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Emerging Market Pioneers ‘Need Environmental Risk Awareness’

PipeBusinesses need to be increasingly aware of environmental exposures as they expand their global operations into emerging markets, according to a white paper by environmental insurer ACE Group.

Many firms will benefit from the potential for growth in new markets, but a pollution incident, for example, can seriously damage a company’s investment in its own plant and property, necessitate an expensive cleanup, result in significant fines, and cause lasting harm to its reputation, according to the white paper, titled Protecting Against Environmental Risks in the Global Marketplace.

However, by understanding the environmental challenges, businesses can take measures to protect their investments and reputations by securing appropriate insurance coverage. Companies need to be cognizant and protect their investments from potential pollution incidents and exposures, the insurer says.

In some instances, companies expect that a pollution incident that may damage their property is covered under a standard umbrella or commercial general liability insurance program. In most cases pollution exposures are excluded on those programs, and companies need to consider premises pollution policies that provide coverage for the first-party costs of environmental remediation as well as the potential third-party liabilities arising from on-site incidents, ACE says.

Operations in emerging markets often require stricter due diligence. To evaluate any future potential environmental exposures, companies should seek out experts who have experience in evaluating and mitigating overseas environmental, health and safety exposures, ACE says. These experts can provide a broad perspective as well as specific guidelines businesses must meet to maintain compliance with current regulations, according to the insurer.

Just one in eight US insurers surveyed in this year by Ceres have comprehensive climate change strategies. Even among those companies with comprehensive climate strategies, the view of climate science is “remarkably diverse,” according to this year’s report.

For example, companies such as ACE are funding primary climate change research and Swiss Re and others lend their brand to efforts at the Intergovernmental Panel on Climate Change. However, companies including Allstate and Travelers express strong ambivalence about the state of the science – specifically, the existence of climate change and what is causing it.

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