InsurTech Ohio Spotlight with Sunny Sanwar

Sunny Sanwar is the Founder and CEO at Dynamhex, monitoring and visualizing complex energy consumption data for individual, corporate and government entities. Sunny was interviewed by Andrew Daniels, Founder and Managing Director at InsurTech Ohio.

Sunny, what have you been doing in the climate space and why?

“We started Dynamhex in 2018 based on a lot of what I saw as a kid. I grew up in Bangladesh’s floods every year. It's one of the hardest hit countries with the physical aspects of climate change. I was always very excited to be in the climate space that was solving the underlying issue: how do we reduce greenhouse gas emissions? We realized that a lot of it actually is the input data that companies have available in order to even know how much their emissions are or where it's coming from. That was a niche back in 2018, where a lot of folks wanted to set sustainability goals. They wanted to upgrade facilities to be less emitting but didn't really know where to get started.

We've been working in the broader climate space, helping our customers integrate data lakes and data pools and all the existing or operational data they have into what we call an inventory-compliant stack. This means you connect all of your operational data: business travel for your employees, employee commuting, generation assets, real-estate assets, capital goods purchases, fleet vehicles, etc. All you have to do is connect, and we would create reporting that is compatible with how the emerging climate-reporting landscape wants corporations of different sectors and segments to report. From that analysis, we are able to recommend reduction strategies that make sense given the location and the type of asset or the type of facility that the enterprise has. We're then able to help them build relationships with service providers who can implement those production activities on their behalf.”

Regulations have been coming into the climate change space; tell us a bit more about those that are in place now and how future ones will affect businesses.

“Up until now, businesses wanting to lower their carbon emissions were voluntary. It was a way to sort of differentiate yourself at the company, being a steward of environmental benefits and the environment. In the last couple of years, we've seen a lot of local and national regulations that have moved things from purely voluntary to compliance driven. An example is in major Metro areas in the US, where you now have to disclose your energy consumption at a certain size. There are clear fines for not benchmarking and giving your data to the city offices or being a lower performance building where clearly you should be updating your resource patterns to be more efficient. That's been happening for the last few years on the national side.

The US Securities & Exchange Commission is now in the rule-making session on how publicly traded companies and public equities should measure their emissions and how they should represent the material risk of not meeting the targets they've set. So, we are seeing a lot more activity, not just local, but national and across sectors. Through a utility company, versus oil and gas, versus a bank, there are different types of reporting standards that you have to deal with in order to be aligned with the regulations. The Inflation Reduction Act introduced a lot of tax benefits and rebates credits for clean generators. Even for households, the firms can now tap into rebate incentives to implement lower carbon than projected. We are seeing a lot of regulations happening in the last 18 months, and future ones will likely ramp up and morph into more sector-specific ordinances.”

Why does an insurance carrier make sense as a partner?

“Much of it is based on entity reports, because of how they perceive that risk or benefit to manifest. When lowering emissions was voluntary, it's more marketing, but when it's required, you’re careful what you measure, how you talk about it, what it actually means and what your future goals are. As a sector, it made a lot of sense because there's this concept of transitional risk, which is the risk of being higher emitting than your peers or the industry average. There are clear ramifications of emissions because at the property level, if you're higher or emit at source, that could have a significant impact on how much you are at risk. Those are some of the reasons why we see insurance being a next step in the traditional quantitative, as there’s marketing-driven concerns of greenwashing.

Now, when people are setting net-zero targets into the future, you have to report as a financial disclosure; these are materials that investors should know about. It doesn't just happen at the corporate level. It happens across the supply chain at the asset level. If there’s strand assets, because people have not lowered carbon, that’s something that needs to be reported to help with understanding how that actually happens. Those are the direct things we're seeing with insurance companies. The other things we're seeing are community wide, more macro impacts. For many of the companies that have ESG (Environmental, Social and Governance) portfolio and plans, what is their impact in their local neighborhoods in terms of morbidity workers' health, even if it's a large factory or an oil and gas reservoir. How does that all impact both on the ESG disclosure side of things, but also the physical asset-level changes that we are likely to see?

For those reasons, the insurance industry has a lot to weigh in on in this transition.”

How do insurance companies look at the space in the short term versus the long term? How does it help their policyholders, and how are you approaching this with the global insurer?

“In the short term, most insurance companies are going to be focused on the physical climate risks, flooding, wildfire industry, hurricanes and tornadoes, things of that nature that have physical losses. Those are some of the things that I think are going to be fairly concentrated in the short term of an insurance company. One of the things that we are doing with Zurich Insurance Group is helping the sustainable captive group of companies who are wanting to be sustainable integrate to their ecosystem, meaning they get to provide carbon accounting and scale as a service to their insurers.

This is important for two reasons. One, a lot of the time, Zurich gets other insurance company’s pre-level data. We use those same parameters to connect all the data links so that organizations can quickly measure their emissions and automate over time.That's something that we're working with insurance companies to help their policyholders in navigating this emerging landscape. We work a lot with municipalities and utilities who do it for fairly different reasons, but with an insurance company, you have the ability to go across sectors. One day, it's transportation logistics, another day it's construction. It's really exciting to see that regardless of what the source emissions are through an integration with Zurich, and through Zurich partnerships, you're tapping into higher scalability.

You're meeting the customer where they're at, so you're not telling them the carbon story when they just want to measure their emissions and move on. We're understanding a lot more about how we can make this available to a bigger spot of the economy. That's where I see insurance companies getting involved in the long term.”

What does the future of climate change reporting look like?

“At Dynamhex, we believe that, effectively, carbon is carbon is carbon. The measurement of carbon should not take as much time as it does today, because it's actually taking time away from reduction. We've seen it happen to a lot of customers, that by the time they're done measuring, it's already time to measure again for the next year. We believe that reporting of the carbon itself is going to be fairly standardized, and people are going to be able to do it as simply as just Googling their address.

Right now, people are setting these types of net zero targets. We hear this every day from large companies both from the SEC standpoint on roadmaps and from an actual “how do we implement this as an organization” standpoint. A lot of the future of climate reporting is going to be breaking down these targets. Is this a low hanging fruit? Should we start here or should we start there? Reporting isn't going to be just on measurement; it’s going to be on action and relative progress. That's very exciting because that's what we need. Just saying that we know what the global emissions are, doesn't really help the environment to actually reduce those concentrations.”

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