The insurance sector is intrinsically linked to and impacted by the environment. The more harm that’s done to the planet, the more the industry must underwrite. With every major natural disaster, the more the tide of risk rises.
Climate change and increasingly extreme weather events have caused a surge in natural disasters over the past 50 years. In 2018 and 2019, Europe suffered its worst consecutive summer droughts in 250 years — an event likely to repeat itself sooner rather than later.
“In common insurance terms, we would have called these events one-in-250-years events,” McKinsey’s FSI advisor Antonio Grimaldi says of the droughts. “But the changing nature of climate risk means that the likelihood of these events actually repeating in central Europe over the next 50 years will increase sevenfold.”
Every country around the world is exposed to its own set of climate challenges — we’ve seen a huge rise in floods in the UK over the past few years; wildfires in Australia; and deadly hot weather in both California and Texas — and insurers are becoming increasingly more aware of the problem that lies ahead. Many large major insurance groups are rightly making fighting climate change a core part of their ESG strategies.
It’s a no-brainer then — a business imperative as well as a moral one — that the insurance industry does all it can to protect the planet and strive for increased sustainability across its operations as a first step to helping combat climate change.
Leveraging Carbon-Thoughtful Tech
One crucial way the industry can drive a sustainable future is by leveraging tech to deliver a secure, seamless hybrid working environment for its employees. Indeed, after the working changes wrought by the pandemic, hybrid working is something employees increasingly expect. Greener technology has a big part to play — and embracing cloud-based technologies is a huge priority for insurance institutions.
Embracing cloud technology has multiple business benefits — reducing costs on hardware and office space; attracting new talent; and enabling companies to get new products to market more quickly, to name a few. But the impact it has on a company’s sustainability credentials is huge, too.
The Planet-Friendly Benefits of Migrating to the Cloud
Leveraging the cloud enables employees and contractors to reduce the amount of time spent commuting to and from the office, meaning way fewer carbon emissions pumped into the atmosphere.
It means less energy used in office spaces and less carbon output from huge datacenters, which are typically designed for only peak usage and leave a lot of equipment underutilized and inefficient.
Traditional datacenters need extensive cooling systems and uninterruptible power supplies and sources, all of which require a great deal of electricity that is sometimes transmitted across great distances. Additionally, performing maintenance and upgrades to those systems is extremely cumbersome and time-consuming, which causes further energy inefficiencies.
While public clouds do need cooling and power, they’re located closer to their power sources, and there is a more efficient transfer of power.
Providing digital workspaces for the workforce also results in fewer performance and security dependencies tied to employees’ physical laptop and mobile devices. This enables IT to extend the life of an existing device, to leverage low-energy endpoints as the access points for digital workspaces, and to allow devices to be used for both personal and business activities.
Corporate Responsibility
The scattering of the workforce due to the increase in hybrid working leads to the subject of another important aspect of a company’s ESG: the notion of corporate responsibility.
One of the main things to consider here is how technology is underpinning the new hybrid world and the knock-on positive impact of broadening social wealth. As an industry, and due to the growth of hybrid and remote work, insurance is no longer locked to major cities. With employees being able to work remotely for at least part of the week, this has given more people the opportunity to move away from the capital, resulting in more equal distribution.
Walking the Walk
Across insurance, finance, and banking there is a lot of talk about sustainable finance — talk being the operative word.
But, actually, when an organization refers to sustainable finance what they’re really referring to is a sustainable supply chain. They’re saying, we’ve ensured our suppliers are sustainable and that there’s no bad money and no bad investment in our supply chain. Of course, this is all good stuff. However, what insurance companies and financial organizations need to do more of is talk about sustainability in terms of their own output.
Companies should ask themselves: What are we doing to reduce our carbon footprint? Obviously, IT and choosing the right technology and solutions to support the business plays a huge part in that, so how are we going to communicate that? How do we get the message across to our customers?
Embracing greener work practices and communicating that to the world is an extremely important selling tool. Today’s customers are looking for environmental responsibility from the insurers they choose. They expect it: Today’s insurance providers must offer them the best value for money and the assurance they’re making huge inroads towards sustainability. Now’s the time to explore all the ways our industry can make the planet a better place for its customers, employees, and future generations.
