In April, we sat down with Emma Cutler, climate risk specialist in the Verdantix Net Zero & Climate Risk team to discuss her recent research into climate risk maturity.
Can you tell me a little bit more about what you’re researching at the moment?
My research focuses broadly on climate risk and adaptation. Recently, I’ve been developing a climate risk maturity model that describes varying levels of maturity across climate risk use cases, such as crisis management/business continuity, reporting and disclosures, internal stakeholder engagement, planning and implementation.
In 20 words or less, can you tell me why a climate risk maturity model is important for firms?
Understanding climate risk maturity helps businesses recognize where they are regarding climate risk management and how to improve.
What are the wider implications of this maturity model?
When it comes to climate, firms have historically focused on reporting, disclosures and target-setting – but to reduce climate risks, it’s necessary to develop and implement concrete plans that address both physical and transition risks. Moving from backward-looking reports and high-level targets to forward-looking action is a challenge for many organizations. The maturity model provides a roadmap for firms to progress from reactive climate risk management to fully integrating climate into all business operations.
What’s the one thing you would suggest organizations do to progress on climate risk maturity?
Establishing strong internal climate governance that involves the board and C-Suite is an important step for advancing climate risk management. Furthermore, it is necessary to engage stakeholders from many parts of the business, such as the finance, legal, operations, procurement and risk departments. This helps to create buy-in and secure resources that will be necessary to move forward with other parts of climate risk management.
What is one recent innovation in the climate technology space that’s caught your eye?
We’re seeing a growing number of technology vendors using AI to predict physical climate losses. These digital solutions combine climate forecasts, satellite imagery and other types of data in novel ways to generate new insights.
Do you have any climate insider secrets to share?
Firms have historically focused their attention on achieving net zero but will increasingly need to address physical climate risks as well. Fortunately, net zero initiatives lay a foundation for further climate risk management. Organizations can take advantage of existing climate governance systems, engagement strategies and climate knowledge to develop and implement climate adaptation, resilience and risk management plans.
What’s next on your research agenda?
I’m getting ready to start research into climate risk solutions for the insurance industry. The impact of climate change on property insurance has become very clear over the past year, with major insurers pulling out of some geographies and many homeowners seeing huge increases in their premiums. Some health and life insurers have also started to think about how climate affects their policies, and insurers have to grapple with climate risks in their investment portfolios. I’m looking forward to researching the many ways that insurers participate in the climate risk market.
