Many companies today are struggling to balance immediate challenges with the long-term risks posed by climate change. A recent survey by Beazley reveals that a significant number of global executives—73%—believe that current economic conditions are making it harder to prioritize sustainability goals. This focus on short-term issues could lead to more severe problems down the road, including property damage, environmental cleanup costs, and lawsuits.
Paul Bantick, Beazley’s chief underwriting officer, highlighted this disconnect in a recent interview. He noted that while companies are understandably focused on economic uncertainty, the risks associated with climate change are becoming increasingly urgent. Only 20% of leaders see climate and catastrophic risks as top concerns, which Bantick believes is a serious miscalculation.
Bantick warned that businesses lacking plans to mitigate extreme weather risks will face rising liabilities, including property damage and business interruptions. He emphasized that extreme weather events are becoming more common, and ignoring these risks could result in significant costs in the future. He urged businesses to invest in resilience and develop strategies for continuity.
The survey also revealed a concerning trend regarding the global energy transition. Only 21% of executives consider energy transition risk a priority. Bantick pointed out that the complexity of moving to net-zero emissions, especially in sectors like marine energy, is a major hurdle. The transition requires substantial investment and time, making it less appealing for many businesses.
In the U.S., changes in climate policy under the Trump administration have further complicated matters. The administration has pushed for fossil fuel development and rolled back environmental protections, which could influence how companies approach sustainability. Bantick cautioned that businesses should not lose sight of their climate goals, even as regulations shift.
Interestingly, while ESG (Environmental, Social, and Governance) regulations are expanding globally, concern about compliance is decreasing. Only 19% of leaders see failure to meet ESG requirements as a major worry, down from 22% the previous year.
To build resilience against climate risks, Bantick believes companies need to ask tough questions about their operations and supply chains. He stressed that economic stability and sustainability can go hand in hand. Insurers can play a crucial role in this process by providing data and tools to help businesses assess risks and plan for the future.
As companies face mounting pressure to adapt to climate change, the need for a shift in mindset is clear. Understanding and addressing these risks is essential for long-term success.