Insurance isn’t the back office of sustainability. It’s front and center

For years, sustainability professionals have treated insurance as a line item — something handled by finance, filed under “cost of doing business.” That’s a mistake.

In our recent “Two Steps Forward” podcast episode, Solitaire Townsend and I spoke with Linda Freiner, group chief sustainability officer at Zurich Insurance Group. The conversation made it clear that insurance isn’t peripheral to sustainability. It is, in many ways, the operating system beneath it.

Insurance, after all, is about pricing the future. And right now, the future is anything but predictable.

I was reminded of a story I covered more than two decades ago: the insurance industry can either react to climate risk — or proactively shape it. That tension still defines the moment. But what’s changed is the scale, speed and interconnectedness of the risks we’re facing.

An enabler, not a brake

Freiner frames insurance not as a brake on risk-taking, but as an enabler. Without it, businesses don’t launch, infrastructure doesn’t get built, and innovation doesn’t scale. Insurance is the social safety net that allows the economy to function — and, increasingly, to transform.

But here’s the catch: The model is under strain.

Climate change is turning the unprecedented into the routine. Historical data — the backbone of underwriting — is no longer a reliable guide. And yet, thanks to advances in modeling and climate science, insurers are getting better at looking forward, not backward. The question is whether that will be enough.

Because rising risk leads to rising premiums. And at some point, the math stops working.

Freiner is blunt about the solution: if we want insurance to remain affordable, we have to reduce risk. That means not only decarbonizing, but also adaptating. Not either/or — both.

Risks and sustainability failures

This is where the sustainability conversation has been incomplete. For a decade, CSOs have focused heavily on transition risk — net zero targets, emissions reductions, carbon accounting. Meanwhile, physical risk — the floods, fires and heatwaves already here — has often been left to risk managers and insurers.

That division no longer holds.

If your factory floods or your supply chain collapses due to extreme weather, that’s not just an operational issue. It’s a sustainability failure. And it’s one that can derail even the most well-crafted transition plan.

Freiner’s message to CSOs is clear: resilience needs to be embedded into sustainability strategy, not bolted on as an afterthought.

What’s striking is how systemic this all is. Insurance sits at the intersection of underwriting, investment and advisory services. It doesn’t just price risk — it helps shape behavior. From incentivizing electric vehicles to funding green bonds to developing parametric insurance for vulnerable communities, insurers are quietly influencing how the transition unfolds — and at what pace.

And yet, most sustainability leaders aren’t engaging with them deeply.

Seeing the data

They should be. Insurers may have the best view of climate risk anywhere in the economy — arguably better, as Soli noted, than even the Intergovernmental Panel on Climate Change in some cases. They see the data. They model the scenarios. They understand where the system is breaking.

The irony is that sustainability professionals — whose job is to manage long-term risk — often aren’t fully leveraging the institutions built to do exactly that.

Freiner also brings a welcome dose of realism to the net-zero conversation. Targets, she says, are a “North Star” — necessary but insufficient. The path is messy, dependent on external factors, and often beyond any one company’s control. What’s needed now is more honesty about that complexity.

That may be the most important takeaway.

We’re entering a phase where sustainability is less about aspiration and more about navigation — through uncertainty, trade-offs and real-world constraints. And in that world, insurance isn’t just relevant. It’s essential.

The Two Steps Forward podcast is available on Spotify, Apple Podcasts, YouTube and other platforms — and, of course, via Trellis. Episodes publish every other Tuesday.