Just as environmental risks are climbing up the agenda so business confidence in its resilience is dropping fast. Clearly, the impact on energy resources of the war over the last 12 months has had a significant impact on thinking and perception of resilience.
Short term gain long term pain?
The long-term risk posed by climate change is now near or at the top of boardroom agendas globally. Our data shows how this risk has rapidly progressed from the periphery to occupy the foreground of future business planning (2022: 19% 2023: 28%). Yet, while business leaders see the long-term threat posed by climate change as a grave concern, they perceive the immediate threat to be reducing (2022: 19% - 2023: 19%) . This dynamic is creating a widening gulf between the attention paid to climate change today and action businesses must take to be resilient in the future to a risk they acknowledge is intensifying.
No other country is more keenly aware of the long-term threat of climate change than the US. Perhaps this is unsurprising given the myriad of increasingly severe impacts from climate change which have been felt across different states. Over the past six months alone, the US has been exposed to the full gamut of catastrophic events from hurricanes and flood to wildfires and convective storms. However, recognition of the threat has left more businesses feeling exposed, with 29% now saying they feel unprepared for the risks posed by climate change, increasing from 15% last year. At the other end of the spectrum, US businesses which feel very prepared for climate change have plummeted from 42% in 2022 to just 29% today. This declining confidence may also, in part, be attributed to the growing financial exposure to climate change litigation.
Applying positive pressure – Bob Quane, Chief Underwriting Officer, Beazley
The energy transition, undoubtedly linked to the Russian invasion of Ukraine, has become the key area of concern globally. For business leaders facing this immediate crisis, it is unsurprising that the focus is on mitigating the short-term impacts rather than focusing on the steps they need to take to adapt for the long-term. However, the current low levels of resilience that many business leaders feel in the face of climate change, coupled with the reality of the effects we have seen over the past 12 months, means a change of mindset is urgently needed.