According to a new survey by Willis Towers Watson (WTW), the availability of data is the biggest test firms expect to face over the next five years in order to address climate risk.
The survey was created to gain insights on progress made to assess and manage the impact of climate risk on their business.
80% of respondents reported data as their top concern in the transition to a Net Zero economy, with difficulty in making quantitative assessments (75%) and insufficient expertise in the actions required (62%) also being revealed as major challenges.
The results showed that only some of the organisations that took part in the survey expect the level of risk associated with climate change to diminish, with 40% of respondents predicting today’s level of risk facing their business will escalate over time.
The reinsurance broker explained that the pace of change is far behind what is needed in order to keep global temperatures from exceeding 1.5°C of pre-industrial levels, the respondents explained that implementing a strategy to achieve Net Zero is the most common challenge to making this commitment (43%), followed by a lack of tools or data (32%).
In addition to future climate-related challenges facing the financial sector over the next five years, the survey looked at issues senior decision makers are having to deal with right now.
Respondents cited transition (75%), reputational (63%) and social responsibility (57%) risks their organisations are prioritising today in order to bridge the gap and achieve Net Zero emissions.
Rowan Douglas, Head of Willis Towers Watson’s Climate and Resilience Hub, commented: “Future climate risks are unprecedented and systemic, and the magnitude of the challenge is so huge and the moment so late that every lever is being explored to turn economies to meet the Paris 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.”