In the second of two articles focusing on manufacturing, Caroline Organer, AXA Commercial’s Liability Technical Risk Manager, discusses the considerations and emerging risks of achieving Net Zero.
The race to reach Net Zero in the UK by 2050 requires collaboration across the social, economic and political spectrum. Business, and manufacturing in particular, will be transformed in the process as we move from a consumption-first approach to growth, to one that takes far greater consideration of the environmental impact of our economic activity.
One of the key ways our economy will be transformed is through the widespread adoption of a relatively recent but increasingly popular concept – the circular economy. This was the focus of a talk given by Caroline Organer, AXA Commercial’s Liability Technical Risk Manager, to brokers at an AXA seminar.
Held at the Manufacturing Technology Centre (MTC) in Coventry, the event explored the latest trends hitting the manufacturing sector, with a particular focus on sustainability.
Caroline’s deep dive into the circular economy gave a solid introduction to the topic and the insight needed to support their clients as more and more of them adopt this new approach to consumption.
“Only 9% of companies are currently engaged in the circular economy but our resources are finite so more and more businesses will turn to this approach to manage the volatility in availability of resources,” said Caroline.
She pointed out that while it may still be a rather niche area of the economy, its popularity is growing fast as economic necessity, consumer demand and governmental pressure all come into play.
Indeed, it has been estimated that the widespread adoption of circular economy strategies could help reduce global greenhouse gas emissions by 40% by 2050. And, guaranteed to get the attention of business leaders everywhere, is the estimation that the circular economy could yield up to $4.5 trillion in economic benefits by 2030.
“This isn’t theoretical,” Caroline told brokers, “it’s happening in the real world, in real time and some of your clients will be considering this approach.”
She explained that the three Rs of Reduce, Reuse and Recycle are way out of date and that a far more effective - and increasingly popular - approach is to run a business on the seven Rs instead:
- Rethink
- Revamp
- Refuse
- Reduce
- Repurpose
- Recover
- And only then, Recycle.
But this was more than a simple awareness raising session – Caroline was keen to highlight the unintended consequences of making the shift. New risks often appear in the most unexpected places.
“As your clients start to make these changes – and they will – it’s important that brokers and insurers are up to speed with what these changes are and how they impact a business’ risk,” said Caroline.
“Even if it looks like a client is making minor changes, they need to make sure they have thought them through properly to ensure there isn’t a knock-on effect elsewhere down the line.”
Using real life examples from the UK, Caroline showed how making even small changes can have huge implications for the overall risk, often resulting in catastrophic damage.
“Sometimes, even a minor change can have a massive impact and it’s important that small changes don’t accumulate to become a major risk. But that is where brokers excel – guiding their clients through their business-specific risk landscape” she said.
If you missed the first article in this two-part series, on the risk management impact of using more sustainable and energy efficient materials and processes, you can read it here.