A recent report by the United Nations’ Intergovernmental Panel on Climate Change painted a dire picture of the health of planet Earth and its fragile environment being pushed to the brink. As outlined in the scientific report, human behaviours since the industrial age of the 19th century have led to higher global temperatures — causing rising sea levels, more extreme weather and other dangerous changes to the Earth and its atmosphere. Should global warming continue, we could within the next decade see significant disruptions to the critical systems that support human life.
The good news, according to the report, is that it’s not too late to limit the harmful impact of Earth’s rising temperatures. However, doing so will require monumental commitment and swift action from individuals, organisations and governments around the world to reduce carbon emissions. As we approach Earth Day — observed every April 22 as a time to highlight protection of the environment — the call to action feels especially pressing. The claims industry must do our part to not merely support, but lead these vital sustainability efforts.
The carbon footprint of property claims
One way that loss adjusting contributes to carbon emissions is through travel. Adjusters visit loss sites in the course of their work every day, and these sites can be quite far from their home bases. Technology tools that allow for virtual site inspections, remote adjusting and automated claim adjudication have alleviated some of the need for travel and thus reduced adjusters’ carbon footprint. Some firms are adding hybrid and electric vehicles to their fleets to reduce their reliance on fossil fuels.
More significant is the creation of waste and carbon emissions as part of the (re)construction and repair of damaged properties. The construction industry is among the world’s largest contributors to carbon emissions, with as much as 8% coming from the production of concrete. According to the UK Green Building Council, construction is responsible for 25% of the country’s greenhouse gas emissions.
Damaged building components and contents can sometimes be repaired instead of replaced, but many policyholders expect brand-new things rather than refurbished ones. (We also have opportunities to find new uses for damaged items to reduce our overall carbon footprint.) Additionally, a repair may cost more than a replacement, and insurance carriers are often more focused on controlling expenses than reducing their negative impact on the environment —especially during periods of economic inflation.
Obstacles in the road ahead
There is a great deal of talk in the insurance sector about “going green,” committing to environmental, social and governance (ESG) initiatives, and making a positive impact on the planet. To bring this vision to fruition, we must collectively change the structures, procedures and policies that govern our industry. This is, of course, much easier said than done.
One reason is our dependence on building materials for property claims. We’re seeing some exciting developments in the production of greener options, such as roof tiles that generate solar energy, insulation made of hemp and other renewable resources, and carbon-negative materials like structural timber and carpet tiles. However, they are not normally as readily available nor as cost-efficient as their less environmentally friendly counterparts. It’s a bit of a chicken-and-egg scenario, as the creators of these innovative products need to know there is sufficient demand before making the investments needed to mass-produce them. Until the manufacturing sector comes up with more reliable ways to reduce emissions, it will be difficult for the insurance industry to meet its stated goals.
In the grand scheme of things, protecting the environment is an especially challenging prospect for governments and businesses to address because of the enormity and long-term nature of the issue. Business leaders often tackle problems with three-to-five-year plans, and elected officials tend to focus on short-term fixes as they look toward reelection. However, this issue demands complex solutions that will take decades of effort and investment — beyond the tenure of the leaders who put them in motion. We in the business community must work together with government agencies, trade organisations and other stakeholders to think in the long term if we are to have any chance of success.
Imagine the possibilities for sustainability
Increased scrutiny by regulators, boards, shareholders, employees, job candidates and the public is putting pressure on organisations to pay attention to and be accountable for their sustainability practices. Here at Sedgwick, we’ve put our commitment to ESG and core value of accountability into action by signing up to the Science Based Targets (SBTi) initiative. Sedgwick’s repair solutions in the UK are now carbon neutral, and we’re proud to say our entire UK operation will soon achieve the same. We’re including on this journey the repair contractors with whom we partner so we can reach our environmental targets and effectively meet the needs of our clients and their policyholders. Additionally, we’re working closely with interested insurer clients to inform and support their sustainability initiatives.
Sedgwick’s thought leadership theme for 2023 is “Imagine,” and one of our 23 trends to watch this year is “managing climate’s impact on claims.” Indeed, it will take a hefty dose of imagination and belief in the possibilities of the future to bring together the changemakers and creative thinkers who can move the needle in addressing the climate crisis. It’s not too late to reach the tipping point in reshaping our societal mindset to think green for the good of the planet!
> Learn more — visit EarthDay.org, and read Sedgwick’s latest ESG report and UK building repair review