Whatever insurers may think about the presence or causes ofclimate change, one thing is certain: the business climate ischanging, rapidly.

New technologies are entering the market for saving andsupplying cleaner energy in buildings, transport, and industry—andinsureds are adopting these “green” technologies left and right.Renewable energy investment around the world topped $257 billion in2011 (80% of the investment in fossil fuel capacity), approachinghalf of all new electrical generating capacity globally. Energy efficiency and “green-buildings” have also becomemulti-billion-dollar markets, and growth is showing no signs ofslowing.

With this comes a need to assess and manage associated emergingrisks, as well as be an early mover to capture businessopportunities and stay in tune with customers who are increasingly“going green.”

Read Mills' “From Risk to Opportunity 2012: The Greeningof Insurance” HERE

I have cataloged over 1100 climate-oriented activities conductedby 378 insurance entities in 51 countries. Surprisingly moreare based in the U.S. than any other country, although some of themost concerted efforts are to be found elsewhere.

Care should be taken that these well-intended efforts to curbgreenhouse-gas emissions don't have inadvertentconsequences. That said, some pundits have focused myopicallyon potential downsides, without considering the prospectiveco-benefits. For example, insurers have long found thatfacilities that institutionalize a “culture” of careful energymanagement experience fewer losses.

Related story: Ceres: Insurers Acknowledge Climate Change, but Are Not Preparedfor Threats

New technologies, by definition, certainly lack a history ofloss experience. This fact of life has been part of theinsurance landscape since the times of Hammurabi. Consider thefirst car, the first boiler, or the first airplane. While insurersmay have temporarily shied away from these new risks, doing sowould clearly not have been a prudent or necessary long-termstrategy. Instead, efforts were proactively made to engineerrisk out of the green equation.

As a case in point, whether building structures can support andremain resistant to moisture from the increasingly popular “green”(vegetated) roofs is a fair question. FM Global has offered alevel-headed response by issuing guidelines for the right way to dogreen roofs. This, coupled with their own green-buildings insuranceoffering, represents a best practice with respect to mitigatingclimate risk without inadvertently taking on new avoidable risks.That Allstate's headquarters has a vast green roof says itall.

Beyond mitigating climate change, green technologies can evenreduce conventional risks. Many insurers note that dual-panedwindows are more fire-safe than single-paned ones (failing moreslowly under heat stress, thereby helping block and keep down thesupply of air to the fire). Pay-as-you-drive insurance helps reduceemissions from cars by rewarding reduced driving while lowering theprobability of accidents. There is a long list of similar win-winstrategies.

Insurers are even finding that some strategies reduce emissionswhile helping directly fortify infrastructure against climatechange impacts. Tokio Marine knows this, and has for over a decadebeen replanting mangrove forests across seven Pacific-rim countriesfor the dual purposes of pulling carbon-dioxide out of theatmosphere and reducing storm damages.

To do this right, insurers will want to look squarely at thewhole constellation of responses to climate change and considertheir comparative risks. There is a colorful cast ofcharacters. Energy efficiency is arguably the most risk-freeclimate change response strategy. It doesn't hurt that it savesmoney as well. It mitigates risks such as vulnerability to forcedpower plant shutdowns during droughts and heat waves or weaponsproliferation and fuel-import vulnerabilities posed by (mostly)carbon-free nuclear power. In fact, targeted efficiency makes theelectric grid more robust and helps customers weather poweroutages.

Sadly, as proven methods of trimming emissions are delayed,concerned scientists and policymakers are increasingly looking tomore desperate approaches such as “solar radiation management” bycontinuously dumping dust from high-altitude jets into theatmosphere or flinging trillions of reflective Frisbeesinto space (I kid you not) to block incoming solar energy, ordumping megatons of iron filings into the ocean to capture carbonin massive carbon-capturing algae blooms. These strategiesare feared to usher in a variety of unintended side effects such asdrought—not to mention fostering complacency. It will beinteresting to see whether private companies proposing to conductthis work will be successful in obtaining insurance.

With burgeoning climate risks, a do-nothing strategy is ofcourse not risk-free. The wisest response is to “greenline”emissions-reduction technologies rather than “redlining” them.