Data the key to Net Zero economy transition: Willis climate survey
The availability of data is the single greatest test firms expect to face over the next five years in order to address climate risk, according to a survey of leading financial institutions by Willis Towers Watson.
In addition to 80 percent of respondents reporting data as their top concern in the transition to a Net Zero economy, difficulty in making quantitative assessments (75 percent) and insufficient expertise in the actions required (62 percent) were also revealed as major challenges.
Conducted as part of Willis Towers Watson’s Climate Risk and Financial Stewardship Summit, the survey polled 122 organisations including global banks, insurers, wealth and asset managers to gain fresh insights on progress made to assess and manage the impact of climate risk on their business.
Looking across the same five-year timeframe, few organisations who took part in the survey expect the level of risk associated with climate change to diminish, with more respondents (40 percent) predicting today’s level of risk facing their business will escalate over time.
With the pace of change far behind what is needed to keep global temperatures from exceeding 1.5°C of pre-industrial levels, survey respondents said that implementing a strategy to achieve Net Zero is the most common challenge to making this commitment (43 percent), followed by a lack of tools or data (32 percent).
In addition to future climate-related challenges facing the financial sector over the next five years, the survey looked at issues senior decision makers are having to deal with right now. Respondents cited transition (75 percent), reputational (63 percent) and social responsibility (57 percent) risks their organisations are prioritising today in order to bridge the gap and achieve Net Zero emissions.
Rowan Douglas, head of Willis Towers Watson’s Climate and Resilience Hub, said: “Future climate risks are unprecedented and systemic, and the magnitude of the challenge is so huge and the moment so late that every lever is being explored to turn economies to meet the Paris targets. While the financial sector is well placed to take a lead, climate-related risk not only needs to be integrated into day-to-day risk management but also to steer the whole economic transition to a low-carbon and resilient future.”
Research from Carbon Disclosure Project (CDP) reveals the extent to which further action across company value chains is required, with nearly half (49 percent) of the world’s 500 biggest companies yet to conduct any analysis of how their portfolio impacts the climate. This is despite portfolio emissions of global financial institutions being on average over 700 times larger than direct emissions, according to CDP data.
Douglas said: “We are seeing an evolution in what Net Zero finance means for the financial sector and its stewardship role in a whole economy transition towards a climate resilient future. Meanwhile pressure from ambitious new climate targets and scrutiny from central banks, regulators, investors and the wider public continues to increase. To continue to thrive, financial institutions will need to adapt and align their portfolios with a Net Zero carbon world.”
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Copyright © intelligentinsurer.com 2024 | Headless Content Management with Blaze