The Covid-19 pandemic has demonstrated how profoundly a risk can have impacts that stretch across society and the economy. But as we recover it’s vital we keep our eyes on the horizon and “redouble” our efforts to mitigate the far greater risk posed by climate change.
The pandemic delivered a huge shock to global health, society and economy. It has changed – and will continue to change – how we work, travel, shop and live our lives.
But it also gave as a glimpse of a lower carbon future, John Scott, Head of Sustainability Risk for the Zurich Insurance Group, told an online audience at the RIMS Australasia 2020 Virtual Summit.
As the world went into lockdown in spring 2020, emissions fell. “And we all noticed a positive effect on our surroundings as natured redressed the balance,” he says.
As we recover and emissions rise once again we need to hold onto that moment and ensure we remember what a greener world could look like.
“This is really critical as scientists tell us we need to act now,” says Scott. “We must keep our promises to people and planet. In some regions – such as the EU – there are plans for a green recovery in place. But others are focusing on a brown recovery.”
“Brown may seem practical and green a nice-to-have. But this would be a grave mistake as climate change represents an existential threat to our existence on this planet.”
For the risk manager, climate change represents a hugely complex and interconnected suite of risks. But these can be summarised under three headings: physical risk, such as the impacts of extreme weather and temperature; transition risks, for example business models that become obsolete as the world changes; and litigation risks as high-emission firms could in the future be taken to court.
“In every sector there will be winners and losers,” says Scott.
Risk managers need to seize the moment and act now to develop metrics and targets to help quantify their climate risks and chose how they will express these risks to their stakeholders.
“Unless we build [climate risk] into our Covid-19 recovery we will all suffer the consequences,” says Scott.
“Now is the wrong time to ease up. In fact, now is the time to redouble our efforts.
“We need to remember that it is very hard for businesses to succeed in societies that are not functioning well.” And while there is still cause for optimism, the window of opportunity for action is closing fast.
John Scott says: “We need a Covid-19 response that is also a climate solution that puts people and communities at the heart of all our efforts.”
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RIMS Australasia 2020 Virtual Summit
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RIMS Australasia 2020 Virtual Summit: DAY FOUR: 3. Global Sustainability