At this time of year in the US most people's minds are focused squarely on the fast approaching Thanksgiving holiday after which attention moves swiftly to preparations for Christmas. Sandwiched between the two this year though is the Paris international climate conference or COP 21 as it's known to insiders. Here with a bit of luck and a strong tail wind - hopefully not too strong - the international community will finally agree to tackle climate change in earnest. It seems to have been a never-ending saga of whether an agreement will be reached or not but things are, dare I say it, looking quite promising.
In the past the US was accused of not being fully enough engaged in the process at a time when its leadership was much needed and often missing. Things have changed.
Whether for reasons of personal conviction or legacy cementing (most likely both) the Obama administration has, over the last couple of years been pulling out all the stops in the run up to the Paris conference. Whether it was the joint announcement with China a year ago on reducing emissions, or the highly significant Clean Power Plan to reduce emissions from existing power plants, the President has decided to take his place on the front grid as we speed toward Paris.
On the international level around 150 countries have submitted their commitments of action to tackle climate change prior to COP21. However, that may not be enough to get us to the point experts tell us we need to be; with temperature increases kept to a maximum of 2 degrees Celcius above preindustrial times. It's not just the scientific community sounding the warnings. Prominent leaders from the insurance industry have been just as vocal and insist that the 2 degrees target is no joke. A world at +2C should remain insurable much above that might not be.
From my perspective all this underlines the need for something serious to come out of Paris. It's been said a thousand times before, and business support has gained a lot of momentum for it – we need to price carbon and Paris needs to increase the likelihood of this happening. Business can work with a price on carbon so we need to put things in economic terms (what 450 ppm of atmospheric carbon concentrations means is harder for us to decipher). We also need COP21 to deliver a mechanism to ensure that country commitments are ramped up over the next few years and that the commitments are actually delivered. We don't have the luxury of being able to take a "wait and see" approach. And, finally, we have to remember that climate change is a thing of the present and not just the future. Understanding how the international community plans to enhance resilience to severe weather, and the financial mechanisms to support this, is key.
So, with just a few days until the Paris conference is opened on November 30 we in the insurance industry should be crossing our fingers for a successful outcome. With global warming kept at bay, insurance will continue to play an important part in strengthening disaster risk resilience by providing a mechanism to compensate those financially affected by severe weather.
Equally, with an agreement there will be a huge boost in the creation of a market for carbon friendly products globally. This will include insurance as investment is driven into clean energy projects and other new technologies that will all face risks needing insurance industry expertise to help manage them. Perhaps the insurance industry can even help with the estimated $50 trillion that's needed to invest in global energy infrastructure by 2035. With around $30 trillion of assets under management, the insurance industry has some of the deepest pockets if ways are found to unlock them for such investment purposes.
So, once the Thanksgiving dishes have been washed, and decisions taken about what to do with the left-over turkey, tune into COP 21 (and keep your fingers crossed)… Read more in my interview with our partners, the Climate Group, in the attached video and link below.
Category: Climate/natural disasters: Climate change, Disaster risk, Resilience