Change from the bottom up

The United Nations Climate Change Conference came to an end 32 hours later than originally planned. Participant Karsten Löffler, Managing Director of Allianz Climate Solutions, shares why he believes important steps were taken both in and outside of the negotiation room.

 

Climate Change or Climate Talk: How much change can we see as an outcome of the Lima conference? 

 

Karsten Löffler: Lima was a very important step to COP21, the UN Climate Change Conference in Paris next year, where the goal is to achieve a new global climate treaty. The good news is that consensus between the more than 190 countries was reached at all. The bad news is that despite the optimism created by the recent bilateral deal on emissions between the US and China, the decades-old split between richer and poorer countries saw a revival. However, there are signals the divide is going to decrease over the next years. But I’m seeing an important mind shift taking place outside of the negotiation rooms. Already today, around 40 countries and regions have introduced a price on carbon emissions. In a meeting with Ban Ki Moon, the Secretary General of the United Nations, business leaders from both the industrial and the financial sector reiterated their support for the World Bank’s initiative for putting a price on carbon. Government-related pension funds are the most outspoken in their support of the initiative, because they see carbon as one of the biggest risks in a long-term investor’s portfolio.

 

 

How much chance does the carbon pricing initiative stand, in your view?

 

The initiative already has support from more than 70 governments and over 1,000 companies. Even German Chancellor Angela Merkel is supporting it. The Paris summit in 2015 will most likely not impose on countries how they have to achieve emission reductions. At the same time, though, many governments and companies are in favor of change. Many of them are working together towards merging the various carbon pricing schemes to a globally applicable one. A bottom-up process, if you will. The international process would do well in supporting this appetite for change wherever possible.

 

 

Some of the world’s least developed countries are among those worst affected by climate change. What kind of support can investment and insurance companies like Allianz offer to these regions?

 

Insurance companies are key players in risk assessment and risk transfer. Reinsurance companies have already started to support national and local governments in assessing and managing their climate-related risks. This needs further scaling up: we need to establish trust and seek closer cooperation with national governments. There are already several great examples, like the African Risk Capacity, which supports African Union countries in preparing for and responding to extreme weather events and natural catastrophes. Or the World Bank’s weather and oil-price insurance for the Uruguayan state-owned hydroelectric power company. These examples are just the beginning. Allianz Risk Transfer is already successfully offering its broad expertise in managing weather risks. However, there is still a gap between the overall losses and damages and what is actually insured, especially in developing countries. Closing this gap requires a joint effort from the private sector, governments and development agencies. The time to act is now, as the amount of damage from extreme weather events is likely to increase with climate change.

Karsten Löffler: "The time to act is now."
Karsten Löffler: "The time to act is now."

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


 

Nicolai Tewes
Allianz SE
Phone +49.89.3800-4511
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