Climate innovation

By Alexandra Richter

Doyle joined more than 150 heads of state and government, representatives of national delegations, businesses, civil society, philanthropy and other international organizations to share ideas and solutions to climate change and build partnerships.

“From my discussions with business and government leaders, it is clear there is a need for the insurance industry to be more innovative in building communities’ resilience to extreme weather events,” says Doyle, president and CEO of Marsh McLennan, the world’s leading professional services firm in risk, strategy and people.

Regardless of climate change’s human or natural causes, the World Meteorological Organization reports that the number of weather-related disasters has increased five-fold over the past 50 years. Yet, only 43% of global weather-related losses are insured, equating to a $132 billion protection gap. Recent hurricanes such as Hurricane Helene and Hurricane Milton highlight the need for risk mitigation and innovative solutions in the insurance industry.

Through collaboration and creativity, companies like Marsh McLennan can transform risks into opportunities for a sustainable future, while building resilience to challenges like extreme weather.

One of Marsh McLennan’s businesses, Guy Carpenter, is helping communities receive disaster relief faster by creating community-based solutions that allow local organizations to offer increased financial protection to members during disasters. In partnership with the Center for NYC Neighborhoods, a nongovernmental organization in New York City, and other partners, Guy Carpenter helped launch the first community-based catastrophe insurance program, funded by the National Science Foundation and in collaboration with such partners as the Environmental Defense Fund. 

Doyle says this quick access to emergency funds will help expedite post-disaster economic revitalization.

“No company, industry or government can create change on its own. Addressing complex challenges such as climate change will require new partnerships, deeper trust and collaborative approaches,” he says. “The more I learn and the more I talk to others, the more optimistic I am about our collective ability to surmount the challenges ahead.” 

As the impact of climate change grows daily, business leaders are developing innovative solutions, including new technologies, renewable energy sources and business models that are less carbon-intensive. In the School of Management, faculty are advancing research to address regional and global environmental challenges. Meanwhile, in workplaces around the world, our alumni are at the forefront of impactful climate action. 

The U.N. conference reinforced a global commitment to carbon neutrality with the conclusion of the first global stocktake of the Paris Agreement — a process for countries and stakeholders to assess the collective global response to the climate crisis every five years.

Higher education has long been at the forefront of working toward carbon neutrality and in transforming risk to opportunity. Michael Pietkiewicz, EMBA ’17, is director of project development and client sector leader for the college and university sector at Wendel — an innovative architecture, engineering, energy efficiency and construction management firm that collaborates with private and public entities to approach facility and infrastructure projects. 

In his role, Pietkiewicz has seen how universities are natural leaders in advancing climate neutrality.

“At Wendel, we find no other sector as proactive about climate change as higher education, where faculty are deeply invested in research and its impact, and students are passionately engaged,” he says.

Pietkiewicz acknowledges that both state policies and university climate action plans are driving innovation in the sector. As university climate agreements to reduce carbon emissions or change operations approach the goal dates of 2030, 2035 and 2050, Wendel, and companies like it, can assist with assessments that help universities move forward to meet goals.

“The goals institutions have set are forcing us to innovate,” he says. “Everyone recognizes that the low-hanging fruit items have already been taken care of, such as replacing incandescent bulbs with LEDs and adding light switch monitors in rooms. Now universities are seeking expertise on how to approach goals systematically: What it will take to complete an energy master plan and how to think about sustainability moving forward.”

To have the biggest impact, these projects often begin by addressing university energy systems. 

“There are new technologies we can incorporate,” Pietkiewicz says. “Instead of installing a heat pump for a single building, why not develop a heat pump plant, and connect four buildings together and create a district? By innovating with technology, you save on costs while decreasing energy use overall.”

State policies are also driving innovation. For example, New York sets goals and timelines, while also partially funding the studies.

“Wendel and other similar organizations can help universities navigate potential funding channels to help cover the cost of studies and find ways to manage existing budgets to creatively fund projects in support of their plans,” he says. 

Cristian Tiu, chair and associate professor of finance, sees universities aligning their investment decisions with their goals to achieve climate neutrality. In his role on the investment committee of the Board of Trustees of the UB Foundation, Tiu was part of a rigorous effort to consider adopting ESG — an investing principle that prioritizes environmental, social and corporate governance issues — in investment decisions. 

In 2021, UBF announced that its investment portfolio of U.S. public equities had divested from companies that earn revenues from fossil fuel, as part of measurable steps UB is taking to achieve climate neutrality by 2030.

Tiu also co-authored a study that examined the costs and benefits of socially responsible investment policies on university endowment funds, which was highlighted on the U.N.-supported Principles for Responsible Investment blog. 

“Our findings show that even if this strategy is a net zero for the investment portfolio, it is ultimately a plus for the university,” he says. “Adopting ESG principles in investment decisions can increase donations, student applications and grant funding.” 

The research also shows that universities that adopt ESG principles often do so based on stakeholder pressure.

At Wendel, Pietkiewicz has seen the effect public support can have on climate change. 

“Many prospective college students have grown up in a world hearing about sustainability and climate change as problems they want to impact,” he says. “National data shows that in a competitive college enrollment market, students are choosing universities based on their commitment to climate action.” 

For Michelle Morand, BS ’11, private equity investor at Goldman Sachs, data is the main catalyst for innovation. 

“When tracking a portfolio company’s operational data, we can see when revenue and expense lines are impacted by changing weather patterns. By analyzing various key performance indicators, we get a clear picture of where the pockets of opportunity are and where innovation needs to happen to improve margins,” she says. “Companies leverage data analytics to identify areas where revenue can be enhanced or expenses minimized and to uncover new market opportunities.”

Morand says unseasonal weather patterns due to climate change can lead to mismatches between inventory and consumer demand.

“Imagine walking into a store in New York City during a warmer-than-usual winter and seeing shelves full of coats and hats that no one is buying. These inventory orders were placed two or three years in advance, in anticipation of weather patterns and a winter season that would last three or four months. With unseasonably warmer weather during the winter, lower sales translate into lost revenue,” she says. “Recognizing these trends uncovered by data allows businesses to become resilient, adapt their product offerings and supply chains and, in turn, remain sustainable in the long run. Data allows businesses to become resilient and sustainable revenue generators.” 

Aditya Vedantam, associate professor of operations management and strategy, sees companies building climate concerns into their products. 

For example, Zillow recently began introducing climate risk data into its listing pages to provide home shoppers with insights into five key risks: flood, wildfire, wind, heat and air quality. The new feature will include risk scores, interactive maps and insurance requirements.

“Businesses are adapting to meet evolving demands, particularly from sustainability-focused Gen Z customers,” he says. “Retailers are leveraging consumer data to find new ways to sell their products. Since many Gen Z shoppers prefer to buy used apparel, it makes sense for retailers to enter the secondhand market and adopt a strategy to maximize profits and minimize climate impact.” 

According to Ananth Iyer, dean of the School of Management, faculty research is playing a crucial role in providing businesses with the data needed to adapt and build climate resiliency.

“As consumers demand action and as businesses across every industry reassess the impact of the environment on their business and their carbon footprint, our faculty research and data equip businesses with knowledge to align climate and financial goals,” says Iyer. 

Shayna Arrington, JD/MBA ’11, chief risk officer at Servbank, recently attended the American Banker’s Most Powerful Women in Banking Conference, where a panel discussed what it will take to lead effectively in a new era of banking that includes generative AI, all while addressing regulatory pressures.  

“We need to balance the benefits of AI with protecting people’s privacy and conserving energy,” she says. “What’s the energy footprint of AI, and how can we offset the energy it consumes? Similar to carbon emissions, we need to ask: Who bears the cost and who pays for it?”

Through his work leading Marsh McLennan, John Doyle has seen that the risk and insurance industry has the right talent for this moment. 

“When you look at the history of this industry, we have been able to bend the curve on a multitude of risks, from fires to the automobile, and support investment in a range of innovative technologies,” he says.

Now, Marsh McLennan is working to help address the challenge of supply chain disruptions caused by extreme weather, including hurricanes, low rainfall, droughts and water scarcity. Two of Marsh McLennan’s businesses, Oliver Wyman and Marsh, have responded by creating a new AI-powered platform called Sentrisk. 

“This solution integrates our data capabilities with more than 150 years of risk expertise,” Doyle says. “Sentrisk uses advanced technologies, such as supply-chain-mapping AI and geospatial satellite imaging, to enable organizations to map their supply chains more comprehensively and develop risk mitigation, transfer and management strategies that more closely align to their business needs.”

Servbank’s Arrington agrees that finding creative solutions will be crucial for future leaders in risk management. 

“I think whoever is going to lead us into the future and solve these problems needs to have the same mindset I see in my own children — no limits, no filter, no blinders — anything is possible,” she says. “We need to ask: How do we creatively solve it?”