April 14, 2016 by Canadian Underwriter
The global insurance industry is a key actor in forging new instruments to anticipate and manage climate risks, and must continue to work with the United Nations to manage and reduce such risks, UN Secretary-General Ban Ki-moon said on Wednesday.
Ban made his remarks at a high-level meeting on resilience with insurance industry leaders and other stakeholders at UN headquarters in New York on Wednesday morning.
Emphasizing that the “impacts of climate change will affect every aspect of our lives,” the Secretary-General noted that the insurance industry played a key role at the Climate Summit he hosted in 2014 and was instrumental in mobilizing momentum for the Paris Agreement in December 2015. “The world needs your leadership to meet the climate challenge,” he said in a statement issued by the UN.
Climate change “profoundly affects” the core business of the insurance industry because the industry will be faced with “mounting claims of a magnitude not yet seen” and also because the industry’s investment decisions can give rise to unexpected risks, Ban said. “Conversely, if you invest wisely, you could reap new rewards – for both your own businesses and society at large.”
Recalling the ‘Anticipate, Absorb, and Reshape’ multi-stakeholder global initiative that he launched this past year to increase climate resilience, Ban stressed the importance of better anticipating and acting on climate hazards through early earning and early action, as well as reshaping development to reduce risks at both national and international levels.
Among the actions that the insurance industry should take, he suggested, include “greening” its investment portfolios and, by 2020, measuring its carbon footprint. In addition, the industry should also ‘decarbonize’ its investments so as not to contribute to rising greenhouse emissions, the Secretary-General said.
“It is not enough to simply create new products to respond to climate catastrophes,” he stressed. “At some $25 trillion dollars, you own some of the world’s largest investment portfolios. Your investment decisions are crucial for reducing the growth of carbon emissions and protecting again the financial disruption caused by stranded assets.”
Ban also challenged the industry to double investments in clean energy and work with the UN to ensure that early warning and early actions are made available to the most vulnerable countries by 2020, since more than one million people have already lost their lives to disasters in this century. In addition, he said that the world’s most vulnerable people should be provided with greater access to risk transfer mechanisms.
“The poorest and most vulnerable people – those who have done least to cause climate change – need support to reduce their exposure to climate impacts,” he said.
Lastly, Ban challenged the insurance industry to develop auditable standards in the industry that incorporate the UN’s Sustainable Development Goals. “It is no longer sufficient to work on voluntary principles and guidelines that do not affect vital decisions,” he said. “It is no longer sufficient to think that human development is the responsibility of governments alone. We thought the same about climate change for years. We were wrong.”
Also attending the meeting were Robert Glasser, special representative of the Secretary-General for Disaster Risk Reduction; Selwin Hart, director of the UN’s Climate Change Support Team; and Mike McGavick, chairperson of the Geneva Association.