Taking an Ecojourney
Climate change is a reality, and businesspeople are sitting up, taking notice and looking to change the way companies operate towards a sustainable future.
These two facts emerged clearly at the conclusion of the recent Ecocentric Journey Conference. Providing insight into the motivation to host the conference, Santam Head of Strategy Vanessa Otto-Mentz explained that sustainability is becoming a strategic necessity for business: "We did an environmental scan to develop scenarios as part of the Santam strategy planning cycle. It was clear that the local insurance industry and its extended participants were not preparing for the downside or the upside of the green economy. The speed of the switch to a greener economy is a key driver of the future landscape for short term insurers. It is important to start the journey and motivate others in our industry to follow. And from the Copenhagen discussions on climate change, it is clear that governments are expecting industry to step up and be part of the solution through pricing risk and risk management strategies."
Impact on the insurance industry
Otto-Mentz pointed out that climate change is affecting Santam and short term insurers through increased flood risk and storm damage especially on coastal regions. "We expect that it will get worse. In addition, South Africa is seeing increasing temperatures and decreasing rainfall on average. It creates pressure on natural resources in an arid region like ours, thus affecting the economy, GDP and as a result, insurance. Climate change is very real; but taking meaningful action is a learning point which depends on research and dialogue."
"Climate change is a systemic risk and as a result will require an industry and broader response. We are taking this seriously and starting the journey at home with our own footprint, as the first company to do a Carbon Disclosure Project in the insurance industry; we are proud that we have already achieved reduction targets."
Focus on risk management
"At the end of 2001, Santam reformulated its business goals, shifting the emphasis from insurance to risk management and thus turning insurance into a shared responsibility. Research has shown that climate change is affecting our risk. Because we aim to increasingly involve and assist all South Africans in the active and ongoing protection of their assets we will also work towards finding solutions to reduce the risk of climate change," added Otto-Mentz.
Global effort
As a member of global insurance interest group Climate Wise, Santam is also participating in and making its voice heard in the bigger picture of activism and action towards sustainable business practice. Through this body, it will participate in the forthcoming UN Climate Change Conference in Copenhagen in November.
Andrew Voysey, Climate Wise secretary, explained that the organisation is working with insurance companies around the world to make them disciples of a reality that change is required. "Where the role of business in the past was to hold back against change, we are seeing, through insurance industry participation in Climate Wise, a sector of industry which is expressly focused on risk recognising the scope and scale of a problem of epic proportions."
The insurance industry is providing a sound example for other sectors to follow, with many large organisations signing a public set of commitments and producing voluntary reports on the impacts of their own activities. Through events like the Ecocentric Journey Conference, the stimulation of awareness and dialogue is intended to call more executives and organisations to take action before it is too late.
