A new report from Beazley, a global insurer, underscores a growing disconnect between escalating climate and environmental risks and the reluctance of global business leaders to prioritise sustainability amid economic instability.
The firm’s latest Risk & Resilience report, which surveyed 3,500 executives worldwide, indicates that the pressures of an uncertain economic landscape are shifting focus away from long-term sustainability goals, with 73% of respondents acknowledging that the current financial climate is making it more difficult to meet their environmental commitments.
At the same time, economic uncertainty has emerged as an increasingly dominant concern, with 26% of executives now ranking it as their top risk, an increase from 21% in 2024.
Despite the mounting evidence of climate risk, Beazley’s findings reveal a troubling lack of urgency among business leaders. While the past year has brought devastating wildfires in California, severe flooding in Spain, and unprecedented storms across the globe, only 20% of executives consider climate-related catastrophes a top risk to their operations.
Beazley’s research highlights the increasing vulnerability of businesses as they struggle to integrate climate preparedness into their risk management strategies.
Although 72% of those surveyed have adopted new risk mitigation measures in response to extreme weather, overall concern about environmental threats remains relatively stagnant. The study also notes a decline in the perceived risk of greenhouse gas emissions, with only 19% of executives viewing it as a major concern, a drop from 24% the previous year.
Beazley’s report also examines the difficulties businesses face in transitioning to non-carbon energy sources, with 67% of executives admitting they are struggling with the shift.
Notably, concern surrounding energy transition risk has diminished, with just 21% identifying it as their most pressing environmental challenge, down from 23% in 2024. However, Beazley warns that this risk is likely underestimated and expects it to rise in prominence among global boardrooms over the next year.
The report further explores the increasingly complex regulatory landscape that businesses must navigate. As governments implement stricter and more regionally divergent Environmental, Social, and Governance (ESG) regulations, compliance is becoming more challenging.
Yet Beazley’s research indicates a surprising decline in concern over regulatory risk, with only 19% of executives citing failure to meet ESG requirements as a primary concern, a decrease from 22% last year. The report warns that neglecting these regulatory shifts could expose businesses to significant financial and legal consequences, including potential Directors & Officers (D&O) claims linked to sustainability failures.
According to Beazley, the insurance industry plays a critical role in helping businesses adapt to these evolving risks. The report highlights the importance of data-driven risk protection, improved forward risk mapping, and bespoke multinational insurance programmes designed to provide consistent coverage across jurisdictions with diverging environmental regulations.
Beazley also emphasises the need for stronger risk management frameworks that account for climate risks, environmental liabilities, and regulatory compliance.
The findings from Beazley’s research indicate that businesses must take a more proactive approach to managing long-term climate risks rather than focusing solely on immediate economic pressures.
The report stresses the importance of understanding global supply chain dependencies and environmental risk exposures, warning that firms without robust contingency plans could face severe operational disruptions and heightened scrutiny from investors.
Beazley also highlights the increasing regulatory pressure on sustainability commitments, with organisations that fail to meet their stated environmental targets facing financial penalties and reputational damage.
As the Beazley report makes clear, climate and environmental risks continue to intensify, yet economic concerns are delaying urgent action.
While progress is being made in the development of low-carbon energy solutions, businesses that fail to integrate climate risk mitigation into their long-term strategies risk significant financial and operational consequences.
The report underscores the need for organisations to invest in comprehensive risk management solutions, leverage insurance industry expertise, and embrace a more resilient approach to navigating environmental uncertainty in the years ahead.
Paul Bantick, Chief Underwriting Officer, Beazley commented: “2024 was characterised by numerous Black Swan weather events – previously once in a lifetime, they are sadly becoming the norm. But our research reveals that executives’ focus is on the uncertainties of the here and now – potentially missing the elephant in the room.
“In this era of accelerating risk, businesses can’t afford to underestimate the impact that climate and environmental risk could have on their business. There is reason to be optimistic however, as 72% of executives are telling us that they are adopting new risk management procedures to better mitigate the impact of extreme weather events.
“Insurance has a crucial role to play here, by supporting business leaders in identifying, understanding and preparing for these new exposures. And by harnessing forward looking climate risk data, and through innovative solutions, such as parametric insurance, we can help firms build resilience now, ensuring that they are better equipped to face the future with confidence.”
