"Forests mean effective climate protection"

Allianz has expanded its investment in climate protection. With the help of Allianz, a forested area in Borneo. Indonesia, the size of a major city will now be protected against the threat of deforestation by the palm oil industry. "This will enhance sustainability and provide us with a yield," explains Karsten Löffler, Managing Director of Allianz Climate Solutions.

 

Mr. Löffler, why is Allianz committed to climate protection?

 

Karsten Löffler: Allianz and its customers are directly affected by the consequences of climate change - in the insurance business as well as in the investment area. However, we don't only see risks, but also considerable opportunities.

 

 

Opportunities? Such as?

 

There is hardly any other market that over the next ten years and beyond will see such rapid and sustainable investment growth as climate change and the decarbonization of our economic processes, and they need it. In order to limit climate change to an acceptable level for all of us, the industrialized nations will have to reduce their emissions by up to 95 percent by 2050.

 

As an insurer, we are concerned about the question of whether and how the ever increasing losses from natural catastrophes can still be insured in the future. Global warming leads to a higher frequency of storms and floods. Moreover, the risk awareness of our customers is on the rise, particularly in growth regions such as Asia. As a result, the volume of insured property is also rising.

 

 

There are also scientists and politicians who say they doubt climate change. What do you say to these doubts?

 

Allianz is a risk manager. Evaluating the development of risks and then finding solutions for our customers is the most fundamental part of our business. Risk management is all about using any room for maneuver you have, as long as there is any left. As a rule, this room is larger the earlier you start to act. If we only start to accept climate change once all the scenarios have become reality, it will not only be too late, but managing the consequences will also become considerably more expensive.

 

We consider the risk of climate change serious enough for us to deal with it systematically and with determination.

 

 

Allianz is already among the biggest investors in renewable energy. Now you are investing in a rain forest in Indonesia. What contribution is Rimba Raya meant to make to climate change?

 

A simple and, above all, immediately effective one! Forests are the world's most important carbon sinks. Tropical forests cover around 15 percent of the Earth's surface and store approximately a quarter of the CO2 captured in the Earth's biosphere. They are also of central importance for sustainable water management, meaning that they have a twofold cooling effect. So conserving them is one of the most effective climate protection measures.

 

Rimba Raya, like our Kenya investment last year, is a so-called "REDD Project" (reducing emissions from deforestation and forest degradation). Both investments don't simply protect threatened forests, they also involve the local population and provide them with a source of livelihood.

 

In addition to that, in Rimba Raya we can inherit a rehabilitation center for orangutans.

Karsten Löffler: "There is hardly any other market that over the next ten years and beyond will require and experience such rapid and sustainable investment growth as climate change and the decarbonization of our economic processes."
Karsten Löffler: "There is hardly any other market that over the next ten years and beyond will require and experience such rapid and sustainable investment growth as climate change and the decarbonization of our economic processes."
Löffler: "Our REDD investments don't simply protect threatened forests, they also involve the local population and provide them with a source of livelihood. In addition to that, in Rimba Raya we can inherit a rehabilitation center for orangutans."

Löffler: "Our REDD investments don't simply protect threatened forests, they also involve the local population and provide them with a source of livelihood. In addition to that, in Rimba Raya we can inherit a rehabilitation center for orangutans."

And what does Allianz get out of this?

For the CO2 stored by the forests we receive certificates with which Allianz and other buyers can offset the CO2 emissions they are unable to avoid or only at a very high expense. In this way, Allianz ensures its climate neutrality and at the same time makes a worthwile investment. But for us, the return on this investment also includes climate protection and the maintenance of biodiversity. Through our investment in the Rimba Raya project in Indonesia we can prevent the emission of 90 million tons of CO2 over a 30-year period. This corresponds to the emissions from around 300,000 households.

 

Why does Allianz make its climate investments in developing and emerging countries?

The people in many of these countries are those most severely affected by the consequences of climate change and those who are least protected from them. Here we can play a dual role by contributing to the economy's development and simultaneously raising the local awareness for environmental protection. Rimba Raya will allow us to send a message against the trend of brutal deforestation.

 

What is necessary to promote further climate investments?

According to the United Nations, 98 percent of Indonesia's forested areas are threatened, predominantly through the growing worldwide demand for palm oil. Projects such as Rimba Raya depend on the demand for CO2 certificates in industrialized nations and can make a small contribution. All in all, though, not enough is being done to prevent global warming from increasing by more than 2°C by the end of the century . To do this, we need reliable local conditions that give investors attractive incentives and security.

1 Reducing CO2 emissions which are incurred through deforestation and destructive use of forests.

 

2 Clean Development Mechanism (CDM) - for developing countries only. Certificates are called CERs (Certified Emission Reductions). Also Joint Implementation (JI), in annex 1 as well - signatories of the Kyoto agreement - i.e. industrialized countries. Certificates are known as ERUs (Emission Reduction Units). Due to questions of method, REDD projects have not yet been integrated into the regulated market.

 

3  Voluntary Carbon Market, certificates are called VERs (voluntary emission reductions). In 2012, projects related to forest protection and land usage had a 32% share of the voluntary market and, more specifically, REDD projects and "prevented forest conversion" had a 9% share. Source: Forest Trends' Ecosystem Marketplace. State of the Voluntary Carbon Markets 2013.

 

4  Established standards like, for example, "Verified Carbon Standard" (VCS), "Climate, Community and Biodiversity Standard" (CCBS) and "Gold Standard" (GS) certify the quality of the projects on offer.

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:

 

Disclaimer

Nicolai Tewes
Allianz SE
Phone +49.89.3800-4511
Send email