Building Climate Resilience

NCG Committee

Oversight of sustainability strategy and reporting, including climate-related and impact disclosures, and is appraised quarterly of our climate risks and mitigation activities.

Audit Committee

Oversight of our climate-related disclosures and associated controls and procedures as part of general oversight for our public company reporting obligations and enterprise risk framework.

Risk Committee

Oversight of guidelines, policies, and processes for monitoring and mitigating key operational risks, including security, data management/privacy, and business continuity (the latter includes climate-related risks) as part of our enterprise risk registry and environmental risk management process.

Legal, Sustainability, Business Technology, and Workplace Functions

The Sustainability and Legal functions are responsible for cross-functional climate strategy development, climate risks, materiality assessments, voluntary climate disclosures (SASB/IFRS, GRI, TCFD, CDP), climate goals, and performance tracking.

The Global Business Technology and Workplace functions provide the data we need to develop our energy and GHG inventory, including accounts of our IT assets, electricity consumption, facilities usage, purchased goods and services, and business travel.

Finance, Enterprise Risk Management and Internal Audit, and Procurement Functions

The Enterprise Risk Management function works in conjunction with the Sustainability, Legal, and Finance functions to identify and evaluate climate-risks, assess the integration of climate risk into business and risk management practices – including our company’s risk registry – and validate the accuracy, credibility, and transparency of our climate-related data and disclosures.

The Procurement function is responsible for evaluating suppliers’ sustainability performance.

Product, Security and Data Privacy, Customer Success, and Sales Functions

The Product function leverages AWS’s modernized cloud architecture, which, when combined with our use of AWS across our product portfolio, research suggests greatly reduces both our and our customers’ emissions. Additionally, our marketplace includes a number of products that have a climate resilience or risk component.

Our Customer Success function oversees our Business Advisory Council (BAC) working group and communicates with our customers about what the insurance and insurtech industries can do to advance environmentally sustainable products that further a better understanding of climate risk, climate resilience, and greater access to insurance/close of the protection gap. Our Sales function communicates with our customers about product sustainability.

Acute Risks

Natural disasters have increased in frequency and severity, and climate scientists have cautioned that acute physical risks (single-event extreme weather issues, such as flooding, wildfires, storm surges, tornadoes, hail, hurricanes, power grid failures, and road and/or infrastructure disruptions that can impact supply routes and workforce connectivity) are expected to intensify. Although we maintain crisis management and disaster response plans, such events could disrupt our ability to deliver our products to our customers; could decrease demand for our products; and could cause us to incur substantial expenses. Our insurance may not be sufficient to cover losses or additional expenses that we may sustain.

Chronic Risks

Systemic climate-related risks due to longer-term climatic changes could include increased duration and severity of high temperature days, which could impact heating and cooling costs. The long-term effects of climate change on the global economy and the technology industry in particular remain uncertain. We recognize that there are inherent climate related risks wherever business is conducted. Any of our primary locations may be vulnerable to the adverse effects of climate change.

Our global corporate headquarters in San Mateo, California has historically experienced, and is projected to continue to experience, physical climate change risks, including warmer temperatures, wildfires and air quality impacts, and power shutoffs associated with wildfire prevention. Climate-related events, including the increasing frequency of extreme weather events and their impact on critical infrastructure in the U.S. and elsewhere, have the potential to disrupt our business, our third-party suppliers, and/or the business of our customers, and may cause us to incur losses or additional costs to maintain and resume operations.

Regulatory and Legal

Regulatory risks can be broken into current and emerging. Current climate regulation risks are included in our enterprise risk management process. Current risks include compliance and disclosure-related risk in jurisdictions that require climate disclosures. Emerging regulation focuses on transition risks, including future regulation for carbon fees/taxes and decarbonization and associated costs; enhanced reporting obligations; future regulatory requirements; and related compliance costs. We are seeing such regulations emerge from various jurisdictions around the world.

For legal risks, enforcement of climate disclosure regulation could result in financial or legal consequences if we do not adhere to rapidly evolving regulations or if we do not have adequate data collection and internal collection controls to ensure data integrity. Variance between regulatory requirements in different jurisdictions could also increase the cost, risk and complexity associated with compliance.

Technology

Technology-related climate considerations can include potential costs to substitute or transition to lower energy-intensive products and services, whether within our value chain or in upstream or downstream activities. They could also include competitors making technological investments to improve energy efficiency, which could shape broader market expectations and competitive dynamics over time.

With respect to our business, our pace and ability to transition to lower-emissions technologies and the potential energy consumption associated with the use of evolving technologies such as AI may influence how stakeholders, including our customers, evaluate companies in the industry we serve.

Reputation

Reputational risks can include increased investor, analyst, customer and employee expectations regarding the pace, progress, and performance of our climate strategy and targets.

For reputational risk, we have identified both our customers’ and investors’ expectations as they relate to climate (i.e., the potential negative reputational impact if we did not meet their expectations). We have also looked at our vendors/value chain, as the majority of our emissions are from Scope 3. To achieve our public goal to reduce our GHG emissions, we are partnering with our vendors to help them set and achieve emissions reductions targets. Additionally, we will continue to engage our employees in our sustainability journey. Additionally, we may need to invest annually in solutions to reduce emissions such as energy efficiency, electrification, and renewable energy to meet the Science Based Targets (“SBTs”) for absolute emissions that we set in April 2022.

Market

Changing customer behavior and preferences towards low carbon products/services could adversely affect our business, financial performance, and growth.

There is a market risk of our customers contractually requiring us, as a supplier, to meet their expectations for climate commitments and demonstrate progress in addition to creating technology that will allow them to reduce carbon emissions associated with insurance, specifically claims management. The former could take the form of customers requiring us to provide emissions and energy data associated with the use of our cloud services. The latter could include customers requiring us to create software to help claims handlers and customers understand the carbon impact of their choices.