20% FACE CHALLENGES PREPARING FOR CLIMATE REGULATIONS

Twenty per cent of respondents in this week’s Airmic Big Question said their organisations are only prepared for climate regulations to a minimal extent, or not at all. Aside from organisations which do not currently fall under the scope of regulated climate reporting, the challenges cited include the reliability of climate data from their supply chain, and conflicting regulations and policies in different jurisdictions.

Julia Graham, CEO of Airmic, said: “One of the key challenges today in making the climate transition relates to how an organisation can accurately measure its Scope 3 emissions – emissions that are the result of activities from the organisation’s value chain. Nevertheless, risk professionals should consider what climate data is material to their business, to determine the metrics that would drive their journey towards greater sustainability.”

An article by Herbert Smith Freehills this year cautioned that with the recent rise in climate litigation, disclosure issues related to climate risks are now one of the two key exposures for directors and officers.

Hoe-Yeong Loke, Head of Research, Airmic, said: “The results also point to a potential divergence between corporations with large ESG teams and smaller organisations which nevertheless fall under the scope of regulated climate reporting, in terms of preparedness.”

“Organisations are also receiving multiple requests for climate data – from regulators, investors, insurers and activists, for instance – which can be onerous to respond to if they lack a large team and or additional systems to capture the data requested.”

In January 2023, the Corporate Sustainability Reporting Directive (CSRD) came into force in the European Union. It modernises and strengthens the rules concerning the social and environmental information that companies have to report. Starting this year, non-EU companies with a net turnover of over EUR 150 million in the EU market will also have to report.

In collaboration with KPMG and the Lloyd’s Market Association (LMA), Airmic has embarked on a project examining how the insurance sector as a whole can better support organisations through the climate transition. Airmic seeks to bring risk professionals together to work through some of these issues facing them and their organisations, through platforms such as its Climate Special Interest Group.

Leigh-Anne Slade, Head of Media, Communications and Interest Groups, Airmic, said: “There is a sense among risk professionals that the onslaught of climate regulations today could have the opposite effect of leading to less disclosure and more ‘green hushing’ – where an organisation makes a deliberate decision to keep quiet about its climate strategies.”

“The voice of the customer is becoming more consequential in the insurance industry’s climate transition. There needs to be more discussion of the challenges and opportunities they see their organisations facing in the midst of their transition journeys.”

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We will be sharing the results of the Airmic Big Question with the press weekly.

You can also find the results here.

Media contact: Leigh Anne Slade
Head of Media, Communications and Interest Groups, Airmic
Leigh-Anne.Slade@Airmic.com
07956 41 78 77