Dirk Wegener, president of the Federation of European Risk Management Associations (Ferma), used his speech at the Swiss Association of Insurance and Risk Managers’ (SIRM) Forum in Bern to call for more urgent action to tackle climate change.
Wegener suggested it is now time for a paradigm shift in the way people think about climate change, pointing out that Mahatma Gandhi had once been ridiculed, but that history now views him with much greater gravitas, as “representing a political philosophy”.
Enter Greta Thunberg, herself an object of mockery from some quarters. Wegener observed that the criticism levelled at her suggests the general public has yet to come to terms with scientific findings indicating that we are committing “ecological suicide”.
To illustrate his point, Wegener recounted an anecdote of someone who has smoked for the past 20 years visiting the doctor. On being told to stop smoking, the patient answers: “OK, I’ll cut down by one cigarette per year, so I eventually reach zero.”
In his analysis of regulatory efforts to counter climate change, Wegener highlighted the issue of subjectivity.
ESG scores are reported by companies to show how they perform with regard to sustainability. Wegener questioned this framework, pointing out that it fails to adequately account for a company’s transition. “The transformation process can fall under the radar,” he said.
Ferma’s recently published survey of Europe’s risk and insurance managers posed the question: How well supported do you feel with regards to the sustainability transition? The response was critical of the current framework. One respondent, for example, said: “We don’t receive the support we need for innovative technology to support our transition away from fossil fuels.”
Wegener said during his speech at the SIRM Forum: “Ferma is especially interested in understanding and thinking broadly about this transformation process.”
Assessing EU sustainability regulation, Wegener mentioned the Corporate Sustainability Reporting Directive. The directive expands the scope of reporting to include ESG factors, as companies disclose the materiality of their internal processes and how they affect the wider environment.
Wegener argued that the concept of “materiality”, which is fundamental to the directive, is “not clearly defined, which raises questions of subjectivity”.
He also referred to corporate sustainability due diligence, whereby a company reports on how it could improve its operations to make them more ESG-compatible. Wegener pointed out that the connection to risk is lacking in the directive.
Looking to the future, Wegener remarked that the main focus at EU level will be on finding how the digital transition can best be exploited to advance the Green Deal and “which digital technologies are in the pipeline to reduce carbon emissions”.
“Our role at Ferma is to integrate risk management in the process and remind the European Commission that risk management is important,” he concluded.