John Scott is head of sustainability risk for the Zurich Insurance Group. In the past decade of his career at Zurich – which has included roles as head of risk insight and chief risk officer – he has focused on climate change as a risk that particularly affects the insurance industry.
He has shared his expertise on climate and sustainability with industry, regulatory and government groups that are too numerous to mention. They include the World Economic Forum (where he sits on the advisory board); the Insurance Leaders Council of ClimateWise; the Bank of England's Climate Financial Risk Forum; the Geneva Association's Extreme Event and Climate Risk working group; the CRO Forum; the UN Principles for Sustainable Insurance; and the Net-Zero Asset Owners Alliance.
His background as a geologist in the energy industries has made him a vital insurance industry link to work on developing carbon capture and storage technologies (for the UK government's Green Finance Taskforce) and he was a major contributor to the recent IEA report, The Oil and Gas Industry In Energy Transitions.
He is a natural communicator and often called upon to speak at events and to the media on climate and sustainability matters.
What inspired you to work on climate change issues?
Climate risk has been on my radar for a long time, but now it's a really important topic for me.
I feel it's an area I have an insight on. I spent six years doing a degree and then a PhD in geoscience: that gave me the knowledge to understand how climate on earth has changed.
I worked in the oil and gas industry, which taught me how to think in three dimensions and think about unlikely answers. I've also been exposed to the mathematics of uncertainty, trying to understand how complex systems operate and analysing data using stochastic modelling.
What are your work priorities right now?
We're looking at how to take a scenario-based approach to risk management, to understand how climate risk affects investment and underwriting portfolios, and what are the practical management outcomes. We're asking questions like: what is our appetite for climate risk? Is it about divesting or selectively investing?
We're also asking how we engage with other organisations, especially in the carbon-intensive sectors, and with governments to create the right levers for change.
Tell me one step the insurance industry needs to take, to improve its response to climate change?
Just as I said above: we need to understand in some detail how climate change is likely to affect our portfolios. On the basis of that, we can have a discussion about how to respond.
The first step to take the theory and turn it into practice, and then come up with strategies to respond.
Are you optimistic or pessimistic we can avoid the worst effects of climate change?
I'm naturally an optimist. It can be done, but I think it's enormously challenging. Covid-19 illustrates the opportunities but also the headwinds. There has been an incredible reduction in emissions this year – a sign of economic activity being put on hold.
But it's the same scale of the emissions reductions that we have to do year-on-year to achieve the Paris Agreement goals. We haven't decarbonised any of the industries and transportation on which we rely, and Covid-19 has shown how geopolitics has fractured, making international agreement difficult.
What are you doing personally to reduce your climate impact?
I was an early adopter of the electric car and have reduced my international flights significantly over the last five years. I travel a lot less and spend more time on virtual communication with colleagues.