Just over half (51%) of the UK’s businesses said it was the responsibility of government to ensure that organisations successfully adapt to the challenges of climate change – compared with only 15% that believed responsibility lies with their organisations.
That is despite the fact that just over half (52%) said they had experience disruption from climate-related, extreme weather events, according to a report by the insurer Gallagher.
Back foot
“The country is committed to reducing our emissions and reaching net-zero by 2050 but, with half of businesses reporting impacts, it seems we are already on the back foot,” Gallagher’s managing director of risk management Neil Hodgson said. “Despite the widespread concern, many businesses are failing to act to protect themselves from the potential impacts of climate change, whether that is investing in risk management measures in their premises, buying more green equipment or ensuring they have appropriate insurance.”
Mostly frequently, those affected by extreme weather reported increased operating costs (47%), supply chain disruption (39%) and damage to physical assets (35%). In response, a minority said they had already moved premises in response to climate-related risk (15%), and some (16%) said it had forced a change of business model. About a third of businesses (32%) take out insurance.
Insurers’ response
In many jurisdictions reporting requirements on climate-related risks and impacts are rapidly moving from voluntary to mandatory, according to Moody’s Analytics. That could speed up requirements for businesses to act on climate-related risks.
In a survey of insurers, the Moody’s found that many were adapting their risk management processes, strategies and their overall business models to meet the challenge. Reliable sources of data from the organisations they insure or from third parties can be patchy and restrict their ability to model risk properly.
“Climate risk management and reporting are already starting to shape insurers’ organisational structure. Many have created sustainability functions to lead the process,” the report said. “Groups are also starting to involve their subsidiaries, as more detailed climate data is required for granular analysis.”
