The shift to a lower carbon economy is among the world’s greatest challenges, according to the president and chief executive of Axis Capital Holdings.

“It requires all of us, businesses, governments, communities, and individuals, to work together to achieve our climate goals,” said Vince Tizzio, speaking after the insurance firm released a new report, Navigating Risk in the Energy Transition.

Based on independent research, the document explores how 600 energy sector leaders view key areas of risk impacting the transition.

The aim was to elevate understanding of the risks and challenges involved in the energy transition and to identify how energy industry stakeholders can proactively and collaboratively support businesses on their journeys.

The report revealed that climate-related weather events pose a direct threat to companies’ physical assets and an indirect threat to their wider business operations.

More than two thirds of the industrial energy buyers interviewed expected the climate crisis to impact their company’s business performance including revenue, costs and investments.

“Climate change is both a driver of change and a source of risk,” the report said.

Preparedness to respond to the urgency of the transition was limited, with 55 per cent of respondents feeling prepared, compared with 4 per cent who were unprepared.

The most common drivers for businesses to take proactive climate action were long-term business viability (49 per cent), regulatory compliance (49 per cent) and climate concern (47 per cent).

The report warned of a developing “negative feedback loop” with the growing number and severity of climate-induced weather events disrupting the deployment and operation of renewable energy technologies that are crucial for reducing emissions and tackling climate change.

Forty-one per cent of respondents said supply chain disruption from climate change was concerning.

“This underscores the need for diversified sourcing strategies and resilient logistical networks,” the report said. “Supply chains are becoming increasingly exposed to climate-induced weather events, with climate-related neutral catastrophe and resource scarcity affecting sub sectors of supply chains.”

Thirty-six per cent of people surveyed also named technology as a major risk.

Navigating Risk in the Energy Transition said this emphasised the need for climate-resilient technology solutions, with both renewable and traditional energy industries impacted by climate change.

“Energy firms recognise that significant investment in technological innovation, risk management, and long-term strategic thinking are key to achieving net-zero goals,” said Richard Carroll, Axis global head of energy resilience.

Mr Carroll said the energy transition also required an insurance industry with deep speciality knowledge of the risks associated with the transition, and of the complexities of deploying the technologies to make global net-zero ambitions a reality.

While the effects of climate change are already being experienced by a range of stakeholders, growing climate risk and severity means that even day-to-day operations and performance of energy technology will need to evolve and adapt to changing conditions, according to the report.

The survey concluded that there is an opportunity for the insurance industry to take a more proactive and strategic role in the energy transition, moving beyond a transactional mindset towards supporting customers in a more comprehensive way.