Climate change is no longer just an environmental issue—it’s one of the biggest threats facing the insurance industry today. But there’s hope. As technology continues to evolve, it’s becoming a powerful tool to help communities not only mitigate the effects of climate change but also adapt to what’s coming next. The recent COP28 conference in Dubai reminded us of the critical goal set in Paris: limiting global warming to 1.5°C. To hit that target, we need to cut greenhouse gas emissions by 43% by 2030 and 60% by 2036, aiming for net zero by 2050. No small feat, right?
Green technology—or greentech—is one area capable of making a difference. From carbon capture and electric vehicles to renewable energy, innovations in climate technology are essential to hitting these ambitious targets. And looking ahead, the possibilities expand even further—big data, machine learning, AI, 3D printing, biotechnology and nanotechnology all have the potential to unlock more sustainable living solutions. Insurance has a crucial role in this movement, too. By supporting climate-focused companies as they start, scale, and innovate, we can help create a greener future for everyone.
Definitions: What do we mean by ‘greentech’?
Put simply, greentech refers to any technology designed to reduce the negative impact of human activity on the environment. You might also hear it called ‘cleantech’, ‘climate tech’, ‘eco-tech’ or ‘sustainable technology’. All these terms refer to innovations designed to help us live and work more sustainably. Think renewable energy technologies, sustainable transport, AgriTech and systems that manage natural resources including water and waste.
Driven by a sense of corporate responsibility and the accelerating impacts of climate change, businesses worldwide are turning to such technologies. The race is on for the world at large to take climate action, and the greentech industry is innovating at rapid pace to provide the solutions required. Back in 2020, the global greentech and sustainability market was worth $10.6 billion. By 2023, that number doubled to $20.6 billion, and it's projected to soar to $134.9 billion by 2030. That’s a massive leap in just a few years, demonstrating just how critical greentech will be in shaping the future.
Some of the key areas driving this growth include natural resource management technologies, green energy, environmental monitoring, green IoT devices and low-carbon solutions for transportation, construction and manufacturing. These innovations aren't just helping the environment—they're paving the way for a greener, more sustainable economy.
The untold risks of greentech—and the missing piece
Like any groundbreaking industry, the greentech sector comes with its fair share of risks. The rapid pace of innovation, coupled with the unpredictability of emerging technologies, means that businesses in this space often face unique challenges. Be it the risk of bodily injury or property damage if products are deployed in harsh environments, under performance or product failure leading to a contractual breach, or navigating complex regulatory environments, greentech businesses and investors need support in managing uncertainties.
The problem is, traditional forms of insurance often don’t meet these specific needs, especially where greentech integrates with industries like healthcare, agriculture and finance. As a result, many companies in this sector find themselves underinsured or, in some cases, completely without protection—leaving them vulnerable to setbacks that could derail sustainability—and business—goals.
Fortunately, the insurance market is evolving to fill the protection gap. By creating tailored products that address unique risks, insurers have the opportunity to not only support this rapidly growing industry but also to demonstrate our commitment to sustainability and encourage further investment in sustainable projects.
The insurance opportunity: Supporting an emerging market
When technologies are so new and unknown, they need support if they’re go on and be a success. Greentech is a new field of science and it’s difficult to predict the nature of future risk, making investment a decision no business can take lightly.
Here, insurance is uniquely positioned to step in, take on some of that risk and give investors the protection they need—a key step in attracting capital to the greentech industry.
It's no exaggeration to say a successful transition to a low-carbon world hinges on our efforts to reduce greenhouse emissions as quickly and effectively as possible, and through offsetting surplus through carbon credit projects such as afforestation—with carbon insurance available for this area right now.
As insurers, we have a golden ticket to help greentech businesses get of the ground, attract funding and scale to the point they can make a real, positive difference in this changing world. The time to start is now.
Get in touch with our technology team to learn more about the greentech market, it’s unique risks and how CFC is evolving to provide cover.
