Almost three-quarters of food and beverage companies worldwide have no specific insurance for environmental risks, a survey by Willis Towers Watson (WTW) has found.
The research involved gathering views from 250 senior executives at food production, processing and manufacturing organisations to determine the top risks currently facing the sector.
Environment-related threats, cyber security and product recall were all ranked as risk factors, yet 73%, 67% and 42% of respondents remained uninsured against these perils, respectively.
Brand and reputation – which is heavily linked to sustainability – was cited as a big risk by 46% of organisations, however, 55% had no reputational cover.
Overall, environmental, social and governance (ESG) risks were ranked as the greatest concern for the sector.
Looking at external factors beyond the organisation’s control, geopolitical and economic factors were both seen as the biggest challenges to mitigating risk in the medium term by 60%.
Garret Gaughan, WTW's head of direct and facultative, said: “The food and drink sector is undergoing a wide variety of disruption caused by a number of seismic events, not least the situation in Ukraine/Russia.
“However, this survey also demonstrates the food and beverage sector’s growing awareness of the impact of ESG on this sector, which is also reflecting the changing nature of consumers who are increasingly concerned about sustainability and how their food is produced and the ingredients within it, as well as the impact of climate change on supply chain.”
Despite the challenges of the last two years, 70% of the survey respondents were optimistic that the sector will be more profitable over the next two years, with organic food topping the list of growth opportunity.
The findings come after separate research recently found that the insurance sector itself still has more to do to on ESG.
After polling 480 senior executives in 13 countries, law firm DWF found that 28% of insurance leaders felt that the ESG performance of their own company was “weak”, with 65% believing it was affecting their company a “great deal”.
“There is increasing pressure on insurance companies to meet market expectations and subsequently stakeholders are often requesting ESG information from their suppliers”, said Claire Bowler, head of the insurance sector at DWF.
“There has been a huge spotlight on insurance over the last 24 months compared to other sectors and it has unfortunately resulted in companies losing business as a result.
“Insurance companies know they need to catch up and there is increased and necessary engagement from board level right across organisations.”
Image credit: iStock
Author: Chris Seekings