9
What is the impact of COVID-19 on the climate change agenda?
The COVID-19 crisis has vividly demonstrated how suddenly the world we live in can change and how quickly policymakers, companies, and individuals can adapt when forced to do so – setting a precedent for climate change transition. Sucha“blackswan”eventthatunexpectedly exposes businesses’ vulnerabilities may provide a foretaste of the kinds of shocks that climate change or a disorderly transition could create in specific industries or economies. Businesses may be surprised by the speed of the changes it triggers, with associated implications for boards’ duty of care in terms of assessing, mitigating and reporting on risk. At the same time, increasingunderstanding of the interplay between climate change and catastrophic events such as floods and wildfires makes the frequency of this type of event more foreseeable. This has obvious implications on parties’ commercial obligations, from force majeure clauses to insurance policy coverage that is predicated on a certain event or peril being unforeseeable. The novel coronavirus has also focussed attention on how changes in landuse and theunsustainable exploitation of nature can give rise to sudden and catastrophic loss around the world.
Managing COVID-19 may have given businesses a playbook for how to deal with fast-moving challenges or created a sense that major enterprise-wide risks that were previously thought too big or too difficult to deal with can now be addressed. It has in some ways proved that organisations can make rapid and large-scale changes if the will to do so is there, moving climate risk further up the list of priorities. In particular, digital transformation has been fast-tracked, speeding up the adoption of sophisticated tech tools which enable smarter, more efficient processes and better products to be developed in a whole host of sectors, from energy and construction to insurance and law. We can expect to see innovations such as parametric insurance, smart contracts that respond to weather data and offsite building component manufacture gain traction as this happens – all of which have the potential to improve climate risk resilience significantly.
Made with FlippingBook. PDF to flipbook with ease