Blog | Tuesday June 13, 2023

A Credible Future beyond Growth

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On May 15-17, BSR attended the three-day Beyond Growth conference, a multi-stakeholder event hosted at the European Parliament in Brussels. The first edition of the conference in 2018 gathered a low number of attendees. In 2023, the conference hall in European Parliament was full, with over 2,500 in-person attendees and 7,000 participants overall, including the President of the European Commission, Ursula Von Der Leyen, and the President of the European Parliament, Roberta Metsola.

At a time when the world is facing a polycrisis, the conference sessions were inspiring, filled with a sense of urgency and a remarkable determination for change. There was a collective understanding that the social, environmental, political, and economic crises are interrelated and that tackling them requires transformational policies and concrete action that address its root causes, rather than its periphery. Speakers highlighted the limitations of the current economic model in our era and that the decoupling of economic activities from natural resources use won’t happen at the pace and scale which is needed for the world to thrive within planetary boundaries.

In her inaugural speech, Ursula von der Leyen set the stage by referring to the 1972 Limits to Growth report and delivered a powerful message: “A growth model centered on fossil fuels is simply obsolete” and that “economic growth is not an end in itself. Growth must not destroy its foundations, but instead, serve people and future generations.
 

Key takeaways from the conference include:

• The current mainstream economic model based on growth contributes to environmental impacts, penalizes the poor and vulnerable, and fuels inequalities globally.
• We need different goals in 2023 and beyond. GDP growth is an indicator that is no longer fit for purpose and currently undermines social foundations and environmental limits. Our policies should rethink the place of growth as a means to an end, instead of a way of achieving a societal vision of prosperity, well-being, and care within planetary boundaries.
• Achieving this vision differs across geographies, activities, and time. The “post-growth” economy within planetary boundaries is a fair society, and the concept of sufficiency as defined by IPCC is central to this vision. It will have very different implications by sector (huge investments needed in some, and a reduction for others); geographies (recognizing that certain countries live well beyond the threshold of planetary boundaries, while others struggle to keep their citizens out of poverty); and time (with transition phases toward long-term vision).
• The alternative paradigm to our current economic model is not working. The main economic theory to reduce harm to the environment is environmental “decoupling.” Several studies prove that decoupling is not working fast enough, and the decoupling of economic activities from environmental indicators is not feasible. Speakers pointed to the fact that alternative models do not necessarily need to be created from scratch—they exist but are not regarded in the mainstream economy.
• We need to change the process, not just the goal. Vulnerable and marginalized communities have a limited voice in current decision-making structures. Giving such communities a place in the making of new policies and solutions is central to achieving a fairer and more sustainable society, and economy.
• The provision of credible and holistic alternatives is central to the transition. Working toward this vision is a transition—and such a transition should be accompanied. Policymakers have a fundamental role in shaping the right, credible policies that bring about a planned, co-created transition. For example, shared decision-making on the implications of the concept of sufficiency and on the right path forward is crucial.
• Civil society, academia, and business can advocate for change. While the conference showed a powerful flow of ideas and thinking from civil society and academia, EU policies are not fit for “beyond growth” thinking in Europe right now, and negative lobbying is impeding progress. All actors have a role to play to define and advocate for the right enabling policy environment to build a more just and sustainable world.

The conference covered a variety of subjects: reflections on fair wages and universal basic services to the just transition, the role of taxation as an instrument of social and environmental justice, the role of finance in a post-growth society, the impact of geopolitics of minerals in the green transition, the biophysical limits of our planet.  

We left after three days inspired by questions, thoughts, and ideas and committed to exploring how these can help us advance the BSR vision of “a world in which all people can thrive on a healthy planet" in our work with business to create a just and sustainable world.

It is very clear that “the hard work” starts now for Europe, and time will tell whether European institutions will draw learnings from this vision to shape the right policies that go beyond growth for growth’s sake. Doing so requires urgent action, courage to push for structural change, and an expansion of social dialogue.

It is also very clear that, while the right enabling policies are crucial, we will need forward-looking and credible action from businesses to work toward a balanced society within planetary boundaries. A thriving business within planetary boundaries will need to innovate to address the tension between traditional models and corporate sustainability goals, and our BSR team is ready to work alongside our members to do so.

People

Angela Spiridis

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Angela leads the operational performance for RISE, an initiative to support collaborative industry action at scale to advance gender quality in global garment, footwear, and home textiles supply chains. RISE’s mission is to empower women workers, embed gender equality in business practices, and catalyze systems change.

Angela has spent her career working for international NGOs focused on promoting gender equality, including for a leading sexual and reproductive health service provider. Angela has managed programs across the Asia and Africa regions and has lived and worked in Nigeria.

Angela holds an MBA from Toronto Metropolitan University, a Honours Bachelor of Commerce from McMaster University, and a PRINCE2 project management qualification. Angela speaks English and Greek.

People

Sreya Nath

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Sreya works on multiple RISE programs across global supply chains. She supports RISE Respect—Tackling GBVH, RISE Foundations, and RISE Women and Leadership programs. She is also responsible for assisting country leads in India and Bangladesh.  

Prior to BSR, Sreya worked as a gender consultant in different nonprofits and international organizations. She worked on an action-research project on socioeconomic inclusion of migrant and refugee women in the EU, focusing on Italy, France, Greece, and the UK, in collaboration with Women Forward International. She also worked as a graduate research assistant at Sciences Po MediaLab, where she investigated the gendered dimensions of immigrant discourse on Twitter.    

Sreya has a Master’s in International Development, with a specialization in Advanced Gender Studies from Sciences Po Paris. Originally from Calcutta, India, Sreya is a native Bengali speaker. She speaks English and Hindi fluently, and she speaks French at an intermediate level. 

People

Kristina Gonzales

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Kristina assists the Global Lead in managing contract negotiations and compliance monitoring for various project teams.  

Prior to working at BSR, Kristina worked in the legal industry. She handled various bankruptcy matters throughout the state of Texas, representing both debtors and creditors in federal court. She also worked in the insurance industry and handled claims throughout the United States.  

Kristina holds a Juris Doctor from the University of Houston Law Center and a BA in Philosophy from the University of Texas. 

Blog | Thursday June 8, 2023

Seven Lessons for the Just Energy Transition

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In 2022, BSR and The B Team launched Energy for a Just Transition (EJT), a business-led collaboration that brings companies and stakeholders together to help the energy and utilities sector plan for and implement a just, fair, and inclusive transition from a carbon-intensive economy to a net-zero GHG economy by 2050. The three-year collaboration provides a forum for discussion, knowledge sharing, and action.

Throughout our first year, we have learned various lessons about the challenges and opportunities of corporate action on the just transition in the energy sector:

1. Ambition matters, but it is not enough. The companies that are part of EJT have set net-zero ambitions, and most have made explicit just transition commitments. However, moving from ambition to action on a complex issue like just transition is not easy. Business must keep up with evolving definitions and stakeholder expectations, as well as maintain transparency on objectives and new challenges. It requires a careful and honest assessment of how and where a company is best positioned to act.
   
   It also calls for buy-in from the top, which translates to the appropriate support and resource allocation for implementation across the organization and its activities. Evolving corporate incentives and culture is essential to drive the right conversations and changes required to ensure coordination across various organizational layers, the supply chain, and multiple geographies. In the year since we started EJT, we do see that just transition has been further integrated into corporate strategies.
2. A cornerstone of the just transition is engaging in social dialogue, minimizing the impact of transition on workers, and maximizing opportunities for inclusion and continued access to good jobs. Last year, the collaboration engaged with worker representatives in challenging yet constructive conversations. A key learning was that more spaces for engagement between workers and company practitioners (including human resources, workforce planning, industrial relations, and stakeholder engagement teams) are needed to improve the mutual understanding of what the challenges, expectations, and possibilities are. While these informal discussion spaces do not substitute formal engagement processes like bipartite or tripartite negotiations, they can build and enrich social dialogue outcomes when actively sought out and entered into with transparency.
3. A significant obstacle to the effective implementation of just transition at the corporate level relates to the cross-functional nature of the challenge. Just transition requires an approach that is contrary to the traditional and often siloed approach to risk and impact management and opportunity realization processes in the energy industry. A just energy transition requires collaborative and coordinated thinking that goes beyond commercial and engineering-driven solutions. Some positive signals of change are emerging. As one member said: “Thanks to the just transition, our engineers are finally starting to understand why social aspects need to be an essential part of solutions design.”
4. No company can tackle the challenge alone. Just transition is about change that needs to happen “everywhere, all at once”—and it needs true systematic coordination. Collaboration can be tricky to “unlock.” It requires trust, aligned objectives, agreement on the problem, the right mandates and resources, and a certain appetite for risk. Adhering to antitrust laws is essential but should not be an excuse to stop exploring the right space for action. Several working groups have now been established to identify possible joint action in areas such as workforce transition, the supply chain, and project development.
5. “Transition out” is different from “transition in”—but the impacts are simultaneous. The “transition out” phase involves asset closure, decommissioning, divestment, or transformation and consideration of how to manage these responsibly whilst creating job opportunities and mitigating impact on surrounding communities. The “transition in” phase requires a strong commitment to respecting human rights and addressing social impacts when moving into the renewables space—including across the value chain—even as we aim to move at the fastest possible pace. Many companies find themselves participating in multiple transitions simultaneously—a situation that some are referring to as the “transition across,” since it requires them to take a holistic approach to manage the impacts of "transitioning in" and "transitioning out.”
6. A just transition is impossible without stakeholder engagement. Stakeholders affected by the transition include workers, communities, landowners, civil society and environmental groups, human rights defenders, investors, and governments at national and local levels amongst many others. The context of transition is one that demands fast implementation. Stakeholder engagement could be perceived as a time-consuming step in project development or closure, and there is a risk that engagement becomes a tick-the-box exercise for companies. This can result in frustration or fatigue by stakeholders. But engagement should be seen as an opportunity to codesign a more sustainable transition and to create more just outcomes. It should be a space for collaboration and coordination, to ensure the processes are valuable, effective, and impactful for everyone involved.
7. Corporate action on just transition without system change will not suffice. To accelerate the just transition, we need to change incentive structures and create an enabling policy environment to align economic incentives to redirect capital toward climate mitigation, ecological restoration, and social needs and opportunities. We need to mobilize significant investment to support economic diversification. The private sector has an important role in calling for the policy changes and incentives alignments that are required to ensure a just transition—and avoiding lobbying for or funding policies that are counter to the just transition.  A level playing field and a supportive environment, created through policy and regulation, will stimulate increased corporate uptake and implementation of the just transition.

After one year of EJT, we know that much remains to be done! Energy companies can and must work collaboratively, participate in, and support initiatives that enable a worker- and community-centered transition to a net-zero economy. Get in touch if you want to learn more about how you can support your company, lead in this changing environment, and advance the just transition.

People

Elisa Estrada Holteng

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Case Studies | Wednesday June 7, 2023

Phoenix’s Human Rights Journey: Designing a Human Rights Roadmap

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Introduction

BSR worked with Phoenix Group to provide a clearer understanding of its impacts on human rights, publish its first human rights policy, and develop a roadmap to deliver an approach to respecting human rights.

Background on the Phoenix Group 

Phoenix Group is the UK’s largest long-term savings and retirement business, serving 12 million customers with a broad range of pensions, savings, and life insurance products across its consumer brands.

Phoenix’s work in supporting people during their journey to and through retirement relies on making responsible, sustainable investment decisions and driving positive change for customers, colleagues, and Phoenix’s wider community of stakeholders, including rightsholders that may be affected by Phoenix’s business activities.

In striving to be sustainability leaders, Phoenix’s strategy focuses on key issues impacting the planet, including by transitioning the business to net zero and nature positive, and people, by helping society live better, longer lives; tackling the pension savings gap; and supporting more people to have better financial futures.

The Opportunity to Act on Human Rights

Financial services companies like Phoenix invest across a wide range of asset classes, sectors, and geographies. This global and multi-sector reach means that it’s important to have a clear view on the impacts of its products, services, and business relationships on people. As a large asset owner, Phoenix is also at the top of the investment ecosystem and has an opportunity to drive change through the full investment value chain and lifecycle.  

Given that Phoenix was at a relatively early stage in its human rights journey, the group identified an opportunity to enhance its efforts on human rights. In working with BSR, Phoenix looked to leverage a combination of human rights and financial services expertise to challenge conventional thinking in the sector on human rights and gain a clearer understanding of its risk and opportunity profile against current and emerging expectations. Phoenix sought to use this as a foundation to build a strategic approach to embed human rights across the organization, including through the publication of its first human rights policy, which sets out its ambition and commitments.

BSR’s Approach

BSR worked closely with Phoenix for nine months, bringing deep human rights and financial services expertise to develop a strategic vision for Phoenix to align with the UN Guiding Principles on Business and Human Rights (UNGPs) and advance respect for human rights across its operations and value chain. This vision was informed by a global industry benchmark that assessed Phoenix and several peer institutions against the UNGPs and a landscape analysis of current drivers on human rights within financial services. BSR also conducted an in-depth assessment of Phoenix’s current practices and a saliency scan of its human rights issues. Through this process, BSR interviewed and engaged with numerous internal and external stakeholders on human rights issues associated with Phoenix’s operations and value chain and developed fit-for-purpose workshops at the highest levels of the business to raise awareness and build capacity around human rights.

BSR’s tailored approach led to a new human rights policy and a tailored roadmap with recommendations and timelines for implementation across Phoenix’s roles as an employer, procurer, investor, and customer service provider. The roadmap provides concrete steps for Phoenix to align more holistically and comprehensively with the UNGPs and meet growing regulatory and stakeholder expectations today and in the future.

Impact

Following completion of the project, Phoenix published its first human rights policy, raising the bar for other organizations in the financial sector. With BSR’s support, Phoenix has increased its capacity within the organization, both at operational and senior leadership levels, to understand its role in respecting human rights. This was achieved through collaboration with a range of stakeholders within the organization—from colleagues working in sustainable investment and risk to the legal, public policy, and data protection teams.

BSR’s support included the delivery of 11 education sessions and workshops for various Phoenix team members, executives, and board members. In addition, the project provided Phoenix with a roadmap of the activities needed to deliver a holistic approach to human rights across its roles as an employer, procurer, investor, and customer service provider.

“We are delighted by the progress we’ve made in advancing our work on human rights within Phoenix. The support provided by BSR has been invaluable and has set Phoenix up for success to deliver real change on this vital issue.”

James Wilde, Chief Sustainability Officer, Phoenix

Conclusion

Against a backdrop of increasing stakeholder expectations and rapidly emerging regulations, such as the Sustainable Finance Disclosure Regulation, Corporate Sustainability Due Diligence Directive, and proposals to strengthen the UK Modern Slavery Act, it is increasingly important for financial services companies to understand and address their human rights risks and impacts. Organizations like Phoenix that have taken critical steps on their human rights journey will be better prepared to navigate this shifting landscape—with the tools in place to manage risks and identify opportunities while putting people at the center of the business. While advancing respect for human rights does not happen overnight, BSR believes that these steps lay the foundation for progress, leadership, and innovation on best practices in the financial services sector, and ultimately advance and scale respect for human rights across the economy.   

This case study was written by Kindra Mohr. If your team is also interested in human rights support—from policy development to a step-by-step human rights roadmap—please reach out to us to learn more.

Blog | Tuesday June 6, 2023

Respecting LGBTIQ+ Rights in Turbulent Times

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For many around the world, June marks Pride Month, an opportunity to remember the struggles faced by the LGBTIQ+ community as well as to recognize progress in advancing equality for LGBTIQ+ individuals. We have seen important milestones in the past decade: marriage equality is now in law in over 30 countries, many more have the recognition of same-sex couples in law, and more countries are adopting progressive legislation recognizing the rights of trans and non-binary people. 

At the same time, there is an increasing amount of legislation that targets LGBTIQ+ individuals. In the last few weeks, the Parliament of Uganda adopted the Anti-Homosexuality Act, mandating the death penalty for “serial offenders” against the law and 20-year sentences for “promoting” homosexuality. In Turkey, newly reelected President Erdogan declared that the country was “against LGBT,” prompting fears that the government may seek to shut down LGBTIQ+ organizations; and in the US, several states have adopted—or are considering—legislation restricting access to gender-affirming care for trans individuals.

Many companies recognize Pride Month and highlight their own efforts to promote LGBTIQ+ inclusion within the workplace and support for the community more broadly. Scrutiny of these efforts has increased, however, with growing concerns that this could amount to little more than “rainbow washing.” Simply adopting a rainbow version of a logo on social media or launching temporary Pride-themed products is no longer seen as sufficient in a world where LGBTIQ+ individuals face persecution, harassment, and worse.

Activists, customers, employees, and investors expect companies who outwardly support the LGBTIQ+ community to make substantive, meaningful changes and decisions that genuinely advance LGBTIQ+ equality, even when this might affect their bottom line. In the US, survey data (from Morning Consult/BSR) found that Gen Z was nearly twice as likely as older generations of Gen Xers and Boomers to say laws and policies protecting LGBTIQ+ people are the most important issue they consider when thinking about a decision to move to another state. Companies could face long-term impacts to their workforce if they stay quiet when their support could advance civil rights in the LGBTIQ+ community.

In this context, companies are expected to ensure the health and well-being of their workers in countries where being LGBTIQ+ can put them at risk of criminalization or discrimination. Companies are also expected to take a more public stance in support of LGBTIQ+ rights, especially by younger people, who increasingly make decisions about where to work based on a company’s approach to LGBTIQ+ equality. The criticism of companies who advertised in Qatar during the World Cup, for example, shows how companies who stay silent when LGBTIQ+ rights are undermined face public criticism.

Key Business Priorities

Beyond Pride Month, there are several actions business can take to create lasting impact for LGBTIQ+ individuals worldwide:

1. Regardless of national legislation, ensure full equity in your policies and benefit schemes, and work with LGBTIQ+ staff groups and external organizations to identify gaps. This could include ensuring that partnership benefits (such as extended health coverage) are available for same-sex couples, that family leave policies equally benefit partners and children of LGBTIQ+ individuals, and that policies relating to gender account for the needs of trans people (for example, access to inclusive healthcare).
2. Collaborate with other companies to identify common challenges via BSR’s Collaborative Initiative Partnership on Global LGBTIQ+ Equality (PGLE). This network of companies and civil society organizations works together to support businesses to respect the rights of LGBTIQ+ people, sharing best practices on issue like trans-inclusive benefits and calling out the harms to business of anti-LGBTIQ+ legislation.
3. Encourage internal support networks for LGBTIQ+ employees, which can act both as a mechanism for support as well as help raise awareness within the company of LGBTIQ+ issues. Whether through such a network or otherwise, find a way for any issues or concerns by LGBTIQ+ individuals to be raised in a safe and supportive way. Networks for allies of LGBTIQ+ people can also help show that the staff are inclusive and welcoming.
4. Analyze publicly available resources like ILGA’s Database to understand the local context of countries where your company operates and the particular challenges that LGBTIQ+ people face, such as a lack of legal recognition of same-sex relationships or an absence of anti-discrimination legislation protecting LGBTIQ+ people in the workplace. Use this information to inform internal workplace practices and ways to meaningfully and responsibly engage in public policy discussions.
5. Connect with “on-the-ground” LGBTIQ+ organizations in countries where the company operates. Most countries around the world have local organizations fighting for LGBTIQ+ equality and building relationships and other forms of support for these groups can help advance progress, as well as help you gain further insight into the situation for LGBTIQ+ individuals in that country.
6. Engage privately and publicly in debates around national laws and policies, whether in force or under consideration, which would expand or restrict LGBTIQ+ rights. Many business-focused coalitions engage on public policies collectively, such as the Human Rights Campaign’s Business Coalition for the Equality Act in the US.
7. Become a supporter of the UN Standards of Conduct for Business Tackling Discrimination against LGBTIQ+ People. As a follow up step, use the LGBTIQ+ Standards Gap Analysis Tool to learn where gaps exist and what steps you can take to fully meet the expectations of the UN Standards. For some companies, gaps might exist in their internal protections for LGBTIQ+ employees, such as policies or benefits which are not fully inclusive of the needs of LGBTIQ+ individuals. For other companies, gaps might exist in their due diligence processes when considering potential risks to LGBTIQ+ people connected to their products and services.

Pride Month in 2023 takes place at a turbulent time for LGBTIQ+ people, with progress toward equality in some parts of the world and regression in others. At the same time—and perhaps because of the regression seen in many countries—stakeholders are setting ever-higher expectations of companies to “walk the walk” and not just “talk the talk” when they commit to LGBTIQ+ equality. The suggested actions listed above are just some of the ways that companies can make real progress and demonstrate meaningful actions. If you would like to find out more about how to advance LGBTIQ+ equality, contact the PGLE team.

Insights+ | Thursday June 1, 2023

How New Regulations Are a Game-Changer in Just and Sustainable Business

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Blog | Thursday May 25, 2023

Land Value at Risk

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In The Risk to Insurance, we discussed how climate change has made insurance industry modeling practices far more difficult to rely upon. Now, we dive into the climate justice risks surrounding the insurance industry’s ability to protect land-based assets and livelihoods, and we urge business to seek opportunities across their value chains to build inclusive resilience through risk mitigation and adaptation.

Climate impacts are raising the specter of uninsurability, giving new prominence to the role of insurance in driving climate mitigation. In 2022, the world saw an estimated US$313 billion global economic loss due to natural disasters, thanks in large part to historic and persistent climate change events. From flooding in Pakistan that displaced 7 million people to droughts in Europe, countries around the globe saw the impacts of climate events on their assets, of which only US$132 billion was covered by insurance.

Those most vulnerable to climate impacts are severely underserved by insurance options, exposing their assets, communities, and livelihoods to great risk. The insurance penetration rate is below 3 percent in Africa—one of the most vulnerable continents to climate change. Here, an increase in catastrophic events—from South African floods to Algerian wildfires—brings both endemic poverty and high exposure of key economic sectors, such as food and agriculture, to climate risk. The IPCC report projects reductions in yield could reach 50 percent by 2020, but small-scale farmers face a dearth of low-income insurance options.

In the US, climate risk has reduced insurance options across the board: hurricanes in Florida have seen large providers leave the state, while rampant fraud has pushed up home insurance premiums to the highest in the nation. Laurie Schoeman, Director of Climate and Sustainability at Enterprise Community Investment, sounds the alarm:

“When carriers step out, there’s less variety and the prices go up. You get stranded assets where households, families, and communities lose their economic legacy—and for low-income communities that’s an extreme impact.”

This could lead to an avalanche of economic displacement: communities lose residents, businesses, and livelihoods—and with them the tax benefits that are passed onto schools, services, and infrastructure. Meanwhile, more insurable locations can come under strain with the influx of those forced to relocate—that is, climate refugees.

This risk is further compounded by the need for reinsurance, which is when an insurance company purchases insurance to protect itself from the risk of loss. As more insurance companies struggle, the availability of reinsurance for those companies is also reduced as fewer organizations are willing to risk reinsuring languishing entities. AI adoption across the insurance industry could help, improving risk analytics to reduce costs and increase the capacity of reinsurance.

Cat Bonds are rising in response: these high-yield debt instruments are designed to raise money for insurance issuers, releasing money from the bond only in the event of a natural disaster.

A Three-Fold Solution

Several programs have been created to better protect homeowners and developing countries from catastrophic weather events caused by climate change. The Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF) utilizes insurance-linked securities (ILS) to create a multi-country risk pool that acts as an insurer for many Caribbean countries in the event of any catastrophic weather event. Payouts have included stabilizing drinking water plants; repairing critical infrastructure such as roads, bridges, and schools as well as homes; and support for the agricultural sector. However, programs like these are remedial, rather than preventative, and rely heavily on the handouts of developed countries.

The perils require a three-fold approach to mitigating and managing the risks, combining a push for secure land tenure, innovative insurance options that incorporate mitigation, and business leadership.

Secure land tenure is widely recognized as a key to climate change mitigation and adaptation. It ensures local landowners can invest in land-based solutions from carbon sequestration to flood management, improving their resilience to climate impacts and thereby their insurability, protecting both frontline communities and their livelihoods. Tenure also enables investment in long-term solutions to protect land in critical geographies from degradation. Businesses and insurers can join in advocacy and action to respect land rights and extend secure land tenure—as a foundation for pursuing insurance solutions and risk mitigation strategies. For instance, Coca-Cola and Illovo Sugar Africa have joined with communities and traditional leadership to support the development of improved land registration systems in Malawi to support smallholder farmers in sugar supply chains.

Effective insurance options to support resilient communities need to be affordable, accessible, and designed to promote and enable mitigation efforts. One model is the California Earthquake Authority, which offers insurance premium discounts to homes retrofitted to better withstand earthquakes and offers support to help homeowners make changes to qualify—equivalents are needed for climate risks. A less proactive but increasingly prominent solution is parametric insurance, which insures policyholders against the occurrence of a specific event at a certain magnitude (such as a specific flood level). The Munich Climate Insurance Initiative advocates for solutions that combine parametric insurance and climate mitigation support with disaster risk financing strategies, including gender-sensitive approaches, and encourages collaboration between social and climate protections. Risk reductions bring a moral hazard, though: they might incentivize rebuilding only to expose communities to chronic and growing risk, where in fact an equitable and inclusive approach to relocation is required. Businesses have a responsibility to engage communities in their value chain in co-creating long-term transition plans.

Citizens are exposed to both direct climate impacts for land and property as well as indirect ones, such as impacts on energy costs. Uruguay has adopted climate insurance to protect consumers from electricity rate hikes if its hydraulic power supply is hit by drought, causing it to fall back on expensive fossil fuels. In the long term, this also protects the economy while it seeks to scale renewables.

While states are wise to explore protections, global executive leadership is also needed to help engage, guide, and protect both industry and citizens. As concerns grow around land-based insurance and its potential to impact homeowners, businesses, and land-based livelihoods, it is important that business step up in these ways:

• Identify at-risk communities in their value chains, particularly those dependent on land-based livelihoods such as food and agriculture.
• Understand the needs of at-risk communities and co-create solutions with them to promote land tenure.
• Advocate for insurance discounts for those who actively mitigate against extreme climate change events.
• Advocate for insurance, mitigation, and transition options for those unprotected by national programs.
• Advocate for federal laws on disclosures for land transactions in high climate risk areas for floods, fires, hurricanes, and drought, ensuring that buyers are informed and acknowledge the risks.