Kenya : Why Financial Industry Must Act Now to Mitigate Climate Losses Ahead

The global financial services industry faces potential climate-driven losses of up to $1.8 trillion (Sh232.5 trillion) by 2050, which could significantly impact companies unprepared for such risks. Currently, only 25% of financial services firms globally have set measurable Environmental, Social, and Governance (ESG) targets, with a focus on traditional profitability indicators like ROE, ROI, EBITDA, and embedded value. However, the increasing financial risks from climate change, evidenced by unseasonable weather patterns, severe droughts, and heightened insurance claims, necessitate a shift towards integrating sustainability into core business strategies. The concept of Profit Plus emphasizes the need for profitability to coexist with sustainability, creating value for shareholders, society, and the environment. This approach involves setting clear, actionable ESG goals, such as reducing operational costs through energy efficiency, offering green loans for sustainable projects, and expanding financial inclusion through microinsurance. The writer, a CEO at Jubilee Health Insurance, urges industry leaders to align ESG initiatives with financial goals and influence product development, risk management, and customer engagement. The writer emphasizes the importance of investing in the right areas to create value under the Profit Plus framework and calls for decisive action to ensure the industry s relevance, resilience, and profitability in a changing world. The writer advocates for leading the change towards a future where sustainability and profitability are intertwined, creating a legacy that can be proud of.

Source: allafrica.com
Published on 2024-09-16