Current worries about energy prices and the need to transition may be blinding business to the existential threat that climate change poses, according to Beazley.
The warning follows the publication of the latest edition of the carrier’s annual Risk & Resilience series Spotlight On: Environmental Risks.
Based on a survey of 2000 senior business leaders across the US, UK, Canada and Singapore, the data shows that current and short-term concerns about the energy transition are deflecting focus away from climate change as the environmental issue of most concern. However, the reality of the long-term threat that climate change poses is rising to the top of boardroom agendas, as more than one in four (28%) predict that this will be their most pressing risk in 12 months’ time.
Key findings include:
- More than a fifth (22%) of global business leaders believe that energy transition risk is the top environmental concern. Worry peaks for the UK, with 27% of boardroom leaders identifying the energy transition as the number one risk.
- Across the globe, just 9% of business leaders predict that energy transition will be the top risk in 12 months’ time and instead climate change leaps to become the biggest environmental risk business leaders believe they will face.
- Worryingly, a lack of business preparedness for climate-related risks has led to a quarter of global business feeling unprepared to face the impacts of climate change. Small and medium businesses are feeling most exposed, with 28% of firms that generate under £100 million revenue noting they are unprepared, versus 21% of businesses with revenue over £100 million.
According to Beazley, just as environmental risks are climbing up the agenda so business confidence in its resilience is dropping fast as all areas of environmental risk suffer a fall in resilience levels. It added that the impact on energy resources caused by the Russia/Ukraine war over the last 12 months has significantly impacted on business leaders’ thinking and perception of resilience.
Bob Quane, CUO at Beazley, said: “The energy transition, undoubtedly linked to the Russian invasion of Ukraine, has become the key area of concern globally. For business leaders facing this immediate crisis, it is unsurprising that the focus is on mitigating the short-term impacts rather than focusing on the steps they need to take to adapt for the long-term. However, the current low levels of resilience that many business leaders feel in the face of climate change, coupled with the reality of the effects we have seen over the past 12 months, means a change of mindset is urgently needed.”