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Survey Report

Pulse Survey – Net Zero strategy must use all available levers

Climate Risk and Financial Stewardship Summit. Willis Towers Watson. 11-13 May 2021

Climate Quantified|Insurance Consulting and Technology|Investments|Reinsurance
Climate Risk and Resilience|Insurer Solutions

May 21, 2021

Survey participants share what they consider to be their top climate-related risks and the challenges in managing those risks and, ultimately, achieving a Net Zero commitment.

Willis Towers Watson conducted a survey as part of its Climate Risk and Financial Stewardship Summit, with 122 organisations participating, providing a snapshot of progress being made by the UK’s leading banks, insurers, wealth and asset managers to assess and manage the business impact of climate risk.

Participants were asked what they considered to be their top climate-related risks and the challenges in managing those risks and, ultimately, achieving a Net Zero commitment.

Key Findings

  1. 01

    Climate risk escalating

    Most organisations surveyed see moderate risk associated with climate change, both currently and in five years’ time, with more seeing this risk growing over time rather than diminishing.

    We have also learned the hard way from the pandemic that getting to grips with a challenge that is escalating globally cannot be undertaken by isolated economies. Instead, co-ordinated action from individuals, corporates and governments will be fundamental to effecting real change.

    Chart to show majority of organisations see moderate risk associated with climate change,
    both currently and in five years’ time, with more seeing this risk growing over time rather than diminishing
    Level of risk currently / in five year's time
  2. 02

    Transition is top risk

    Transition, reputational and social responsibility risk are considered the top three climate-related risks for these organisations.

    In the UK, all premium listed companies will be required to disclose financial-related climate risks for accounting periods after 1 January this year, with the first reports due in spring 2022. Such disclosures, in line with those recommended by the Task Force on Climate-related Financial Disclosures, are scheduled to be economy-wide by 2025.

    The transition to a net zero economy is driving a pace of change that is rapidly accelerating for an increasing number of entities.

    Chart showing Transition, reputational and social responsibility risk are considered the top three climate-related risks for these organisations
    Top three climate-related risks
  3. 03

    Lack of data

    Lack of suitable data for analysis, difficulty in quantitative assessment and insufficient understanding of actions required were identified as the top challenges to address climate risk over the next five years.

    Insufficient internal prioritisation and resourcing and reluctance of cultural changes were seen as less of a challenge for these organisations.

    Chart showing lack of suitable data for analysis, difficulty in quantitative assessment
    and insufficient understanding of actions required are top challenges for these organisations to address climate risk over the next five years
    Top three challenges when addressing climate risk over the next five years
  4. 04

    Net Zero target challenge

    Implementing a strategy to achieve a Net Zero target is the most common challenge to making this commitment, followed by lack of tools/data.

    This underlines the integral role that data and scenario analysis play in an effective strategic response to climate risks and opportunities.

    Survey participants also listed several topics they would like to learn more about, including data and tools to quantify sustainability risks, investment opportunities for climate transition, and understanding the impact on pricing.

    With so many challenges presented by climate change, the steady, continuous developmental approach currently being adopted looks to offer our industry the optimal path to eventual success in embedding climate risk. Insurers will then find themselves well positioned to seize the transformative and structural opportunities presented by the low carbon, climate resilient transition.

    Chart showing implementing a strategy to achieve a NetZero target is the most common challenge to making this commitment, followed by lack of tools/data
    Single biggest challenge to making a Net Zero commitment

Rowan Douglas, Head of Willis Towers Watson’s Climate and Resilience Hub, said:

All levers must be pulled at once to meet the Paris Agreement climate targets.”

Rowan Douglas
Head of Willis Towers Watson’s Climate and Resilience Hub

“Future financial risks are unprecedented and systemic, and the scale of the challenge to reach Net Zero is so huge that all levers must be pulled at once to meet the Paris Agreement climate targets. While the financial sector is well placed to take a lead, climate-related risk not only needs to be integrated into day-to-day risk management but also to steer the whole economic transition to a low-carbon and resilient future.”

View all the presentations and panel discussions here.

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