Environmental Insurance Research Articles

Certain aspects of the implementation of imputed insurance of environmental risks in the Russian Federation

Purpose: of this article is to justify the implementation of insurance of environmental risks in the Russian Federation in the form of a pilot project based on imputed insurance with the definition of the main conditions of insurance coverage.Methods: the presented work uses statistical and predictive methods and the integrated approach for processing data on natural, climatic and human activity risks. Correlation-regression analysis and actuarial modeling were used to determine the conditions for insuring environmental risks and calculate tariff rates.Results: the paper substantiates the possibility of carrying out insurance of environmental risks in the form of a pilot project using an imputed form of insurance. Approaches to the calculation of the main parameters of business civil liability insurance for causing environmental damage as a result of an accident within the framework of a pilot project are proposed, including the determination of the minimum and maximum non-aggregate insurance limit, the minimum number of insurance companies, and the calculation of tariff rates. Due to the lack of Russian statistics on insurance coverage of environmental risks, statistical data on global insurance catastrophic losses from natural events, climate risks and human actions, as well as judicial statistics on disputes over the application of environmental protection legislation, were used for the calculation. The regions of the Russian Federation were identified for the implementation of a pilot project of environmental risk insurance.Conclusions and Relevance: the implementation of a pilot project of environmental risk insurance in certain regions on the basis of imputed insurance will make it possible to assess the current and forecast level of environmental risks in the Russian Federation, the need for insurance and reinsurance protection, the possibility and necessity of state participation in covering environmental damage. Using insurance statistics, insurers will be able to develop adjustment factors that encourage enterprises to take preventive measures. Reflection in a special reporting section of the results of the participation of insurance companies in the insurance of environmental pollution risks will be considered as the implementation of ESG principles.

Environmental liability insurance, green innovation, and mediation effect study

This paper begins by establishing a three-party game model involving three key players: the insurer, the firm, and the government. This model is used to analyze the utility of each party in various scenarios, one of which encourages green innovation within the firm. According to this model, when the insurer rejects insurance coverage and the government maintains a neutral stance on environmental liability insurance, the firm may opt to engage in green innovation. Green innovation fundamentally serves as a mechanism to mitigate environmental pollution risks stemming from the firm’s operational processes. In cases where the insurer declines underwriting, it becomes rational for the firm to enhance its risk management through green innovation, which can be viewed as a mitigating factor in the context of environmental liability insurance. To comprehensively examine the overall impact of environmental liability insurance on the green innovation endeavors of firms, we use a mediation effect model utilizing firm-level data from heavily polluting industries. This paper delves into the intricate relationship between environmental liability insurance and the capacity of heavily polluting firms to engage in green innovation, along with the mediating influence of financing constraints between these two factors. The findings of this analysis suggest that the acquisition of environmental liability insurance enhances the green innovation capabilities of firms operating in heavily polluting industries by alleviating financing constraints, serving as a mediating factor in this regard.

Green innovation of heavily polluting enterprises under environmental liability insurance: Evidence from Chinese listed companies

We construct a novel data set of heavily polluting listed companies on the A-share stock market in China that applied for environmental liability insurance in 2014 and 2015. Our study aims to scrutinize the influence and underlying mechanisms of green insurance policies on enterprises' green innovation endeavors. The findings indicate that environmental liability insurance promotes green innovation achievements of enterprises. This positive impact is more pronounced in non-state-owned entities, firms without political affiliations, businesses known for their high information transparency, and locations with well-established legal structures and stringent environmental regulations. Mechanism tests unveil three pathways through which green insurance policies exert this favorable influence: mitigating external financing constraints, promoting environmental management certification, and encouraging environmental information disclosure. This paper provides new evidence for evaluating the role of environmental insurance within developing economies. Furthermore, it carries significant policy implications for promoting ecological civilization and high-quality economic development.

Environmental pollution liability insurance and commercial credit financing

ABSTRACT Environmental risk issues for heavily polluting enterprises are a significant concern for both society and scholars; raising awareness of pollution liability insurance is essential for sustainable development. Within the context of green development, we focus on a unique environmental pollution liability insurance (EPLI) system and examine its relationship with commercial credit. We empirically test this relationship using regression analysis, propensity score matching (PSM), and placebo tests. We find that subscribing to EPLI significantly improves commercial credit financing. This effect is particularly strong in state-owned enterprises, financially developed areas, and regions where governments prioritize environmental issues. Our conclusions remain valid after robustness tests. A mechanism analysis reveals that supplier bargaining power and the value of collateral assets are key mechanisms through which EPLI enhances commercial credit financing.

Compulsory environmental pollution liability insurance and corporate risk taking: a difference-in-difference approach

PurposeMany developing countries have encountered frequent pollution accidents during their rapid development, while the previously weak environmental insurance systems could seriously undermine the progress of sustainable development. Some developing countries like China has initiated and strengthened environmental pollution liability insurance, so how effective this system would be in resolving enterprises environmental risks need to be further revealed.Design/methodology/approachThis research identifies the possible consequence that compulsory environmental pollution liability insurance pilot (CEPLIP) policy would bring to the risk-taking capacity of heavy-polluting corporations of China by the Differences-in-Differences (DID) approach.FindingsThe result supports the implementation of CEPLIP policy in increasing corporate risk-taking capacity. Furthermore, the CEPLIP policy can promote the corporate’s risk-taking capacity by reducing financial distress constraints and enhancing trade credit, supporting its dual role of “fallback effect” as well as “external supervision effect” of environmental insurance. As a result of heterogeneity test, the policy is more pronounced in enterprise samples with mature life cycle stage or lower industrial concentration degree. Similarly, it is more significant in enterprise samples owned better environmental management capabilities or greater strategic deviance.Originality/valueThis paper verifies the effectiveness of the CEPLIP policy by strengthening its supervision mechanism and restraining opportunistic behavior tendency and provides implications for alleviating increasing environmental risk pressure and building more sustainable environmental protection management systems.

LEGAL PROTECTION OF THE ENVIRONMENT IN THE ARCTIC ZONE OF RUSSIA WITH THE DEVELOPMENT OF THE EXTRACTIVE SECTOR OF THE ECONOMY

The article considers the main aspects of legal environmental protection in mining in the Arctic zone of the Russian Federation. The existing environmental problems are highlighted, the issues of implementing effective legal mechanisms for environmental protection and business regulation are considered, as well as key theoretical concepts in this area, such as "legal environmental protection", "environmental risk", "environmental insurance". The necessity of adopting a special law in the field of legal environmental protection of the Arctic zone of the Russian Federation is indicated.

The impact of environmental pollution liability insurance on firms’ Green innovations: evidence from China

ABSTRACT Green innovation (GI) is crucial in promoting environmental sustainability, especially in the long run. Environmental pollution liability insurance (EPLI) facilitates firms better dealing with pollution-related risks, encouraging firms to invest in GI. This paper studies the impact of firms’ EPLI coverage on GI using data from Chinese heavily polluting firms. Results show that EPLI promotes GI, both in terms of quantity and quality, and it has a persistent effect on innovations over the years. Further mechanisms study suggests that EPLI improves the cash flow conditions and reduces agency costs of the board, which explains the positive effect of EPLI on GI.

A multiagent collaborative development strategy for environmental pollution liability insurance based on an evolutionary game

AbstractTo improve the problem of environmental pollution liability insurance, this paper constructs an evolutionary game model based on the government, insurance companies, and polluting enterprises. The findings indicate that in an imperfect market, penalty and subsidy mechanisms boost insurance rates. Reinsurance facilitates insurer underwriting, prompting gradual government withdrawal. Effective pricing mechanisms by insurance companies enhance environmental liability insurance operations amid evolving market mechanisms, offering theoretical guidance for addressing challenges in implementing such insurance.

Effects of environmental liability insurance on illegal pollutant discharge of heavy polluting enterprises: Emission reduction incentives or pollution protector?

This paper discusses the impact of environmental liability insurance (ELI) on illegal pollution discharge (ILD). ILD was measured by the diurnal pollution coefficient of variation at the monitoring station nearest to the heavily polluting enterprise. Results show that: (1) Compared with firms that do not participate in ELI, ELI can inhibit ILD by 0.24 %. (2) Impact paths mainly include pollution prevention, production, emission and supervision effects. On the one hand, ELI can aggravate ILD by weakening environmental responsibility and increasing management costs, on the other hand, ELI can also curb ILD by increasing environmental protection investment and government punishment. (3) ELI is more able to suppress ILD of state-owned enterprises and large-scale firms, while ELD aggravates ILD of labor-intensive firms. (4) Peer effect of ELI in the same region is more obvious. This paper aims to provide insurance implications for restraining ILD.

Introduction of ESG Principles in the Insurance Market of Uzbekistan

The article discusses the implementation of ESG principles in the insurance market of Uzbekistan, which is an important step towards the sustainable development of the country’s economy. In the context of global changes, the insurance sector of Uzbekistan is faced with the need to adapt to international standards of sustainable development, which include environmental, social and governance (ESG) aspects. The authors analyze the current state of the insurance market in Uzbekistan, emphasizing its positive dynamics in recent years, but note that the implementation of ESG principles is at an early stage. Key barriers include a lack of experience and knowledge in the ESG field, limited financial resources of insurance companies and lack of regulatory support. The article proposes strategic steps to deepen the integration of ESG principles into insurance practice, including the development of environmental insurance, increasing the financial literacy of the population and improving management transparency in insurance companies. In conclusion, it is emphasized that the introduction of ESG principles can significantly increase the competitiveness of insurance companies, strengthen their market positions and attract new partners, as well as contribute to the implementation of the national strategy for the transition to a green economy.

Environmental insurance and green productivity: A firm-level evidence from China

Green transformation is currently a major challenge for both developed and developing economies, while the role of environmental insurance (EI) in green productivity in developing economies remains unclear. Using firm-level data from Chinese A-shape listed companies, this study investigates the relationship between EI on green total factor productivity (GTFP) along the period 2010–2019. To do so, a slack-based measurement model integrated with Global Malmquist-Luenberger approach (SBM-GML) is applied in GTFP calculation, and then a time-varying difference-in-difference (DID) setup is employed for empirical analysis, as well as its combination with propensity score matching method (PSM-DID) to overcome the sample self-selection bias. We find that EI significantly promotes firm's GTFP by about 0.22 units, which is mainly driven by the improvement of technical efficiency rather than technological progress. Further analysis exploring channels suggests that EI promotes GTFP by alleviating financing constraints and stimulating green innovation. However, the heterogeneity analysis shows that both financing constraint mechanism and technological innovation mechanism are mainly observed in heavily polluting and non-state-owned enterprises (non-SOEs). Our findings provide a new insight for policy-makers that utilizing environmental insurance can promote green productivity, but which should be focused more on those enterprises who are difficult to absorb external financing and technological innovation resources.

ENVIRONMENTAL AUDIT IN THE ENTERPRISE MANAGEMENT SYSTEM

The purpose of the article is to study the organizational and methodological principles of conducting an environmental audit in order to develop directions for increasing the effectiveness of the environmental management system at the enterprise. The relevance of conducting an environmental audit as a component of the enterprise's environmental management system is determined. The important role of organizing an environmental audit and determining existing environmental risks in the company's activities is indicated. The historical aspects of the formation of environmental audit are highlighted. The description of the environmental management system (EMAS) and the specific features of its activity are given. The regulatory and legal framework, which is guided by the auditor when conducting an audit, is defined. The purpose and tasks of conducting an environmental audit are revealed. The functions of environmental audit are defined. The essence of mandatory and voluntary environmental audit is considered. The types of environmental audit are characterized from the point of view of the purposes of its implementation: verification of compliance with legal requirements, audit within the scope of environmental insurance, audit during the passage of environmental certification, audit for the purpose of investment evaluation, audit of enterprises that cause damage to the environment. The requirements for an environmental audit are determined (independence, comprehensiveness, documentation, practical orientation) and the characteristics of the principles of its conduct are given. The peculiarities of the formation of an information array for conducting an environmental audit, which is grouped by the components of sustainable development (economic, ecological and social), are highlighted. The stages of the audit of the environmental sphere of the enterprise's activity have been established (preparatory, main, final). Emphasis is placed on drawing up an audit opinion, which provides the results of an audit on the compliance of the enterprise's environmental policy with current legislation and other issues that provide information on the effectiveness of the environmental activities of the business entity. Environmental audit methods used by auditors during an environmental audit are specified. The advantages provided to the business entity by conducting an environmental audit are determined.

Environmental pollution liability insurance pilot policy and enterprise green transformation: evidence from Chinese listed corporates

In the context of dual-carbon, corporate green transformation, a significant measure of the green effect of Environmental Pollution Liability Insurance (EPLI), garners substantial attention in current research. By leveraging the 2008 EPLI pilot policy as an exogenous event, this paper employs a difference-in-difference model to scrutinize the influence of the EPLI pilot on the green transformation of listed companies. We find that: (1) The EPLI pilot actively promotes corporate green transformation. (2) The pilot policy’s impact on green transformation is mediated through regional green development and enterprise investment efficiency. (3) The pilot policy manifests asymmetric effects on green transformation, influenced by regional, industrial, and enterprise-specific pollution levels, as well as government environmental concerns. (4) The EPLI pilot policy engenders enduring financial implications and contributes to the governance of information. This study is beneficial to enrich the research on the EPLI system and green transformation of enterprises that provide policy suggestions for improving the green financial system and promoting the green transformation of enterprises.

Does environmental pollution liability insurance affect corporate green innovation? New evidence from China

The effect of the development of green finance (GF) on the green transformation of corporations has been a key research issue in recent years. This study is based on a list of companies insured under the environmental pollution liability insurance (EPI) announced by the Ministry of Ecology and Environment (formerly the Ministry of Environmental Protection) in 2014 and 2015. Considering A-share listed companies in China as research samples and using the DID model, we investigate the impact of EPI on corporate green innovation (CGI). The results show that EPL can significantly promote the green innovation level of insured corporations, mainly reflected in two aspects of green invention patents and green utility model patents; this positive effect is more obvious in non-state-owned, heavily polluting, and patent-intensive corporations. These results hold after the robustness test. The mechanism analysis reveals that EPL promotes corporate green innovation by alleviating corporate financing constraints. This study provides new evidence for the role of GF in promoting green innovation and transformation in China.

Exploring the Effect of Policies on Environmental Pollution Liability Insurance in China’s Highly Polluting Industries: Applying Ajzen’s Theory of Planned Behavior

ABSTRACT This paper investigates the effects of different types of government policies related to environmental pollution liability insurance (EPLI) and how these policies promote the demand for EPLI of polluting enterprises. Based on the theory of planned behavior (TPB), we establish a research framework to analyze the effects and mechanisms of the three different policies (mandatory, incentive, and monitoring policies). Our empirical results suggest that the mandatory and monitoring policies can effectively promote companies to buy insurance, but the incentive policies have no significant impact on the insurance demand overall. Furthermore, companies with more positive environmental attitudes are not sensitive to mandatory policies. Although the overall effect of incentive policies is not significant, they have a significant positive impact on the EPLI demand of non-state-owned companies. The monitoring policies prompt enterprises to purchase insurance by strengthening information disclosure and compliant production.

Marine spatial planning identifies solutions for offshore wind farms at fishery and environment in Taiwan territorial waters

Some fishery and environmental organizations criticize offshore wind farms affecting fishery livelihood and marine ecological biological environment. The problems offshore wind farm directly affect the fishing ground due to ocean currents, marine ecology, and the marine environment being changed. In addition, fishing operations may carelessly damage undersea offshore wind farm cables disrupting energy operations, many fishing activities are restricted within the offshore wind farm areas and marine ecological biological environment has been damaged by offshore wind farm. However, marine spatial planning could coordinate offshore wind farm stakeholders and conducts marine environmental impact assessments to identify suitable offshore wind farms. The purpose finds solutions for offshore wind farm in the fishery and marine ecological biological environment. The research questions are how to reduce offshore wind farm impact on fishery livelihood and marine ecological biological environment through marine spatial planning and marine environmental impact assessment in the Taiwan territorial waters. In online questionnaires of 404 respondents, 64.36% supported marine spatial planning site selection and marine environmental impact assessment could reduce offshore wind farm impact; 66.83% agreed offshore wind farm coexistence with multiple uses, increasing fishery and biodiversity; 58.17% agreed on public financial participation in offshore wind farm to increase social acceptance. The findings are consistent with previous research. However, interviewees challenged that multiple uses coexistence might affect some populations in the ecosystem and further investigations are required. Another, 50.50% agreed on updated regulations of marine spatial planning, marine environmental impact assessment, insurance, specific fund, feedback, and compensation of offshore wind farm that could improve fishery livelihood and marine ecological biological environment. Finally, based on the study results, the paper suggests that energy policy could open public financial participation in offshore wind farm increasing social acceptance, skill training influenced groups for employment, enhancing fishery livelihood, and protecting marine ecological biological environment.

Regulation Concept of Optimizing Biodiversity Function due to Climate Change through Biological Insurance

Biological diversity, also known as genetic resources, plays a crucial role in sustaining human existence. Despite its significance, the destruction of these resources continues to persist over time, partly due to the impact of climate change. Numerous mechanisms have been implemented at both international and national levels to address this issue. However, the IUCN Red List indicates that the apprehensive situation persists, with 28% (35,765 species) of known species categorized as threatened with extinction as of 2020. In light of this challenge, an alternative worth considering is the concept of biological insurance, wherein biological or genetic resources become objects of insurance in general. Implementing this approach would require careful adjustments and, more importantly, scientific argumentation to support the idea both legally and economically. By employing normative legal research alongside statute and conceptual approaches, it has become evident that the current environmental insurance available in the market does not adequately protect the uniqueness of biological diversity. To strengthen the protection of biological diversity, it is essential to incorporate the sustainable use of natural resources for the prosperity of people while ensuring their sustainability indefinitely. Developing a comprehensive environmental insurance system would involve proposing a specific set of terms and conditions for biological insurance tailored to its unique characteristics. This approach seeks to safeguard and promote the conservation of biological or genetic diversity effectively.

Environmental insurance in the mechanism of environmental protection in Russia: how to improve its efficiency with the help of law?

Purpose The purpose of this study is to formulate a proposal to fill the gap in national legislation, which will increase the effectiveness of mandatory environmental insurance. Design/methodology/approach This is a review of scientific doctrine and legislation, which shows the problems and prospects for the development of mandatory environmental insurance on the example of one country. Findings At the moment, environmental insurance in Russia is at the very beginning of its development. Despite the experiments carried out and fragmentary references in the law, there is a classic example of a gap in the law, when the procedure provided for by the norms of law lacks a clear implementation mechanism. To fill this gap and increase the effectiveness of environmental insurance, the authors propose to clearly localize the scope of its operation, fixing the obligation of environmental insurance only for objects that have a significant or moderate negative impact on the environment (objects of categories I and II), provided for by the Federal Law “On mandatory Environmental Protection.” Originality/value A new concept of a mandatory environmental insurance contract is substantiated, which optimizes civil liability for causing harm to the environment, life, health and property of citizens (property of legal entities) as a result of accidents and man-made disasters.

The Inaction in Climate Change Adaptation and Mitigation in Sub-Saharan Africa: Some Policy and Legal Issues

This article seeks to examine as to how relevant environmental policy and legal principles deal with adaptation and mitigation challenges posed by climate change in Sub-Saharan Africa. It reviews and analyzes relevant provisions and processes of the UN Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol, the Paris Agreement as well as other relevant principles such as common but differentiated responsibility and respective capability (CBDRRC) and binding emission reduction targets. The Sub-Saharan Africa’s attempts to adapt to and mitigate the effects of climate change are reviewed along with the challenges in the region including the urgent need for climate financing. It concludes by urging the creation of a separate department of climate change by the Sub-Saharan African States, the implementation of environmental liability insurance, the revitalization of the West African power pool project, and the creation of a robust financial mechanism under the Paris Agreement for adaptation and mitigation policies in the Sub-Saharan Africa.

The Role of Environmental Insurance in “Green” Post-War Rebuilding of Ukrainian Regions

"Environmental insurance is top priority in a given scope of issues because it represents effective mechanism of risk regulation, formulating legal guarantees and providing significant instrument for implementing environmental-economic processes. Existing rudimentary mechanisms of environmental insurance in Ukraine are limited in nature and unable to fulfil the tasks set, notably under burdens of determinism and increased risks of war and post-war periods. The authors have set a study goal to evaluate preconditions of environmental insurance in post-war Ukraine and to define main priorities, primary tasking algorithms and specifics of environmental risk insurance in circular economy. The researchers applied empirical methods for study of scientific materials and regulatory documents and conducted their description and comparison. The authors analysed major approaches to implementation of mandatory environmental insurance strategy in Ukraine and gave broad definition of its structural elements and priority principles. They conducted analysis of regulatory and legal base, explored opportunities of engaging “green” insurance providers to national environmental insurance system. There has been a suggestion of variability in environmental insurance approaches with possibility to differentiate by risks, fields of economy and by regional distribution. The researchers have undertaken a forecast of effective implementation for economy, environmental protection and social area. They concluded about the need of preventive changes in economic and legal field and maximum implementation of international experience in national environmental insurance system with account of specific influence of certain factors, notable for post-war period in Ukraine."