By Roddy Langley
As it becomes increasingly clear that nobody can predict exactly what impact climate change will have on the planet, concerns are growing as to how well the world’s Governments are working together to tackle the problem.
In an article this week in The Times, an international team of researchers concluded that, for the past seven years, the rate carbon dioxide is being released into the atmosphere is an astonishing 35% more than most climate change models have allowed for.
These findings were so worrying that they made previous widely accepted forecasts of climate change seem unduly optimistic, commented Professor Nicholas Owens of the British Antarctic Survey (BAS). The question of whether change may take place faster than previously thought was also highlighted by Lloyd’s in its report Adapt or Bust last year.
In this context of increasing uncertainty, what is perhaps of even greater concern is the apparent lack of co-ordination amongst the world’s governments to tackle the issue. John Llewellyn, senior economic policy adviser at Lehman Brothers, recently painted a damning indictment on this in a recent article in the Financial Times, claiming that whilst finance ministries of different Governments endeavour to get a grip on climate change policy, “the picture that emerges is of piecemeal, disorganised policymaking, reminiscent more of Soviet central planning than of modern market economics.”
It seems clear that the business community can play an important role here. British Prime Minister Winston Churchill once famously asked for the tools to do the job, and a good example of how government and business have combined their own knowledge and expertise is the ClimateWise initiative launched in September.
Providing a framework enabling insurance companies worldwide to build climate change into their business operations, the ClimateWise principles are practical and, hopefully, far reaching. They include working with policy makers to develop economies resilient to climate risk, helping achieve national and global emissions reduction targets, and supporting government action and regulation to ultimately reduce the environmental impact of infrastructure and communities.
According to Nick Bennison of Marsh’s Environmental Practice, there can be significant upside to a robust environmental policy, but tackling environmental risk the wrong way could result in the costs outweighing the benefits.
“This is where the risk and insurance industry can play a key role, helping identify, quantify and understand the main sources of environmental risk and the potential impact. The industry is uniquely equipped and positioned to understand the effects and interdependency of a wide range of risk factors.”
While John Llewellyn points out that climate change policy is an economic issue requiring a global policy approach with governments looking to achieve their ends at the lowest cost, “they need to conduct policy discussion and formulation in a forum where they are used to co-operating and there is a combination of economic and energy expertise.
“If it is time to do anything about global warming, then it is time for treasuries to get a grip, individually and collectively.”
