LONDON - Having extracted government action on exposure to terrorist attacks, the insurance industry must now press politicians for climate-change controls, one of its leaders said this week.
Most scientists say emissions of carbon dioxide and other "greenhouse" gases are causing a rise in global temperatures, which in turn are responsible for more frequent natural catastrophes that insurers must pay for. "The threats to our economies and lifestyles from climate change are no less consequential than terrorist threats," Carlos Joly, the chairman of the United Nations Environment Programme's (UNEP) insurance industry initiative, told Reuters in an interview.
U.S. President Bush, while leading a war against terrorism, has been criticised for rejecting the Kyoto Protocol and its mandatory targets for cutting greenhouse gas emissions, and proposes an alternative plan for voluntary reductions.
Without a reduction, insurers will be forced to protect themselves by cutting cover, leaving companies and individuals without insurance for the increasing number of weather catastrophes, said Joly.
Devastating forest fires in Australia and the U.S., floods in Brazil and Turkey, snow in central and southern Europe and a typhoon in Singapore provided further evidence in 2001 of catastrophic weather events caused by climate change, says Munich Re, the world's largest reinsurer.
Last year, according to statistics compiled by the World Meteorological Organization, was the second-hottest year since records began in 1860. The hottest was 1998, and nine of the 10 warmest years have occurred since 1990, it said.
SETTING GOALS
At a meeting in Rio de Janeiro next month, members of UNEP's insurance initiative will discuss what measures they have each taken to help tackle global warming and decide what issues they should concentrate on leading up to the September World Summit on Sustainable Development in Johannesburg.
Joly expects insurers to come up with a strong statement on the roles of business and government in controlling climate change for the "Rio +10" summit in South Africa, which will discuss how much progress has been made since the ground-breaking "Earth Summit" held in Brazil a decade ago.
But the industry does not speak with one voice.
"While most European insurance leaders accept that human action has caused global warming...the U.S. insurers buy into that claim much less," said Joly.
The prevailing consensus there on the environment is very different from that in Europe, he acknowledges.
That is illustrated by the fact that only two U.S. insurers signed UNEP's October 2001 Statement of Environmental Commitment by the Insurance Industry, compared to eight Russian insurers.
But a group of over 80 insurers from across the world have signed the commitment and are sharing their plans and experiences to create a benchmark for ways to tackle environmental problems.
FLEXING THEIR MUSCLES
Through their control of vast life insurance and pension funds, insurers are among the world's most powerful investors and can flex their muscles.
Joly is also senior vice president of the investment arm of Norway's Storebrand, which, like other insurers, is adopting 'green' investment criteria.
Joly said firms are setting up funds to invest in alternative energy companies, such as waste-to-energy producers, or creating products to trade carbon emissions.
The key principle, he said, of an investment philosophy in line with UNEP's idea of sustainable development is not to avoid polluting companies, but to choose the most responsible, the "best in class".
"You can't live without a chemicals industry, but you want one with processes and products that result in less pollution and toxic impacts."
Apart from being investment giants, insurers are also among the biggest real-estate owners, particularly of city centre office buildings, and are beginning to use this power to promote green building practices and energy efficiency in those they run.
But while there is now a greater awareness of environmental issues, Joly said the environment is just one concern that managers must deal with in a difficult economic environment.
"Its prominence on their agenda has increased during the past decade, but is still not overwhelming. Perhaps it should be more, but that is simply a fact of life," said Joly.
Only a major catastrophe - a major oil spill, big fire or devastating storm - would galvanise them to dramatic action, he said.:
