I think you're right, insurance and banks are both looking at a similar problem. In our approach, which is agri-specific, we work with banks to include requirements for climate smart agriculture into loan agreements. Farmers must do x, y and z if they want a loan. From an insurance perspective, this is the equivalent of requiring drivers to wear a seatbelt. We use a remote-sensing system to verify that farmers are in compliance with the system, and if they are we pass a score back to the bank for inclusion in their credit scoring algorithm. Compliant farmers have an improved risk profile and should be able to access credit on improved terms to reflect the improved risk.
How are banks responding to your services? In insurance, we’re having a very soft market due to all the capital sloshing around the system. I imagine it can be challenging for lenders to impose significant risk controls when there’s alternative financing so cheaply available.
My wife works on climate change advocacy on the nonprofit side. Are you working with any advocacy organizations? Presumably they’re an important part of your approach.
TBH - climate silos and finance silos are difficult to merge. Different language, KPIs, incentives and concerns. We're trying though to reconcile the two! That said, banks are increasingly paying attention. The two drivers for this are: (1) Ratings agencies including climate factors in their ratings, and (2) G20 Financial Stability Board, Bloomberg Committee calling for voluntary disclosure of climate risk and mitigation steps by company boards.