Environmental and climate risks intensify while economic uncertainty drives a cautious approach to investing in sustainability

• 73% of global1 executives believe that the current economic climate is making meeting their sustainability targets less of a priority.
• 72% are adopting new risk management procedures due to extreme weather.
• 26% rank economic uncertainty as their top risk, up from 21% in 2024.
• Only 20% of global executives ranked climate and associated risk catastrophic as a top risk concern.

In the current economic environment, executives are focusing on the challenges of the here and now, leaving their businesses unprepared and exposed to the intensifying environmental and climate risk. This is according to the latest Risk & Resilience report: Spotlight on Environmental & Climate Risk 2025, released by Beazley, the leading specialty insurer.

The report details how 3,500 global business leaders perceive the threat posed by climate risk, the energy transition, greenhouse gas emissions and environmental damage to their operations today.
 
Exposed and Unprepared

The last 12 months have brought home the real, far-reaching and devastating impact of extreme weather events – and businesses are increasingly exposed. 

Yet despite the pressing need to protect their business from the growing impact of extreme weather, concerns about the uncertain economic environment is making meeting their sustainability targets less of a priority (73%), with only 20% of executives ranking climate and associated catastrophic risk as a top concern. Combined, this paints a concerning picture of businesses being left vulnerable and unprepared.
 
Powering Progress

Over two-thirds (67%) of executives believe they are struggling with the transition to non-carbon energy sources. Yet concern around energy transition risk is falling, with only 21% of global executives selecting it as their greatest environmental risk this year, down from 23% in 2024. Significantly, our data shows that for the second year in row, executives have underestimated the threat posed by the energy transition risk. However, this risk is expected rise further up the agenda of global boardrooms over the next 12 months. 

Energy Transition Risk – perception versus reality

Percentage of global business executives who selected energy transition as their greatest environmental risk over time2

Regulatory Jeopardy

The regulatory road for global businesses is complex. With a host of new and stringent regulations set to come into force in some regions, and diverge in others, navigating this landscape will prove difficult.

But our data indicates that concern around regulatory risk is falling, with 19% of global executives selecting the failure to comply with new ESG requirements as their top concern this year, down from 22% in 2024. But our data indicates that concern around ESG regulatory risk is falling, with 19% of global executives selecting the failure to comply with new ESG requirements as their top concern this year, down from 22% in 2024. 

Paul Bantick, Chief Underwriting Officer, Beazley said:

“2024 was characterised by numerous Black Swan weather events - previously once in a lifetime, they are sadly becoming the norm. But our research reveals that executives’ focus is on the uncertainties of the here and now – potentially missing the elephant in the room. 

“In this era of accelerating risk, businesses can’t afford to underestimate the impact that climate and environmental risk could have on their business. There is reason to be optimistic however, as 72% of executives are telling us that they are adopting new risk management procedures to better mitigate the impact of extreme weather events. Insurance has a crucial role to play here, by supporting business leaders in identifying, understanding and preparing for these new exposures. And by harnessing forward looking climate risk data, and through innovative solutions, such as parametric insurance, we can help firms build resilience now, ensuring that they are better equipped to face the future with confidence.”