Encouraging car and truck drivers to drive safely not only avoids accidents and saves lives, but prevents pollution. Insurance companies are often in the first line of emergency response to leaks and spillages that can have dramatic environmental effects. Many are major real estate owners, and can make a real difference by minimizing environmental impacts through, for example, replacing CFCs in refrigeration systems, reducing waste and introducing recycling systems for their tenants. Integrating environmental risk and opportunities into asset management has exciting potential, and is likely to command increasing attention from financial analysts. Proactive corporate responses to environmental issues can drive product and corporate competitiveness and increase shareholder value.
Insurers know that environmental risks are financial risks.
We increasingly reflect this in the kinds of coverage we are willing, or unwilling, to provide - and in its price. Claims about pollution from Super-Fund hazardous waste sites caused a crisis, and we do not want another one to come about as a result of climate change. Yet if environmental risks affect the liabilities side of our balance sheets, they must also affect the asset side. Some leading insurance companies and banks are beginning to take steps to correct this. We have developed a proprietary approach to evaluating companies based on a combination of financial and environmental criteria and the concept of eco-efficiency propounded by the Business Council for Sustainable Development.