Current and short-term concerns about energy transition are diverting focus from climate change as the environmental issue of most concern, according to a report from specialist insurer Beazley. However, the long-term threat of climate change is a rising concern for business leaders, as 28% predicted it would be their most pressing risk in 12 months.
The report was based on a survey of 2,000 business leaders across the US, Canada, the UK, and Singapore.
According to the report, 22% of global business leaders believe that energy transition risk is the top environmental concern. That concern was greatest in the UK, where 27% of boardroom leaders identified the energy transition as their number-one risk. Business leaders in Canada (22%) and Singapore (21%) also cited it as their primary area of concern.
The US, with greater onshore energy resources, was less concerned with transition risk, Beazley found. For US business leaders, greenhouse gas emissions and the costs associated with reporting them were a top concern, with a quarter citing them as their number-one risk.
Business leaders’ worries grow more aligned in the longer term, Beazley found. Only 9% predicted that energy transition would be the top risk in 12 months. Instead, climate change was the largest environmental risk business leaders thought they would face.
Despite that agreement, a quarter of global business leaders feel unprepared to deal with the impacts of climate change, Beazley found. Small and medium-sized businesses felt the least prepared, with 28% of firms that generate less than £100 million saying they were unprepared, versus 21% of businesses with more than £100 million in revenue.
“The energy transition, undoubtedly linked to the Russian invasion of Ukraine, has become the key area of concern globally,” said Bob Quane, chief underwriting officer at Beazley. “For global business leaders facing this immediate crisis, it is unsurprising that the focus is on mitigating the short-term impacts rather than focusing on the steps they need to take to adapt for the long term. However, the current low levels of resilience that many business leaders feel in the face of climate change, coupled with the reality of the effects we have seen over the past 12 months, means a change of mindset is urgently needed.”