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Business Times
2 days ago
- Business
- Business Times
Issue 158: Who says what's material for Singapore firms; catastrophe payouts pile up for insurers
This week in ESG: Study finds lack of external input in materiality identification; US$80 billion of insured losses from natural catastrophes in H1 2025, says Swiss Re Institute Sustainability reporting Reporting in a material world Singapore-listed companies should seek more external perspectives to determine the non-financial issues that could most affect their businesses, a new analysis suggests. Large companies listed on the Singapore Exchange (SGX) tend to rely on internal feedback, peer benchmarks and international standards significantly more than external stakeholder feedback in identifying material sustainability-related factors, shows a report co-authored by Professor Mak Yuen Teen of the National University of Singapore and Tina Thomas, Baker Tilly's head of environmental, social and governance (ESG) and sustainability. The report is published by Governance for Stakeholders – an advocacy platform run by Prof Mak – and Sustainable Finance Institute Asia. The study assesses disclosures about materiality identification by 300 listed companies – 100 each from the Australia, Malaysia and Singapore stock exchanges. The companies come from 10 industry sectors that are either high emitters of greenhouse gases or major sectors with many large companies. Materiality identification is a critical aspect of ESG and managing sustainability-related risks and opportunities (SROs). In essence, companies need to prioritise SROs. The more important ones should be addressed and disclosed, while the less important ones do not need to be reported. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up One of the questions the study asks is how companies identify material SROs. The analysis grouped the identification methods into five key channels: Internal stakeholder feedback External stakeholder feedback External sustainability consultancy Peer benchmarking International standards alignment There are two additional methods for unspecified channels: Unspecified stakeholder feedback Unspecified standards alignment The study finds that of the 100 Singapore-listed companies, only 20 report using external stakeholder feedback, which is fewer than half of the 42 that report using internal stakeholder feedback. It's also fewer than half of the 46 that use international standards alignment and the 49 that use peer benchmarking. There is also a drop-off – albeit not as steep – for external stakeholder feedback in Malaysia. On Bursa, 16 companies report using external stakeholder feedback, which is about 65 per cent of the 25 companies that report using internal stakeholder feedback. Australia-listed companies are more balanced, with 68 using internal stakeholder feedback and 63 using external stakeholder feedback. However, Australian firms are less likely to seek the independent industry-wide perspective. Only 47 companies report using international standards alignment, which is 70 per cent of those that use internal stakeholder feedback. A significant number of companies from the Singapore and Malaysia samples disclose unspecified stakeholder feedback, but that's unlikely to change the fact that external stakeholders' views are sought less often than internal ones in these markets. That's because it's much easier to obtain feedback from internal stakeholders than external stakeholders, and it's highly probable that most of the unspecified cases will include internal feedback. Unknown unknowns It's important that companies in Singapore and Malaysia take greater effort to obtain external stakeholders' views, to guard against blind spots. The five key channels used in the study reflect three different kinds of perspectives on SROs. From internal stakeholder feedback, companies obtain the internal company-specific perspective on key risks and opportunities. From external stakeholders and external consultancies, companies acquire an external perspective that's specific to them. From peer benchmarking and international standards alignment, companies get an independent, industry-wide perspective of SROs. However, while benchmarks and standards are independent, they do not reflect idiosyncratic circumstances that a company faces. Meanwhile, interpreting and applying those benchmarks and standards to account for circumstances is an internal process. Therefore, the external stakeholders' perspective is valuable because it helps a company to obtain independent views that account for the company's circumstances. Without that perspective, companies risk blind spots – the unknown unknowns. For example, a producer of plant-based health foods might not be aware of customer and civil society concerns about human rights and labour issues at the farms that supply the producer's chickpeas. Companies must also seek out a diversity of external views. The study finds that Singapore and Malaysia companies in the sample engage with non-government organisations less than their Australia-listed counterparts. Defining impact The study notes that there is currently uncertainty about how materiality assessment will evolve as implementation begins for the accounting profession's IFRS sustainability and climate reporting standards. SGX has mandated phased alignment with the IFRS standards starting this year. The phased implementation calls for a climate-first approach, which could lead to climate issues rising in importance in companies' materiality assessments, the study says. But closer alignment to the IFRS standards could eventually narrow the scope of material factors. Most Singapore-listed companies are using the Global Reporting Initiative (GRI) standards, which approach materiality from a broad understanding of impact. By contrast, the IFRS focuses on financial materiality. When SGX eventually moves towards the full adoption of the IFRS standards, 'the scope of disclosure would narrow', the study states. 'Only topics that present a financial material impact to the company would be required to be reported, potentially reducing the visibility of broader environmental and social issues currently captured under the GRI framework if companies do not voluntarily report'. The IFRS approach doesn't mean that non-financial factors won't be deemed material, but the onus is placed on companies to determine the potential financial impact of ESG factors, which can be challenging when gazing at medium-to-long-term horizons. This raises the importance of engaging with external stakeholders, who can help companies to better understand impact over longer periods. Investors will also have to raise their game when it comes to imposing market discipline. Professional and institutional investors, especially, can play a bigger role in calling companies to task if they're not properly capturing material issues. For Singapore-listed companies, the materiality landscape could change in the coming years. It's good to have some outside insights. Climate risk When protection hurts If there's one sector where climate change directly impacts profit, it might be in insurance. Swiss Re Institute estimates that global insured losses from natural catastrophes stood at US$80 billion in the first half of 2025. That's almost double the 10-year average. The main source of losses came from the Palisades wildfires that hit Los Angeles in the first quarter of the year. Without that fire, total insured losses would have been below trend. The Palisades fires hit especially hard because of the value of assets affected by the blaze. 'With changing climates, unexpected and unseasonal weather conditions may occur more frequently, making loss outcomes more volatile and difficult to predict,' the institute says. The institute worked out that global insured losses from natural catastrophes have been growing at a long-term trend of 5 per cent to 7 per cent. If that trend holds in 2025, full-year losses could approach US$150 billion. Insurers have begun to walk away from parts of the world where catastrophe risk has risen too much. For example, home insurance is too costly to be practical in parts of hurricane-prone Florida. But even in places where catastrophe risk is still manageable, the physical risk of climate change is an unavoidable problem. Asset owners in coastal or low-lying areas must plan for potentially damaging flooding. Assets close to vegetation must confront the higher possibility of wildfires. Either invest in climate adaptation and resilience, or pay higher insurance premiums. These problems exist for a significant portion of the global population. That's why climate change is a global problem, and why businesses should consider climate change to be a material sustainability-related risk or opportunity. That's true even for businesses that don't belong to emissions-intensive sectors. Other ESG reads
eNCA
4 days ago
- Business
- eNCA
Natural disasters caused $135 bn in economic losses in first half of 2025: Swiss Re
AFP/File | JOSH EDELSON ZURICH - Natural disasters caused $135 billion in economic losses globally in the first half of 2025, fuelled by the Los Angeles wildfires, reinsurer Swiss Re said on Wednesday. Swiss Re, which serves as an insurer of insurance companies, said first half losses were up from the $123 billion in the first half of 2024. The Zurich-based reinsurance giant estimated that of this year's first half losses, $80 billion had been insured -- almost double the 10-year average, in 2025 prices. The Los Angeles blazes in January constitute the largest-ever insured wildfire loss event by far, reaching an estimated $40 billion, said Swiss Re. It said the "exceptional loss severity" of the fires was down to prolonged winds, a lack of rainfall and "some of the densest concentration of high-value single-family residential property in the US". Swiss Re said losses from wildfires had risen sharply over the past decade due to rising temperatures, more frequent droughts and changing rainfall patterns -- plus greater suburban sprawl and high-value asset concentration. "Most fire losses originate in the US and particularly in California, where expansion in hazardous regions has been high," it said. Before 2015, wildfire-related insured losses made up around one percent of all natural catastrophe claims, but now account for seven percent. - Hurricane season approaching - Insured losses from severe thunderstorms amounted to $31 billion in the first half of 2025. The second half of the year is usually more costly for insurers due to damage during the North Atlantic hurricane season. If current loss trends continue, global insured losses from natural catastrophes in 2025 could exceed the Swiss Re Institute's projections of $150 billion. "The strongest lever to increase the resilience and safety of communities is to double down on mitigation and adaptation. It's here that everyone can help reduce losses before they occur," said Swiss Re's group chief economist Jerome Haegeli. "While mitigation and adaptation measures come at a price, our research shows that, for example, flood protection measures such as dykes, dams and flood gates are up to 10 times more cost-effective than rebuilding." The March earthquake in Myanmar figured among the major natural disasters in the first six months of the year, with the tremors felt in neighbouring Thailand, India, and China. In Thailand alone, insured losses reached $1.5 billion. Overall, while natural disasters caused $135 billion in economic losses in the first half of 2025, man-made disasters -- which include industrial accidents -- caused another $8 billion in losses, of which $7 billion were insured losses. noo/rjm/giv
Business Recorder
4 days ago
- Business
- Business Recorder
Natural disasters caused $135bn in economic losses in first half of 2025: Swiss Re
ZURICH: Natural disasters caused $135 billion in economic losses globally in the first half of 2025, fuelled by the Los Angeles wildfires, reinsurer Swiss Re said Wednesday. Swiss Re, which serves as an insurer of insurance companies, said first half losses were up from the $123 billion in the first half of 2024. The Zurich-based reinsurance giant estimated that of this year's first half losses, $80 billion had been insured — almost double the 10-year average, in 2025 prices. The Los Angeles blazes in January constitute the largest-ever insured wildfire loss event by far, reaching an estimated $40 billion, said Swiss Re. It said the 'exceptional loss severity' of the fires was down to prolonged winds, a lack of rainfall and 'some of the densest concentration of high-value single-family residential property in the US'. Swiss Re said losses from wildfires had risen sharply over the past decade due to rising temperatures, more frequent droughts and changing rainfall patterns — plus greater suburban sprawl and high-value asset concentration. 'Most fire losses originate in the US and particularly in California, where expansion in hazardous regions has been high,' it said. Before 2015, wildfire-related insured losses made up around one percent of all natural catastrophe claims, but now account for seven percent. Insured losses from severe thunderstorms amounted to $31 billion in the first half of 2025. The second half of the year is usually more costly for insurers due to damage during the North Atlantic hurricane season. If current loss trends continue, global insured losses from natural catastrophes in 2025 could exceed the Swiss Re Institute's projections of $150 billion. 'The strongest lever to increase the resilience and safety of communities is to double down on mitigation and adaptation. It's here that everyone can help reduce losses before they occur,' said Swiss Re's group chief economist Jerome Haegeli. 'While mitigation and adaptation measures come at a price, our research shows that, for example, flood protection measures such as dykes, dams and flood gates are up to 10 times more cost-effective than rebuilding.' The March earthquake in Myanmar figured among the major natural disasters in the first six months of the year, with the tremors felt in neighbouring Thailand, India, and China. In Thailand alone, insured losses reached $1.5 billion. Overall, while natural disasters caused $135 billion in economic losses in the first half of 2025, man-made disasters — which include industrial accidents — caused another $8 billion in losses, of which $7 billion were insured losses.
NDTV
4 days ago
- Business
- NDTV
Natural Disasters Caused $135 Billion In Economic Losses: Reinsurance Giant Swiss Re
Natural disasters caused $135 billion in economic losses globally in the first half of 2025, fuelled by the Los Angeles wildfires, reinsurer Swiss Re said Wednesday. Swiss Re, which serves as an insurer of insurance companies, said first-half losses were up from the $123 billion in the first half of 2024. The Zurich-based reinsurance giant estimated that of this year's first half losses, $80 billion had been insured -- almost double the 10-year average, in 2025 prices. The Los Angeles blazes in January constitute the largest-ever insured wildfire loss event by far, reaching an estimated $40 billion, said Swiss Re. It said the "exceptional loss severity" of the fires was down to prolonged winds, a lack of rainfall and "some of the densest concentration of high-value single-family residential property in the US". Swiss Re said losses from wildfires had risen sharply over the past decade due to rising temperatures, more frequent droughts and changing rainfall patterns -- plus greater suburban sprawl and high-value asset concentration. "Most fire losses originate in the US and particularly in California, where expansion in hazardous regions has been high," it said. Before 2015, wildfire-related insured losses made up around one per cent of all natural catastrophe claims, but now account for seven per cent. - Hurricane season approaching - Insured losses from severe thunderstorms amounted to $31 billion in the first half of 2025. The second half of the year is usually more costly for insurers due to damage during the North Atlantic hurricane season. If current loss trends continue, global insured losses from natural catastrophes in 2025 could exceed the Swiss Re Institute's projections of $150 billion. "The strongest lever to increase the resilience and safety of communities is to double down on mitigation and adaptation. It's here that everyone can help reduce losses before they occur," said Swiss Re's group chief economist Jerome Haegeli. "While mitigation and adaptation measures come at a price, our research shows that, for example, flood protection measures such as dykes, dams and flood gates are up to 10 times more cost-effective than rebuilding." The March earthquake in Myanmar figured among the major natural disasters in the first six months of the year, with the tremors felt in neighbouring Thailand, India, and China. In Thailand alone, insured losses reached $1.5 billion. Overall, while natural disasters caused $135 billion in economic losses in the first half of 2025, man-made disasters -- which include industrial accidents -- caused another $8 billion in losses, of which $7 billion were insured losses.
Time of India
4 days ago
- Business
- Time of India
Natural disasters caused $135 bn in economic losses in first half of 2025: Swiss Re
Natural disasters caused $135 billion in economic losses globally in the first half of 2025, fuelled by the Los Angeles wildfires, reinsurer Swiss Re said Wednesday. Swiss Re, which serves as an insurer of insurance companies, said first half losses were up from the $123 billion in the first half of 2024. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program The Zurich-based reinsurance giant estimated that of this year's first half losses, $80 billion had been insured -- almost double the 10-year average, in 2025 prices. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Neighbor Chops Down Man's Tree, Freezes When He Sees What's Inside Undo The Los Angeles blazes in January constitute the largest-ever insured wildfire loss event by far, reaching an estimated $40 billion, said Swiss Re. It said the "exceptional loss severity" of the fires was down to prolonged winds, a lack of rainfall and "some of the densest concentration of high-value single-family residential property in the US". Live Events Swiss Re said losses from wildfires had risen sharply over the past decade due to rising temperatures, more frequent droughts and changing rainfall patterns -- plus greater suburban sprawl and high-value asset concentration. "Most fire losses originate in the US and particularly in California, where expansion in hazardous regions has been high," it said. Before 2015, wildfire-related insured losses made up around one percent of all natural catastrophe claims, but now account for seven percent. - Hurricane season approaching - Insured losses from severe thunderstorms amounted to $31 billion in the first half of 2025. The second half of the year is usually more costly for insurers due to damage during the North Atlantic hurricane season. If current loss trends continue, global insured losses from natural catastrophes in 2025 could exceed the Swiss Re Institute's projections of $150 billion. "The strongest lever to increase the resilience and safety of communities is to double down on mitigation and adaptation. It's here that everyone can help reduce losses before they occur," said Swiss Re's group chief economist Jerome Haegeli. "While mitigation and adaptation measures come at a price, our research shows that, for example, flood protection measures such as dykes, dams and flood gates are up to 10 times more cost-effective than rebuilding." The March earthquake in Myanmar figured among the major natural disasters in the first six months of the year, with the tremors felt in neighbouring Thailand, India, and China. In Thailand alone, insured losses reached $1.5 billion. Overall, while natural disasters caused $135 billion in economic losses in the first half of 2025, man-made disasters -- which include industrial accidents -- caused another $8 billion in losses, of which $7 billion were insured losses.
