Global reinsurer Munich Re’s CEO said we will not meet the Paris Climate Agreement targets without a “technological restructuring.”
The executive explained what that might look like — and how to get insurers back on track towards meeting the targets — during his keynote speech at CatIQ Connect in early February.
Chris Gottardo, head of global business development, financial institutions and climate change solutions at Munich Re, said the reinsurer’s CEO attended the United Nations Climate Change Conference (COP26) in the fall of 2021 for the first time. “[Munich Re’s CEO Joachim Wenning] is quite vocal about the Paris Agreement targets not being achievable,” reports Gottardo.
According to Gottardo, Wenning believes the targets can only be achieved with a “radical technological restructuring to focus on negative emissions.”
The Paris Climate Agreement targets are creating mounting pressure on corporations to phase out fossil fuels rapidly and achieve net zero emissions in the near future. Gottardo observed this can be done if we “drastically reduce the amount of man-made emissions, predominately for the energy sector.”
Munich Re’s publicly available report, Munich Re Group Ambition 2025, highlights its method for reaching the targets of the Paris Climate Agreement.
Step 1 is to phase out investments in oil and coal.
The reinsurer’s personal targets include “net greenhouse gas emissions in its investment portfolio will first be reduced by 25% to 29% between now and 2025, before achieving net-zero emissions by 2050.” Also, Munich Re has ceased investments in companies that “generate more than 30% of their earnings from coal or by extracting oil from oil sands,” according to the report.
Gottardo presents Munich Re’s Climate Ambition 2025 at CatIQ Connect.
Step 2 is to invest in new technologies designed to remove carbon from the atmosphere.
“In our in our own Climate Ambition 2025…it’s about looking at negative emissions,” Gottardo said. “It’s about massive investment in the removal — through various technologies — of CO2 in the atmosphere.”
However, he added, “some of this technology doesn’t exist yet, or it’s very early-stage.”
Nonetheless, Gottardo said the industry should be thinking about potential “new business opportunities as we look at new technologies to try to tackle this huge issue we’ve got in front of us.”
So, where exactly are we in terms of preventing global temperatures and greenhouse gas emissions from rising?
Chart predicting probability of warming by the year 2100, based on data from IPCC and CRO Forum.
One aim of the Paris Accord is for signatory nations to “pursue efforts to limit global temperature rises to 1.5C, and to keep them ‘well below’ 2.0C above pre-industrial times.” Gottardo says current emissions are not in line with this target.
“If we think of all the pledges that governments around the world have made towards the Paris Agreement, we only get to 2.5 to 3.5 (Celsius),” Gottardo said. So, even if every government was to honor their pledge, we’re not there yet.”
Based on the available data, Gottardo said, “the part that scares me the most is that the probability of being within the Paris Agreement, under 2%, is the same probability that will likely be over 5%.”