(4 minute read)
If you want to learn about the business relevance of sustainability you may not need to look any further than the insurance industry. Sounds strange I know, but not when you realise that some of the best research out there is being undertaken and published by insurers.
Why? The answer is astonishingly simple: the insurance industry’s greatest asset is data. They have data on everything. They monitor risks and opportunities and spend huge amounts of time and resources trying to predict future trends. And one of the key trends being talked about by insurers at the moment is environmental and social risk.
According to the Global Risks Report 2018, extreme weather events, natural disasters and failure of climate-change mitigation and adaptation are three of the most severe risks facing the world today. That’s in addition to ones that we are more familiar with such as water crises and food crises.

Source: Global Risks Report 2018
Take Zurich Insurance Group as an example. They have an entire part of their website dedicated to environmental risk and they have made the reasons for that very clear:
“From extreme weather to water scarcity, today‚Äôs environmental risks are interconnected, causing disruption not only at the source but throughout the business supply chain. When a natural disaster strikes a factory in one country, the ramifications are felt half way around the world.” (Source: Zurich Insurance May 2017)
And it’s this impact on business that the insurance industry is so focused on. Whether it’s insured losses or uninsured losses, the insurance industry bears the brunt of environmental disasters because they’re either paying out or having to say why they’re not paying out. It is in the insurance industry’s interests to encourage businesses to be as resilient as they can be, in order to minimise the risk of insurance claims being filed.
Resilience, in the context of climate change, is a buzzword at the moment – a lot of people are using it but it is widely acknowledged that we are still in the early stages of really defining what it means for the private sector. What we do know is that climate resilience is essential. Resilience can be split in to two relevant categories for the private sector: risk management and business growth opportunity.
Risk Management
Let’s focus on the three pillars of sustainability: People, Planet, Profit. I’m going to assume you have a good handle on your economic risks, but do you have a good idea of your environmental and social risks? By using the three pillars of sustainability you can start to map your dependencies. You may not even need to quantify them to start with – just get them on a page. Some questions to ask yourself:
Planet (Environmental)
Where do your supplies come from?Where are your customers based?Are you at risk of a natural disaster or extreme weather event wiping out a large proportion of your business or supply chain?What about your premises? Are they at risk?Does your insurance cover all losses from extreme weather events?
People (Social)
Do you often get large proportions of your workforce taking sick leave? Do you have high staff turnover as a business? Is that your intention?If you have high staff turnover or absence, is that affecting your client relationships? Is your business suffering from brain-drain?Where do your supplies come from? Are there modern slavery risks in your supply chain? What about your reputation in your market? Do you have a positive reputation? Do you have strong brand value? Is that important to your business?
If you are able to identify where your dependencies lie (in other words, where you might be impacted by environmental, social or other risks), you have the opportunity to manage that risk. And in knowing about, and managing, that risk you can become more resilient as a business.
Business Growth Opportunity
We are still focusing on the three pillars of sustainability but are now using a different lens. You have undertaken your risk identification exercise so you now have a solid idea of where some of the risks lie in your business. In your field, what opportunities are there for growing and strengthening your business? You can now use the results of that exercise to ask yourself a few more questions:
Planet (Environmental)
Can you deliver a solution that helps your current customers and target customers tackle their own environmental challenges? Does your more resilient business strengthen your reputation as a reliable business to work with? Are there products or services you can design which are targeted at reducing environmental impacts? Do you have convening power to start a dialogue in your industry on particular environmental issues? Will that benefit your brand? Can you reduce your overheads e.g. reducing insurance costs through managing environmental risks?
People (Social)
Can you change your business practices to become a sought-after place to work? Are you able to provide local people with upskilling opportunities? Can you strengthen the desirability of one of your products by telling the story of where it came from? Are you a respected business in your community? Is that valuable to you? Can you identify extra revenue sources by providing empty-space and extra resource to help your community?
The questions above are by no means comprehensive, but they should provide a helpful starting point.
Finally
The insurance industry has given us a great insight in to how seriously they are taking sustainability risks and this focus is challenging businesses to get their own house in order.
The good news is that, as a minimum, entry-level knowledge of how to identify and manage key environmental and social risks is available to everyone. The great news is that your risk management exercise has the potential to help you identify business growth opportunities in the process.
I am a sustainability coach with 10 years experience in the sustainability sector. I can help you and/or your business understand how to identify your material impacts on the environment and start mapping out a path to a more sustainable strategy. Contact me at emma@greenarchconsulting.com for more information.