Grapevine

Financial industry must act now to mitigate future climate losses

Njeri Njomo, CEO of Jubilee Health Insurance. [Courtesy]

The global financial services industry is facing climate-driven losses of up to Sh232.5 trillion ($1.8 trillion) by 2050.

This huge amount will shake the industry and wipe out companies that will be found unprepared. But as the threat looms, only 25 per cent of financial services firms globally have set measurable Environmental, Social, and Governance (ESG) targets.

Instead, players in the competitive industry are still focused on metrics that define success—Return on Equity (ROE), Return on Investment (ROI), EBITDA (Earnings before interest, taxes, depreciation, and amortisation) and embedded value.

These terms shape our strategies and measure achievements. Yet, as we focus on these traditional profitability indicators, we must confront a new reality - the escalating financial risks posed by climate change.