Insurers must be included in “policy architecture of sustainable development”: former U.N. Assistant Secretary-General on Climate Change

The former United Nations Assistant Secretary-General on Climate Change said on Wednesday that insurers must be included in the “policy architecture of sustainable development.”

Janos Pasztor was interviewed about his assessment of the role of the insurance sector – specifically mutual and cooperatives – in delivering the Paris Agreement on climate change that was adopted by 196 countries in December at the Conference of Parties (COP21), said a press release from the International Cooperative and Mutual Insurance Federation (ICMIF). The Paris Agreement held that “collectively, the countries of the world agreed to strengthen the global response to limit global average temperature rise to well below 2 degrees Celsius, as well as pursue efforts to limit [the] increase to 1.5 degrees,” Canada’s Minister of Environment and Climate Change, Catherine McKenna, said in mid-December.

Pastzor was UN Assistant Secretary-General on Climate Change until Jan. 30, and had been appointed by UN Secretary-General Ban Ki-moon to support efforts to achieve a successful agreement at COP21.

Pasztor said that when it comes to mitigating the impact of climate change, the insurance industry has an “obvious and immediate financial stake in the game.” By pledging a rise in its climate-smart investments at the UN Climate summit in 2014 – from US$42 billion to US$84 billion by end of 2015 – the insurance industry had “already transformed its mainstream asset management by placing more emphasis on climate risk, and the US$84 billion goal has already been exceeded,” he said in the release.

At COP21, there was an opportunity for the cooperative and mutual insurance sector to share how it is playing a leading role in doubling the industry’s investment in smart risk investing. “This provided an important signal for delivering a long-term culture of ‘smarter’ investment decisions,” Pasztor said, adding that the UN was looking forward to the trajectory by which the insurance sector will deliver its further commitment to increase the amount invested in climate smart investments to 10 times the current amount by 2020.

“The insurance sector can help to manage and transfer risk and protect against the potential financial downside due to losses so that businesses feel more comfortable operating and continue to invest in the low carbon future,” Pasztor said in the release. “As one of the world’s largest industries, insurers are best positioned to assess and analyze risk, influence risk reduction behaviours and develop products to ensure sustainability of business models.”

Pasztor’s belief is that the insurance industry will likely play an influential part in climate change discussions as an investor and also as part of task force on climate-related financial disclosures announced by Mark Carney, chair of the international Financial Stability Board, at COP21.

Ki-moon announced in January that Pasztor would become senior adviser to the UN Secretary-General on Climate Change. In his new role, Pasztor will support efforts to implement the Paris Agreement.