The Climate Crisis: Derisking The Journey To Net-Zero

Innovation The Climate Crisis: Derisking The Journey To Net-Zero John Riggs Forbes Councils Member Forbes Technology Council COUNCIL POST Expertise from Forbes Councils members, operated under license. Opinions expressed are those of the author. | Membership (fee-based) Oct 19, 2022, 07:00am EDT | Share to Facebook Share to Twitter Share to Linkedin John B.

Riggs | SVP Applied Technology Solutions HSB – Applied Technology Solutions . getty Can the industrial reinsurance industry move the needle significantly in the struggle to combat the increasingly disastrous effects of climate change? Climate change is, of course, intensifying at a pace that threatens to overwhelm our ability to adapt to it. This is hardly even newsworthy.

The multi-faceted danger of our continued reliance on fossil fuels has been underscored, most recently, by the crisis in Ukraine, and the recognition that Europe is hugely dependent on non-renewable fuel piped in from Russia. There are a lot of obvious, compelling reasons for us to respond—and fast. One of the most compelling reasons is simply that promoting the transition to renewables and more efficient technologies is starting to make great business sense.

How much? About $100 trillion in new investment over the next thirty years, according to Goldman Sachs. So where do industrial reinsurers like my company, HSB, fit in? At this point, it’s practically expected that we’ll all clean up our acts, steadily reducing our carbon footprint on the accelerating march to carbon neutrality. The day is rapidly approaching when NOT addressing these issues will no longer even be an option, from both regulatory and PR perspectives.

Companies that don’t make the grade will likely perish. All insurers are, of course, trying to devise products that help their customers navigate these perilous new shoals, but most of these products focus on mitigating the consequences of climate change—not addressing the causes. They offer more robust coverage for climate-induced catastrophes, like floods and fires, and, in some cases, even nudge their customers in more climate-friendly directions by, for example, increasing premiums on high-risk investments like the rebuilding of homes in fire-ravaged regions.

As industrial reinsurers, we’re in an excellent position to slow—even reverse—climate change by taking on some of its root causes. There are two main areas where we can make a difference: • Vastly increasing the efficiency of the currently installed base of industrial equipment, thereby lessening energy consumption, and employing techniques to re-use and redeploy resources that until now have been waste by-products (thermal optimization is a huge area of innovation and opportunity) MORE FOR YOU They Inherited Billions Upon Billions: Meet America’s Richest Heirs Mom Founder Uses Texting To Transform Kid’s Healthcare Clearly Communicating Is The Solution To Quiet Quitting • Decarbonization by transitioning to equipment that runs solely on renewable fuels To bring this all about will require several key elements: • Partnering with best-in-class OEMs and operations providers • Data: Industrial IoT and AI greatly multiply our visibility into the performance and fine-tuning of the projects we underwrite • Standards: They need to be revisited and updated to reflect new realities • Derisking: We can and must assume the burden of risk to enable our clients to make the leap • Innovating new financing models Every project is different. Sometimes we have to contend with large inventories of legacy machinery; at other times we apply inventive business models enabled by the enormous progress in sensoring and monitoring techniques.

Let’s be clear. These are enormous challenges, orders of magnitude greater than perhaps anything else we’ve ever faced. After two centuries of spewing massive volumes of carbon and other noxious substances into the atmosphere, basing our entire industrial infrastructure—and the wealth that is generated—on the burning of fossil fuels, we are talking about nothing less than the total overhaul of the world’s technological, industrial and agricultural operating systems.

None of us have all the answers—far from it. And none of us can do this alone. I hope and trust that our peers and competitors are working on this as hard as we are.

I hope that they are igniting their workforces to apply their best thinking to come up with solutions that work. There are enormous challenges to be solved and a tsunami of work to be done. Those who succeed will be amply rewarded financially and—more importantly—in the knowledge that they’re helping ensure the survival of future generations.

We’re in this to win. For all of us. Full steam ahead! Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives.

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