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Spotlight on Environmental Risk 2023

Businesses overlook climate change as energy transition dominates

Can business afford to be distracted from the climate crisis?

Our research has revealed that dealing with the immediate pressures of energy transition in an uncertain geopolitical landscape, and accountability for greenhouse gas emissions on the journey to net zero, are proving a distraction from dealing with the overarching, immense threat posed by climate change.

With nations’ efforts to realise net zero milestones facing increasing scrutiny and legal challenge, and company’s sustainability positions being forensically analysed for “greenwashing”, a picture emerges of a business world in turmoil.

Key Findings

The gulf between preparedness widens as environmental risks intensify

What is the latest Beazley research telling us about environmental claims?

Advancements in technology are exposing a plethora of environmental risks to which businesses were previously unaware.

As regulators and a more informed consumer base become more aware of the dangers of business practices which had, for decades, been considered safe, a complex web of new environmental liability risks is emerging. Exacerbated by an increasingly litigious environment, particularly in the US, businesses will need to consider whether they are aware of and resilient to these new risks, and insurers will need to carefully evaluate their exposures.

We’re seeing climate related claims increase in volume and can only expect court cases to continue to grow, particularly as these claims are often amplified by media attention.

Next steps

Searching questions should be asked about how businesses are dealing with environmental concerns, and the insurance industry also needs to explore how companies are monitoring and managing risk in these areas. This should be part of every D&O renewal meeting discussion.

With so much external focus on environmental risks, we feel it is important to support businesses who are actively managing such risks, hence Lloyd’s Syndicate 4321 offering additional capacity to businesses that perform well against ESG metrics. We must also work with our clients to help facilitate a just transition, mindful that decisions today can have long-term consequences, as businesses navigate commercial pressures and environmental imperatives.