI; and local requirements like Bursa Malaysia Sustainability guidelines. The process is mostly undertaken through a materiality analysis, which is informed by the GRI standards. The outcome of this process is a range of key sustainability issues to be addressed in their local operations. It is these contextualised issues that subsequently inform the identification process for selecting relevant sets of measurements for corporate sustainability performance, which is critical at the implementation stage.

5.2. Measurement System for Corporate Sustainability: Guide Corporate Sustainability Strategy Implementation, Monitoring Performance and Measuring Impact

While the sustainability governance system sets a pre-conditioned arrangement that determines performance, the measurement system is required to implement the identified sustainability strategy. This study provides empirical evidence that by adopting different measurement systems drawing from the broader sustainability strategy, managers can have better clarity on their actions when implementing the established strategy [40]. In AMB, the translation process from strategy into a range of actionable indicators includes a materiality assessment to contextualise and prioritise sustainability issues directed through the Allianz global strategy and collaboration with various local organisations and consultants to inform which meaningful actions to implement.

The AMB adopted approach for delineating down the Group’s global sustainability direction into actionable sets of indicators at the local operations provides empirical evidence that by setting a measurement system, two key benefits emerge. First, it helps the company identify what needs to be done to achieve desired impacts through directed targets and indicators to guide this process. Second, it also allows the company to monitor, evaluate and drive organisational change in the internal practices through having a well-established measurement system. Setting the measurement system for implementation guides the company to focus on improving the company’s overall sustainability impacts because they are able to monitor and evaluate their performance.

The examination of the measurement system adopted at Allianz and AMB gives clear examples of how the choice of sustainability approach at headquarter strongly influences the operations at the local level. By following the Allianz global sustainability strategy, AMB is able to go beyond the minimum requirements set in Malaysia and strive to meet a sustainability agenda that reflects global expectations. This provides empirical evidence that global standardisation can lead to the efficient transmission of sustainability practices to subsidiaries and to consistent and comparable results across the business [7,15].

5.3. Reporting for Sustainability: Supports an Iterative Management Process in Addressing Sustainability through Improvement Loops

While corporate sustainability governance systems set the pre-condition for company performance to make specific impacts for sustainability and measurement systems provide guidance for the actual implementation, the reporting for sustainability is the final outcome of the CSA process. While sustainability reporting is typically seen as a communication tool, the examination of reporting practices in Allianz Group and AMB shows that it also serves as a key management tool that drives changes in the way the company manages their core business as well as across their business operations.

This is aligned with previous studies that argue that a company commitment to various sustainability disclosure standards helps a company’s internal and external stakeholders have a clearer picture of the companies’ principles, governance and management values in promoting sustainability [70,71,72]. The reporting practice examined in this case study shows that in order to produce a sustainability report that adequately captures key data for reporting, a systematic management process is needed to synchronise the company sustainability governance and measurement systems.

The process includes contextualising the Group’s global sustainability strategy, prioritising relevant issues through materiality analysis, setting up targets and actionable indicators, and conducting reporting content assessment through the use of a participatory approach. By doing so, the company not only produces a sustainability report that meets the high standards of sustainability practices but also meets external stakeholder expectations and promotes sustainability initiatives leading to organisational change for internal stakeholders. This emphasises the important role that MNEs have over their subsidiary activities driving them to not only meet local expectations, but also perform at standards that are globally accepted [15].

6. Conclusions

This study has addressed a specific gap in the extant literature, providing a detailed in-depth case study of a leading multinational insurance company operating in an emerging market in Asia. With the focus on Allianz, this case study has detailed a comprehensive picture of not only the sustainability practices that have been implemented but also the important role that global and local operations operate to translate global strategies to achieve sustainability into meaningful and contextualised local agendas for sustainability.

While this study is instructive in illuminating the detailed practices of Allianz in Malaysia, it is not without limitations. Specifically, the focus on one in-depth case study removes the ability to generalise this study’s findings to other contexts, be it within the industry or across geographic contexts. This is compounded by the company selection, as Allianz is a very significant global insurance company with a significant and well-established sustainability agenda and strategy, the practices evident here are likely to be more comprehensive than what is typical, especially given their broad ranging commitments to different sustainability standards and guidelines. A final limitation is the evolving sustainability context that was evident at both the local and global level for Allianz, which resulted in areas of the paper that were potentially reflective of earlier practices or focuses. However, the general principles are maintained, allowing insights into the practices of Allianz, along with examples of these practices.

Having said this, the practical implications of this case study are significant. It is likely that managers within the sector can draw substantial insights into comprehensive practices that they can implement to address sustainability. Moreover, that this can inform the challenging context of global practices being implemented within a locally contextualised situation. Within this context, future studies would benefit from extending the sampling frame both more broadly across the insurance sector and geographic location to validate and provide further insights into the utility of the corporate sustainability framework as a tool for explaining the sustainability practices of companies.