Cleantech: What Is Our Environmental Footprint?

Small steps by every business and every individual today will make a huge impact on our environmental footprint in the long run. We should all be thinking of cleantech living and doing whatever we can to help reduce our environmental footprint.

Cleantech, short for clean technology, refers to any technology or process that aims to minimize environmental impact and promote sustainable development. It encompasses a wide range of sectors and innovations that focus on reducing carbon emissions, improving energy efficiency, conserving resources, and mitigating climate change.

Digitalization has numerous benefits across various sectors and in our private lives.

Digitalizing processes can greatly increase efficiency and productivity. By automating routine tasks, companies can save time and resources, allowing them to focus on their core competencies.  It can often lead to a decrease in operational costs resultingfrom efficiencies such as a reduced need for physical storage space, less printing and paper usage, or automated workflows that require fewer personnel hours.

Digitalization is also making the world a smaller place.  Digital information can be accessed from anywhere in the world, fostering better collaboration and convenience. It enables remote work, e-learning, telehealth, and many other activities that don’t require physical presence.  What is more, it has revolutionised the way and the speed we communicate. It’s now easy to stay in touch with friends, family, and colleagues around the world through email, instant messaging, video calls, and social media platforms.

But be warned: Digitalization comes with a hidden environmental impact.

For all the benefits mentioned we of course need the digital devices to make them happen, and we also have to store the data somewhere. According to Cybersecurity Ventures, the world will store 200 zettabytes of data by 2025 (one zettabyte is equal to a trillion gigabytes – that’s a 1 with 23 zeroes after it!). This includes data stored on private and public IT infrastructures, on utility infrastructures, on private and public cloud data centres, on personal computing devices – PCs. laptops, tablets, and smartphones – and on IoT devices.

The approximate number of personal computers in use worldwide is 2 billion. Mobile phones approx. 4 billion. And we haven’t yet counted all the game consoles, smart watches, smart home devices, etc.

But all this tech needs to be powered somehow.  And we’re not talking just the power to use the devices but also to manufacture them. We need much more energy to manufacture all these devices than for their operation. This is the hidden environmental impact of digitalization.  The side we rarely think about, but we must consider embodied energy or in other words the total energy required to produce a product. This includes all stages from raw material extraction, manufacturing, transportation, installation, maintenance, and to its end-of-life disposal or recycling. It is an important measure in assessing the environmental impact of products.

As an example, let’s  look at the lifecycle of a mobile phone.  Its lifecycle involves several stages, each with its own environmental impact:

  • The first stage – material extraction – where raw materials for the phone are extracted from the earth. This includes metals (like gold, silver, copper, palladium, and lithium), petroleum (for plastic), and rare earth elements. Extraction often involves mining, which can cause environmental damage and pollution.  The extracted materials are then processed and manufactured into components like circuit boards, screens, batteries, and casings. This stage uses a significant amount of energy, much of it from non-renewable sources. It also often involves the use of hazardous chemicals.
  • Next, the components are assembled into the final product. This stage also consumes energy, particularly if the components are produced in different countries and need to be shipped to the place of phone construction.  Afterwards, the finished phones are packaged, shipped to retailers or directly to consumers around the world. The transportation process results in greenhouse gas emissions.
  • The consumer uses the phone, which involves energy consumption for charging the battery and using data services. Software updates can extend the useful life of the phone. However, many phones are replaced after just a few years, even though they are still functional, leading to waste.
  • Eventually, the phone is discarded. Some phones are collected for recycling, while others end up in landfill. E-waste can be a source of pollution, particularly if it is not managed properly. If phones are recycled, some of the materials can be recovered and used to manufacture new products, reducing the need for new material extraction.

What are we doing about embodied energy and its environmental impact?

There are efforts within the electronics industry to improve energy efficiency and reduce the environmental impact of device production. This includes optimising manufacturing processes, adopting cleaner energy sources, implementing waste reduction strategies, and promoting recycling and responsible disposal of electronic waste.

But we need to be asking ourselves do we really need a new mobile phone every year? Or a laptop or all the new gadgets? What is our environmental footprint and how can we reduce it?

  • We should all be making our digital devices last as long as we possibly can.  Companies like iFixit have an array of repair manuals for different electronic devices and they sell the kits and tools needed to conduct the repair yourself.  Likewise, Apple has been running its Self-Service Repair initiative for over a year which makes parts and tools available for some Apple devices so customers can fix them themselves.
  • If you do need to replace your electronic device, then consider donating full functioning devices to charity or research how to recycle them properly to create as little impact on the environment as possible.  Most recycling centres now have e-waste recycling points where large and small electronic items can be recycled.
  • Businesses and individuals should all also power down devices when they’re not in use.  Just by simply turning down the brightness on your screen you can save electricity.  Unplugging desktop computers, TVs, and chargers when not in use can also save electricity.
  • Give your storage cloud a spring clean!  We can all save energy by deleting old files that we don’t need both at work and at home.  We can store things locally on our devices or on an external hard drive to reduce the amount of data being stored in the huge data farms across the world.

Anita Molitor

Operation Executive

T +43 664 962 40 08

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The Opportunity for B2B2C sales

After Covid-19 Insurance Developments

Covid-19 has brought a lot of disruption in all areas of human life. Our homes have become epicentres of our lives. We work from home, we shop from home, we have home-schooling. Our home has become our sacred digital fortress.

Furthermore, the way we engage and interact with each other has been affected across all industries and geographies. With different physical distancing and quarantine restrictions we are no longer able to meet so freely in person. Our once “in person” activities now need to be digital and remote.

Also, value for money has become a top priority for many of us. Financial uncertainty in the post Covid-19 era makes us think twice about what and how much we can spend.

How can insurers address these challenges?

1. Changes in distribution models
For many insurance companies a physical sales force was the most significant sales channel up to now. Face-to-face meetings were the most successful way of catching customers. The still ongoing physical distancing is having major impacts on personal relationships (and insurance distribution, as well). The sales force, the insurers and the customers have switched to digital and remote interactions and tools, which was a huge change for many of us.

The key to survive a significant sales drop is expanding distribution partnerships. Insurers are reaching out to diverse companies so that these can offer the insurance products to their large customer base. This is one of the ways to maintain it sales volume at a satisfactory level in these times of crisis.

2. Putting the customer in focus
Going digital is not where the demand stops. Yes, it is important to remotely offer your services and products, but it is crucial that the sales process is easy and simple. There is no personal meeting, where an insurance product can be explained in detail.

Many insurance products are mostly considered as too complex to be easily explained and easily understood. Still, the shift in the distribution has made it a priority to simplify insurance products – therefore insurers need to give a serious thought on how their existing processes, products and experiences can be easily adjusted to the new digital customer.

3. Thinking long-term
There are some quick successes that insurers can do in order to cope with the new situation Covid-19 is bringing to their business. Still, they need to reconsider how to adjust their strategy to all the changes this pandemic has brought and will bring to us.

  • It is key to find the best sales channel mix
  • In-person sales will still play a significant part in the distribution of insurances. Still, insurance companies also need to prepare remote sales agents that are ready to interact with the digital customers.
  • Digitalising key areas of insurance sales
  • Paperless application and submission forms, digital signatures and online client onboarding should be in focus of digital developments.
  • Smart M&A acquisitions
  • The number of InsurTechs and FinTechs is rapidly rising. Their flexibility and simplicity in offering insurance products will help insurers cover the gaps in their distribution ecosystem and give them the possibility to offer new products to new customers on new territories.

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Alma Ribanovic

Group Practice Leader Affinity

T +43 664 962 40 17

Cybercrime is also targeting your business

Some industries, such as online retail or banking, handle large amounts of sensitive and possibly lucrative data. By the very fact that the services they offer are to a wide extent are virtual, the exposure is rather obvious. With others, like manufacturers, telecommunications and healthcare, it is their obvious dependency on IT which makes them an attractive target for attacks in the cyber sphere. And indeed, participants of industries where neither apparently applies are sometimes lead to believe that this topic is of subordinate relevance or relevant to others.

Unfortunately, this is far from true, as an even quick analysis and recent events show. It is a misperception that a company has to have a widely known brand, a particular product or media coverage to become a target. Falling prey to one of the ominous phishing mails or an inconsiderate click of an employee on a seemingly harmless attachment are equally relevant for each and every company. Recent events and our claims experience show us that both large and small businesses are targeted by cyber criminals.

The top three cyber strategies of businesses

In our daily discussions with clients we encounter broadly three classes of responses:

  • Denial / minimum response: The initial response is that this risk is relevant for other industries, but not so much the own. Publicly available examples are discarded as singular incidents or consequence of particularly unsuitable use of IT tools. Often, this approach is also driven by the fact that the acknowledgement of an exposure would require a reaction, which may result in costs. An insurance premium would be such an additional cost. The topic of cyber and IT security is seen as a responsibility of the IT-department. Since the details of any exposure would inevitably be technical in nature (and impossible to understand for anybody but an IT professional) this is where the matter resides best. In smaller companies, without dedicated departments, the responsibility is seen to lie with suppliers of software or hardware/infrastructure.
  • Awareness and prevention: Media coverage on the topic has become ubiquitous and hard to avoid, even to a level where not addressing the topic could lead to the management’s reaction in this respect being questioned with hindsight. It is understood that the exposure is not merely technical, but also comprises soft facts like social engineering and human error which has to be actively managed in a company. The focus here often lies on prevention.
  • Comprehensive approach: In addition to prevention also comprising mitigation and business continuity analysis based on having developed a number of actual scenarios. Similar to fire drills, real exercises are being conducted and key personnel (not limited to the IT department) trained in how to react when servers go dark and communi

This simplified classification is of course exemplary and in reality more like a continuum. It can also be observed that when the conversation is brought to Cyber and insurance it is either the complexity of what is covered under which line of insurance (property, cyber, professional indemnity, D&O and crime being the ones which could immediately be triggered, depending on the loss scenario) which may be challenging. A certain saturation given the ever increasing media alerts and the fear this could only be the insurance industry seeking the next product it can sell are other reservations.

The risk, of course, is real and can be effectively managed by a combination of prevention and mitigation, where insurance falls under the latter.

The article is written by Stephan Eberlain.

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Anita Molitor

Operation Executive

T +43 664 962 40 08

Best of insurance in Ukraine

Alexander Laukart, General Manager of GrECo Ukraine, about Ukraine´s “tradition” of instability, regulatory changes and how international insurance programmes are implemented.

How do the current political developments and economic conditions in Ukraine influence the insurance industry and clients’ risks?

LAUKART: I may say that it’s our local Ukrainian “tradition” to be in the permanent state of political instability and regular economic crisis. All this also deeply impacts our economy including insurance industry. Due to all these reasons the insurance industry is quite small for the biggest country that lies completely on the European continent. The insurance penetration rate in Ukraine is possibly the lowest in Europe. The local insurance market has been actively developing during the last years but is not yet “mature” enough to develop and implement a number of insurance lines and products and thus limiting the proposition and client’s potential needs. The financial capacity and resources of the local insurance market are quite limited and a big share of the risks is still going to international reinsurance market.

In which economic segments/industries do you expect increasing investments in the coming years?

LAUKART: Although the overall situation in Ukraine’s economy is not good, some industries are quite attractive and may provide good return to the potential investors. Ukraine is quickly regaining its position of being a Europe’s “grain basket” and agriculture is definitely a very attractive industry for investing. I am also pleased to admit that Ukraine is becoming one of the leading world IT/FinTech outsourcing services hub and this sector will be an active investment recipient for the coming years.

Being located on a crossroad within Europe with big transit potential, Ukraine may also anticipate big investments into its infrastructure i.e. railway network, road system, sea ports etc.

What are the biggest risks foreign companies doing business in Ukraine need to consider?

LAUKART: There are a number of factors that may prevent the foreign companies from launching their operations in Ukraine or that make their existing business operations in Ukraine not easy and risky. I mean political instability, changing legislation including taxation system, high level of corruption and very bad judicial practice.

What are the main facts of the insurance market in Ukraine?

LAUKART: The Ukrainian insurance market achieved the following results in 2019:The Gross Written Premium (GWP) is EUR 2 billion, that indicated a 7.4% growth including the life insurance share of 175 million EUR (18.4% ,growth). The losses paid of 542,7 million EUR including life insurance share 21,8 million EUR are rather low compared to the GWP. The dominant lines are Motor Insurance, P/C, Health and Life Insurance.

Due to the absence of the official information, it’s hard to say what share of the insurance market result is represented by intermediaries but I can estimate that in MTPL and life insurance agents/MLM sales share may reach 60%. In corporate insurance i.e. Health Insurance, Energy/Power, Aerospace, Financial Institutions the share of intermediaries sales may reach 50%. And, of course, multinational corporations that operate in Ukraine are mainly served by international brokers by their local representative offices and agencies.

Although the current local legislation that regulates insurance broking business is not good we can see many world leading brokers having their agencies and representative. offices here. We expect that our Parliament will soon accept a new insurance law and will introduce new legislation regarding insurance broking business regulation. This will lead to an intensive growth of the insurance and intermediary business in particular.

What specifics differ from those in other countries?

LAUKART: We’ve got some local specifics which are not helping the insurance industry to develop and grow quicker. The insurers are paying 3% insurance tax which applies to the insurance premium received. But at the same time the insurance companies are paying standard corporate profit tax, so in this case we may say that local insurers are double-taxed.

The current insurance broking regulation is not allowing brokers to develop their business in Ukraine. The number of broking operations in Ukraine is very small and international insurance brokers do not register broking companies but open agencies and representative offices.

Can international insurance programs be implemented? Which special features have to be considered?

LAUKART: One of our core business in GrECo Ukraine is the provision of our services to international companies operating in Ukraine. As we are not a part of Freedom of Services market and non-admitted insurance is prohibited in Ukraine the implementation of global insurance programmes as well as the issuance of the local insurance policies in full compliance with master policy terms & conditions and local legislation requirements is very important. We have a dedicated team of specialists who are in close contact with controlling brokers to provide excellent service in accordance with the agreed procedures and service guidelines. The average experience of our specialists in international client servicing and consulting is 10+ years. The main business language in the company is English.

What regulatory challenges are companies facing? What types of insurance are mandatory?

LAUKART: We’ve just currently had a change of the insurance regulator when the regulation authority was passed from the National Regulating Commission to the National Bank Of Ukraine and as a result a mega-regulator was created. We witnessed the process when NBU cleaned the banking sector and double reduced the number of commercial banks in Ukraine. The market anticipates that same cleaning process will be done with insurance industry and the number of insurers will be drastically reduced.

Currently we have 37 types of compulsory insurance, as stipulated in Insurance Law. But not all of them are implemented and the main of them are: Compulsory Liability of Car Owners (MTPL), Civil Liability of Nuclear Reactor Operator, Civil Aviation Insurance, Space Insurance, Hazardous Cargo Transportation etc.

The level of tax load – how seriously the tax burden affects the brokers’ activities?

LAUKART: The insurance broking business in Ukraine has the same standard taxation as any other corporate entity in Ukraine. The current corporate tax rate is 18% and insurance companies and intermediaries are not paying VAT. This taxation system is quite acceptable and does not prevent us from business development.

When was the last bankruptcy of an insurance company in Ukraine? How do you made preparations to minimize the effects on your clients?

LAUKART: The bankruptcy of an insurance company in Ukraine is not a rare and unique case. We used to have nearly 500 insurers and now as of end of 2019 we had 233 insurance companies including 23 life insurers. Some insurers have gone bankrupt and the rest had their license being revoked and cancelled. In the past we had the cases when big insurers went bankrupt and this had a tremendous negative financial effect on the clients and the insurance market. But currently we see a process of market cleaning.
This is one reason why we take market security very serious. Locally we are monitoring the local insurance companies. Our carrier risks are also monitored on a group level and we will not work with those companies who are not fulfilling certain predefined parameters. If the client wants to partner with such a company we strongly advise him about all possible negative implications this may bring.

What do you at GrECo Ukraine focus on when advising clients and what special expertise have you developed?

LAUKART: In Ukraine we have a dynamic team using their expert knowledge to advise international clients but also those of the local energy sector. Additionally, we arrange fronting solutions for large multinational firms with operations in Ukraine. We strongly cooperate with our colleagues in Vienna to advise our clients based on their risks and prepare insurance solutions using international markets.

Alexander Laukart

Alexander Laukart

General Manager
GrECo Ukraine

Alexander studied at the Kiev Institute of Foreign Languages and has exceptional English skills. His insurance carrier started 1994 and includes experiences in management positions at multinational insurance brokers, insurance departments of leading Ukrainian firms as well as the local subsidiaries of international insurers. He obtained exemplary knowledge of the insurance market, especially the placement of larger risks and international cooperation with brokers and insurers. In 2010 he joined GrECo Ukraine as the General Manager.

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Jonathan Höh

Group Sales & Market Coordination

T +43 5 04 04 396