February 13, 2020 by Adam Malik
Canadian industries have a silo-ed approach to preparing for climate change, which is working against the Canadian P&C insurance industry’s desire to address climate change loss exposures and manage catastrophes, a pair of experts told a recent conference.
For example, Canada’s P&C insurance industry would like the nation’s businesses to take steps to mitigate their exposures to damage arising from climate change. But many corporations are hesitant to do so because they don’t know for certain how those steps could affect their bottom line and the way they do business, Maryam Golnaraghi, director of climate change and emerging environmental topics with the Geneva Association, said recently at the CatIQ Connect conference in Toronto.
Without any guidance from governments or the P&C industry on how the country’s various industry segments should respond, Canadian industries are often left to work things out on their own, which sometimes has them working at cross-purposes on the climate change file.
“Yes, we need to break those silos, but what are we actually looking for? What are we after?” Golnaraghi asked. For her, these key questions require answers if organizations are to consider sustainability as part of their corporate ethos.
“There are massive technological disruptions that go far beyond green, clean and others,” Golnaraghi said during a fireside chat with Kathy Bardswick, president and CEO of the Canadian Institute for Climate Choices. “There are other environmental conditions and sustainability factors that we need to take into consideration, like changing market conditions, customer preferences and shareholder requirements, labour and trade issues. All of these have to come hand-in-hand to really design the new business models of the future.”
Golnaraghi said she spends a lot of time speaking with executives about the need for a climate strategy. And the key issue question that keeps coming up in discussions with executives is, ‘How do we do it?’ “The way of doing business that got them to this point is not the same that will help them become a carbon-friendly corporation,” as Golnaraghi noted.
“It’s really believed by many that much of this has been a lot talk and not a lot of action – 95% of our activities over the last [few] years have been focused on discussions and problems. Maybe 5% has been focused on actual solutions,” Golnaraghi said, adding that finding those solutions and helping business move the needle is a key focus going forward.
Bardswick said it’s not just industries across Canada that are siloed on this topic, but federal ministries are as well. “The relationships within the federal, provincial, territorial communities [are at odds over] who’s accountable for what,” she said, noting the ongoing litigation over who can price carbon. “These are divisive on the one hand, but they’re reflective of the need for us to re-think how we collaborate.”
As an example of industries and government agencies working together to push change, Golnaraghi highlighted Insurance Bureau of Canada’s progress in getting flooding issues noticed by the federal government.
Golnaraghi said discussions around climate change have typically focused on mitigation, with adaptation being considered after-the-fact. That needs to change, she said. “Mitigation and adaptation should be financed hand-in-hand. If we don’t mitigate, the cost of adaptation will not be possible; yet, as we solve the mitigation issue, adaptation has to be part of that solution.”
Many companies and governments, including Canada, have pledged to have net-zero emissions by 2050. But Bardswick wants to see greater clarity around what that means. “We’ve got to understand where we think we are moving as a country. Where are our strengths? Where do we need to invest more aggressively? Where are those opportunities and trade-offs? Do we really understand them? Let’s put the clean, candid conversations on the table.”