Climate Is the Biggest ESG Risk

ESG investors have emerged as the most engaged board activists. Risk professionals are grappling with ESG in respect to risk transfer terms. “Across the three pillars of ESG, environmental, social, and governance, the biggest risk transfer area is climate,” says Lorraine Stack, managing director at Marsh Captive Solutions, International. Companies have increasingly found themselves under-insured in respect to the severe floods, droughts and wildfires of the past decade, and traditional insurers are increasingly wary of underwriting carbon-emitting environmental risks. Most of the biggest insurers are committed to net-zero underwriting and investment by 2050 and to significant reductions by 2030. According to Adriana Scherzinger, head of captives, sales and execution at Zurich North America, the harder market and escalating risks are spurring more risk managers adding or expanding the use of captives.