Overview
In the current economic environment executives are focusing on the here and now, risking missing the elephant in the room. Beazley reports a widening gap between rising climate and environmental risks and the limited action by global business leaders. Economic instability continues to push sustainability lower on the corporate agenda.
The past year has seen California ablaze, deadly floods in Spain, and unprecedented storms, making extreme weather the new norm.
These events cause devastation, and increase the risk of environmental damage, commodity shortages, supply chain and business interruption, yet just 20% (up from 18% in 2024) of global executives that we surveyed rank climate risk and associated catastrophic risk as a top concern (see Role of Insurance in ESG).
Key takeaways
- 26% of executives ranked economic uncertainty as their top risk in 2025, up from 21% in 2024. This level of concern over this risk is at its highest since 2022, when it was 29%.
- 73% believe that the current economic climate is resulting in them taking their eye off their sustainability targets and making being a sustainable business less of a priority.
- 34% plan to increase energy efficiency this year, up from 23% in 2024. Yet only 21% see energy transition as their top risk concern, down from 23% in 2024. Executives have underestimated this risk since 2023, but 23% predict concern will rise again by next year.
- 76% believe the divergence of Environmental, Social and Governance (ESG) related regulations globally will limit their firm’s ability to meet its Diversity, Equity & Inclusion (DE&I) strategy.
- 72% are adopting new risk management procedures due to extreme weather. Despite this, business concern for climate risk and environmental damage remains steady, with 20% ranking these risks as their top concern.
- 19% see greenhouse gas emission risk as a significant concern, down from 24% in 2024, and perception of resilience is high with just 15% feeling unprepared for this risk.
Economic risk is now the top concern for insurers
The 2025 Risk & Resilience report, based on responses from 3,500 executives worldwide, shows that 73% believe current financial conditions make it harder to meet environmental goals. Economic risk is now the top concern for 26% of respondents, up from 21% in 2024.
By planning for and identifying future climate risks, firms can start to build resilience to these emerging risks and be better equipped to face the future with confidence.”
Paul Bantick, Chief Underwriting Officer, Beazley
Despite evidence of worsening climate threats—including wildfires in California, flooding in Spain, and global storm activity—only 20% of executives rank climate events as a top operational risk.
Meanwhile, 72% of companies have introduced new measures to reduce exposure to extreme weather, yet overall concern about environmental threats remains largely unchanged.
The report notes a decline in the perceived risk of greenhouse gas emissions, with only 19% of executives identifying it as a major issue, down from 24% the previous year (see Impact of Climate Change for Insurance).
For brokers
- Data-driven protection – armed with better forward risk mapping capabilities and claims data, the insurance industry can play a pivotal role in helping firms identify, navigate and build resilience to the environmental and climate associated risks they face.
- Consistency of coverage – with jurisdictions moving in different, sometimes conflicting, directions firms with a global footprint are exposed to new liabilities linked to environmental and climate risk. Bespoke multinational insurance programmes that cover these risks can provide comprehensive and consistent coverage worldwide.
- Reducing regulatory jeopardy – with diverging environmental regulations globally, and stricter rules and larger penalties on the horizon in some regions, firms need to navigate a complex and shifting regulatory landscape. Failure to do so could result in director’s & officer’s liability (D&O) claims.
For businesses
- Look beyond the here and now – while short-term issues dominate, preparing for longer-term exposures like climate risk is critical. Don’t overlook the potential impact of extreme weather on your operations, liability, and reputation. Third-party risk mapping, top-tier insurance partners, and data can help you to identify vulnerabilities and boost longer-term resilience.
- Understand your global footprint – fully understanding environmental and climate risk exposures and supply chain dependencies is vital. Without contingency plans, your business could face severe disruption. The nature of D&O claims is changing, and your firm and directors could face claims from investors should you fail to plan for and mitigate these new exposures.
- Prioritising sustainability – driven by stronger regulatory pressure and heightened public scrutiny, together the advent of more affordable and accessible renewable energy, firms that fail to meet their stated sustainability targets increasingly risk incurring fines and damaging their reputation.
Shift away from carbon-based energy
The shift away from carbon-based energy also remains difficult. 67% of respondents report problems with the transition, and concern about energy transition risk has fallen to 21%, from 23% in 2024, according to ESG Related-Risks for D&O Survey).
Beazley expects this risk to receive greater attention in boardrooms within the next year.
However, progress towards a more sustainable global economy is being made, with significant advancements in the development of new low-carbon energy sources.
2024 is poised to have been a pivotal year, marking the peak of global energy-related CO2 emissions.
Environmental and Climate risk ranking
The challenges inherent to achieving this critical, global change are myriad. Businesses will need to develop robust risk mitigation solutions to navigate shifts in political and economic priorities.
The insurance industry has a crucial role in helping businesses to navigate this accelerating risk landscape.
With improved data analysis, risk mapping and understanding of climate risk, we have a real opportunity to assist forward-thinking businesses in understanding their exposures and building better resilience.
Environmental liability risks
These statistics are based on the percentage of global executives selecting these risks as their top environmental & climate risks in our 2025/26 Risk & Resilience research.
The resilience statistics are based on the percentage of global executives who feel ‘unprepared’ (‘not very well’ and ‘not at all’ prepared answers combined) for these environmental & climate risks in our 2025/6 Risk & Resilience survey. The 2025 energy transition resilience statistic is based on the predicted level of resilience in our 2024/5 Risk & Resilience survey.
Environmental regulation
The findings also point to a decrease in concern about environmental regulation. Just 19% of respondents cite ESG compliance as a main concern, compared to 22% last year. Beazley warns that failure to address regulatory developments could lead to legal and financial consequences, including D&O claims related to sustainability issues.
According to Beazley, insurers can help businesses prepare for environmental and regulatory threats. The report highlights the need for improved risk mapping, cross-border coverage, and data-based protection.
Strengthening internal risk management processes to address climate exposure, environmental liability, and regulatory change is also essential.
The report recommends a forward-looking approach. Businesses must consider environmental risk alongside financial pressure. Those without effective contingency plans for supply chain disruption and resource exposure may face severe operational issues and increased scrutiny from investors.
Delays in addressing environmental risk may lead to penalties
Beazley warns that delays in addressing environmental risk may lead to penalties and reputational harm. Firms that miss their environmental targets could lose credibility with stakeholders and regulators.
While progress continues in the development of non-carbon energy, failure to include climate risk in strategic planning exposes businesses to material financial and operational loss.
Beazley calls for investment in risk management solutions, insurance expertise, and structured planning to reduce exposure to environmental uncertainty.
Paul Bantick, Chief Underwriting Officer at Beazley, stated that 2024 included multiple severe weather events that were once considered rare. However, most executives remain focused on immediate financial challenges.
According to Bantick, 72% of leaders report taking new steps to manage extreme weather risks, showing that action is underway.
He added that insurers have a key role in supporting firms by identifying and preparing for new threats. Data on future climate conditions and options such as parametric insurance can help companies improve preparedness and reduce exposure.
FAQ
Economic instability has pushed climate concerns lower on the agenda. Beazley reports that 73% of executives believe current financial pressures make it harder to focus on sustainability, and only 20% rank climate-related risks as a top concern—despite increasing extreme weather events.
Economic uncertainty ranks highest, with 26% identifying it as their top risk—up from 21% in 2024. Climate and environmental risks remain a lower priority, even as they cause growing disruption.
Yes. 72% of firms have adopted new risk management procedures in response to extreme weather. However, concern remains stagnant, with little change in how executives rank climate and environmental risks.
67% report challenges in shifting away from carbon-based energy. Concern about this risk has declined to 21%, yet Beazley expects it to rise again as pressure from regulators and markets increases.
Insurers can provide risk mapping, claims data analysis, and cross-border coverage. These tools help firms identify vulnerabilities, ensure regulatory compliance, and improve resilience against environmental liabilities.
Only 19% of executives view ESG compliance as a major concern, down from 22% in 2024. Beazley warns that failing to meet ESG requirements could lead to D&O claims and financial penalties, especially with stricter and divergent regulations globally.
Firms should prepare for long-term risks, understand their supply chain exposure, develop contingency plans, and invest in insurance solutions. Failure to address climate threats may lead to operational losses, legal exposure, and reputational damage.
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AUTHOR: Paul Bantick – Chief Underwriting Officer at Beazley, Jayne Cunningham – Focus Group Leader – Environmental at Beazley USA
