Risk community needs to bring ‘enormous knowledge’ to bear in climate change battle

The risk management community has a big role to play in efforts to tackle climate change by offering its “enormous knowledge” and supporting the strong partnership needed between public and private bodies, according to experts gathered to discuss this critical topic during Ferma’s seminar in Antwerp this week. Risk managers from across Europe met in Belgium as the UN’s Intergovernmental Panel on Climate Change (IPCC) issued its sternest warning yet on the risks of rising global temperatures. The scientific evidence suggests that the world is now completely off track, and is heading for a rise of 3°C rather than the target agreed within the Paris Agreement in 2015 of 1.5°C. The IPCC’s report highlights a number of climate change impacts that could be avoided by limiting global warming to 1.5°C, compared to 2°C or more. The body stated that by 2100, global sea level rise would be 10cm lower with global warming of 1.5°C compared to 2°C. The likelihood of an Arctic Ocean free of sea ice in summer would be once per century with global warming of 1.5°C, compared with at least once per decade with 2°C. Coral reefs would decline by 70% to 90% with global warming of 1.5°C, whereas virtually all would be lost with a 2°C rise. The Paris Agreement, adopted by 195 nations at the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change in December 2015, aimed to strengthen the global response to climate change by "holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels”. The latest IPCC meeting held in Korea at the weekend was preceded by a dire warning from the Organisation for Economic Co-operation and Development (OECD) that most governments have failed to meet their Paris Agreement commitments and need to “get serious” to avert disaster. “Three years on from the commitments made at COP21 in Paris, the overwhelming majority of governments have not taken the necessary action to contain growing risks to the climate. With emissions on the rise again, OECD governments need to get serious about shifting their economies to a low-carbon model and stop investing in carbon-intensive infrastructure,” stated the OECD. As it presented an OECD-UN Environment-World Bank Group report – Financing Climate Futures: Rethinking Infrastructure – in New York, the OECD pointed out that only nine of the 180 signatory countries to the Paris Agreement have submitted their long-term low-carbon strategies for 2050. Meanwhile, the OECD pointed out that governments continue to spend half a trillion dollars a year subsidising oil, coal or gas, and most have not broken their budgetary dependence on revenues from fossil fuels. Governments are also failing to make enough use of public spending as a lever to decarbonise economies by investing in low-emissions infrastructure and innovation. “After all the promises made in Paris and despite having all the tools we need at hand to move forward, this inertia risks us losing the war on climate change,” said OECD secretary-general Angel Gurría. “Governments need to implement their pledges in full and then scale up action if we are to keep the global temperature rise below 2°C. We would like to see OECD countries taking the lead and setting an example for others,” he said. Experts gathered by Ferma this week agreed that everyone needs to seriously step up their efforts to both mitigate and adapt to climate change. Risk managers have a role to play, they said. Ernst Rauch, global head of climate and public sector business development at Munich Re, told delegates during a panel discussion on climate change that risk managers have expert skills and knowledge that need to be brought to the table. “The focus needs to be on mitigation as well as adaption. But if you were to ask me where to place the emphasis I would say on adaption, because we are on the way to losing the mitigation battle. Emissions have not dropped by enough and the fact is that CO2 emissions stay for 100 years, so it will continue to warm up over the next few generations,” he told delegates. “It is no excuse to hide behind a lack of data. To raise resilience needs a true partnership between the public and private sectors and the key is the enormous knowledge that the risk management community has, and this needs to be made available at all levels,” added Mr Rauch. Manouelle Lepoutre, executive vice-president of sustainable development and environment at French energy giant Total, stressed the critical role of partnership and cooperation in the bid to tackle climate change. She said that Total had teamed up with its rival energy companies to pool their vast resources in an unprecedented manner during recent times, and that this has to be the way forward. Total is a member of the Oil and Gas Industry Initiative (OGCI). It is a voluntary CEO-led programme that uses the collective strength of the world’s leading energy firms to lower the carbon footprints of the energy industry, transportation and wider value chain. Only last month, the OGCI announced a big step forward as it welcomed three new member companies from the US – Chevron Corporation, Exxon Mobil Corporation and Occidental Petroleum – that together represent 5% of global oil and gas production. OGCI members now represent about 30% of global oil and gas production, and supply close to 20% of global primary energy consumption. Ms Lepoutre stressed that such partnership is essential if any progress is to be made on climate change. “It is not true to say that this is a public or a private matter, this is for everybody. Without public and private sector partnership and sectoral cooperation in key areas such as the energy market, this will not be solved. We have to be innovative and seek solutions more than in the past. This involves hard work but the oil and gas industry now has a coalition that not only has put $10bn on the table but also a commitment to innovate together. This would have been unimaginable ten years ago. But without this kind of cooperation we will not succeed,” she said. Elena Visnar Malinovska, head of unit, adaptation to climate change at the European Commission, agreed with Ms Lepoutre that the climate change challenge requires an “unprecedented” level of cooperation. “Climate change is a huge issue and it is really important that the public and private sector are aligned. The window of opportunity is closing. It seems we are on the path to 3°C or even 4°C emissions. The global research community recently met in Korea to review 2,000 papers produced on the difference a mere 0.5°C would make. That is the difference between what was committed to and what was actually achieved, and it makes a tremendous difference,” she said. Ms Malinovska said the focus needs to be on adaption and mitigation, because the impact of rising emissions is already being felt and will not go away anytime soon. “It is clear that this is still doable. But it will take an unprecedented level of collaboration between the public sector, private sector and individuals worldwide. We have to cut emissions and mitigation is clearly the best option, but we have delayed this for too long to make a difference…Climate change needs to be among all the other key risks on the agenda – it is definitely not one for the future because it will be too late,” she said. Speakers at the Ferma event also said it is critical to show the positive economic benefits that can result from tackling climate change. This is a key point raised by the OECD in its latest report, Financing Climate Futures. The OECD says there has been some progress on green financing. For example, the green bond market has ballooned by 1000% in the five years to 2017 and transparency around climate risk is improving. But the OECD says much more needs to be done and governments must adopt a more transformative agenda on financing a low-carbon future. “OECD analysis has shown that shifting infrastructure investment into low-carbon options combined with structural reforms to support the transition could actually increase global GDP by as much as 5% by 2050, rather than posing a threat to economic growth. That includes the effects of lower risks of damage from extreme weather events. The cost of shifting from brown to green infrastructure would be more than offset by fuel savings. Yet little has been done by central governments to level the playing field between high- and low-emission alternatives,” states the OECD. “As things stand, power plants currently under construction or in planning will lead to a near doubling of emissions from power generation. Incentives to shift to green energy and infrastructure, and disincentives to emit in all sectors, remain weak,” it adds.

Risk community needs to bring ‘enormous knowledge’ to bear in climate change battle

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