Ch 21 Climate change risk - transition risk category

[ahtohallan]

Hi

These examples are listed under the transition risk section, please clarify the meaning/ intention of these examples:
- "transition to low-carbon economy reducing demand for life insurance products...": Why would the demand for LI products reduce?
- "adaptation of the operational model": Does this refer to changes in the LIC operational activity to adopt greener and more sustainable solutions to attract investors, staff, customers?

Many thanks

 

[Lindsay Smitherman]

- "transition to low-carbon economy reducing demand for life insurance products...": Why would the demand for LI products reduce?

If you read to the end of that bullet point, the example it gives is a company selling occupational pension plans to a customer base that is heavily exposed to conventional carbon-intensive industries. If such industries contract, so will that insurer's customer base.

 

[Lindsay Smitherman]

- "adaptation of the operational model": Does this refer to changes in the LIC operational activity to adopt greener and more sustainable solutions to attract investors, staff, customers?

Yes - it's about making sure that its own operations are adapting to (and not contributing to) climate change, eg using more sustainable energy sources to heat its office buildings.

 

[ahtohallan]

Yes - it's about making sure that its own operations are adapting to (and not contributing to) climate change, eg using more sustainable energy sources to heat its office buildings.

Thanks Lindsay!