Why recycling’s fourth R is risk
IN Partnership with
More businesses are embracing the circular economy by reusing waste and materials. But there is risk buried in these good intentions
More
EVERYONE ALREADY knows how to use a recycling bin, but businesses across the globe are finding new ways to support a circular economy by reusing waste and materials in their manufacturing processes. Companies making a conscious effort to repurpose waste can significantly benefit our environment, but there are also inherent associated risks.
“Today there is a high degree of focus on environmental stewardship in corporate America. In fact, in some cases it’s even contemplated when companies are securing financing,” says Jencap managing director Canaan Crouch.
“But what’s not discussed frequently are the potential risks associated with some of these ESG programs.”
Jencap is one of the largest wholesale intermediaries in the United States with expertise in wholesale brokerage, binding authority, and program management. It has specialized divisions and affiliate companies that provide niche expertise, unparalleled market access, and nationwide influence.
Find out more
“Today there is a high degree of focus on environmental stewardship in corporate America. But what’s not discussed frequently are the potential risks associated with some of these ESG programs”
Canaan Crouch,
Jencap
The aim of a circular economy is to reduce waste and maximize the value of resources by keeping them in use for as long as possible.
Product manufacturers are storing, transporting, treating, and reconstituting waste into other component parts that end up as new chemicals and intermediate products. Biogas, a renewable energy source produced by the breakdown of carbon-based waste and raw materials, is one example of a product that is derived from reconstituted waste. Other examples include clothing, construction products, food containers, sneakers, and other goods.
Big business is increasingly waking up to the benefits of a circular economy. In 2021, Apple reported that nearly 20% of the materials – including gold, tungsten, rare earth elements, and cobalt – used in its products were recycled, a record for the big-tech company. Environmental, social and governance (ESG) investments are a priority for so many companies today because they enhance marketplace reputation and attract new talent, and investors look favorably on them.
If that isn’t incentive enough, maximizing the value of existing resources could unlock $4.5trn in economic potential by 2030, according to Accenture research cited by the US Chamber of Commerce.
Insuring industrial waste is a relatively easy process when it’s disposed of at approved facilities. This is a highly regulated industry with a straightforward, known process that makes insurers comfortable. However, repurposing waste into new products has proven to be considerably riskier and carries many unintended consequences – including pollution and contamination.
Take biosolids, for example. Organic farmers in New England and California were spreading biosolids created from the desiccated material left over from wastewater treatment facilities on their fields and crops as organic fertilizer.
“There are things that you can’t capture in a vendor box or through your underwriting process, so carriers get a little hesitant. It’s a lot of risk to assume”
Doug Mangus,
Jencap
Restaurant grease offers another use case for the risks associated with repurposed waste. “There is a whole industry of companies that will go around and collect it,” says Doug Mangus, Jencap managing director. “If you are a restaurant owner, you pay someone to collect the leftover grease, and then they insure and take that back to their facility for processing.”
Often, it is turned into biofuel, “which is great,” says Mangus. But what about when that same processed grease is fed to livestock? This creates more unknown risk for insurers, as it could affect the food chain, animal health, or the environment.
“There are things that you really can’t capture in a vendor box or through your underwriting process, so carriers get a little hesitant. What if it poisons a bunch of livestock? Or carries through the food chain? It’s a lot of risk to assume,” says Mangus.
Share
Share
What is a circular economy, and what are its benefits?
Published 29 Mar 2023
The risks of insuring repurposed materials
“They spread the organic fertilizer onto their fields thinking that they were doing something positive for the environment,” Crouch says of the New England and California cases. “Unfortunately, the result was that they actually ended up contaminating their soil and groundwater with residual chemicals that were left in those biosolids.”
There are immeasurable benefits to businesses finding new ways of minimizing waste and maximizing existing resources to build a more environmentally conscious and sustainable future. However, it’s essential to understand the inherent risks involved and secure the appropriate insurance protections in case the unthinkable were to happen. Environmental insurance provides a way to manage the unknowns and protect business owners. That’s where a specialized environmental wholesaler like Jencap can really set its agency partners and insureds up for success.
The important role insurance plays in a circular economy
In 2022, under the Bipartisan Infrastructure Law, the US Department of Energy launched a $675 million research program aimed at developing more sustainable critical materials and technologies and using a circular economy approach.
The circular economy has international attention and backing as well. The European Union’s 2020 Green Deal included a circular economy action plan, while the UK’s 2022 critical minerals strategy sought to accelerate its circular economy drive.
Aran Insurance Underwriters
Quaker Special Risk
International Assurance
of Tennessee, Inc.
HRMP
Jencap’s affiliate companies
Minico
Jencap by the numbers
team
members
900+
offices across the US
49
agents
and growing
20,000
in total written premiums
More than
$3 billion
employee
equity holders
20%
largest wholesaler in the country
4th
Jencap by the numbers
team
members
900+
offices across
the US
49
agents
and growing
20,000
in total written premiums
More than
$3 Billion
employee
equity holders
20%
largest wholesaler in the country
4th
Copyright © 2023 KM Business Information US, Inc
RSS
Sitemap
Contact us
About us
Conditions of Use
Privacy policy
Terms & conditions
People
Copyright © 2023 KM Business Information US, Inc
RSS
Sitemap
Contact us
About us
Conditions of Use
Privacy policy
Terms & conditions
People
Copyright © 2023 KM Business Information US, Inc
RSS
Sitemap
Contact us
About us
Conditions of Use
Privacy policy
Terms & conditions
People
Contact Us
Specialty
Best in Insurance
Resources
Risk Management
TV
News
Contact Us
Specialty
Best in Insurance
Resources
Risk Management
TV
News
Contact Us
Specialty
Best in Insurance
Resources
Risk Management
TV
News