Summary
Ernst & Young released their top 10 industry insurance risks and climate change clearly hits number one. It hits number one for the following reasons: 1) Changes in weather patterns that have and will cause losses from floods, severe storms and other natural phenomena. 2) Insurability criteria may change effecting an industry’s ability to obtain suitable insurance for operations. 3) Corporate viability and sustainability as changes in pricing, policies, regulations and other gradual consequences of climate change impacts a company’s solvency.
Analysis
Industries like oil & gas, coal fired energy producers and other industries that are large final emitters (LFE’s) and even medium sized emitters are going to have to complete an independent Carbon Risk Analysis and Strategic Plan. Insurance risks are what investors, investment managers and hedge fund managers use to scrutinize secure places to invest their portfolios. Many of these LFE’s have talked the talk and made niceties on their web-sites, but have done precious little to reduce GHG’s. A Carbon Risk Analysis and Strategic Plan will show the investment community that they are serious about reducing their carbon footprint and thus address their insurance risk. A good number of changes that LFE’s can do will significantly reduce their GHG’s while positively affecting their bottom line. There are numerous companies from oil and gas producers to steel makers that have reduced GHG’s while increasing their bottom line. The investment community also needs to wake-up and smell the emissions and know that those emissions will not only erode the quality of life they will erode the financial returns of their portfolios.
