The insurance industry’s focus on risk is particularly salient considering the increasing impact of climate change on our daily lives. But there are a number of promising forces gaining momentum that could lead to real and positive change in the fight against climate change. In the spirit of Solutions Day at COP27, here are four signs of progress on the net-zero journey.
Worldwide investment in clean sources of energy is increasing after years of remaining flat. The International Energy Agency (IEA) projects that clean energy investment will exceed US$1.4 trillion by the end of 2022 and account for almost three-quarters of the overall growth in energy investment.
Renewable power is driving this positive trend. Despite rising prices due to global instability in energy markets, clean sources such as wind and solar power continue to represent the cheapest option for large-scale new power generation. Increased investment is also fueling improved efficiencies. The insurance industry has a key role to play in buffering the risks of investing in green energy infrastructure.
Gen Z are most likely to give up their funds and time to combat climate change, but people of all generations are mobilizing themselves to take action in ways that make sense to them. This increased awareness is also driving the growth of sustainability initiatives within businesses who are not only ensuring they keep up with the times but gaining a competitive advantage as well.
The Marsh McLennan Green Team, for example, is a global network of colleagues who are passionate about environmental issues and living more sustainable lives, both at home and in the office. The Green Team has revitalized a Brooklyn community garden, planted 100 ecologically-valuable trees in Puerto Rico and assisted beach cleanup efforts in Singapore. Sustainable initiatives aren’t just about doing social good though – candidates are increasingly asking us about our green credentials in the interview process.
People, companies, and nations are joining together in recognition of the need for cooperation against climate change. Denmark recently became the first developed nation to pay for loss and damage, pledging €13.4 million to help developing nations vulnerable to climate change. Of this sum, €4.7 million is earmarked for the subsidization of insurance in poorer countries.
In the UK, regulation is helping to protect against the threat of climate change. Some 97% of industrial sites complied with all environmental regulation that applied to them in 2020 and emissions of greenhouse gases from regulated sites have decreased by 50% since 2010. And governance frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) are helping to ensure that financial markets are informed by data on companies’ climate impact.
Human ingenuity is proliferating in response to the climate crisis. Radical and creative solutions to the problems presented by climate change are making a real difference. Technological strides often grab the headlines. For example, the world’s first commercial nuclear fusion reactor could be operational as early as 2040, paving the way for potentially unlimited sources of energy. But natural solutions are turning out to be just as effective.
Twenty-five years after it began, the reintroduction of wolves to Yellowstone National Park, for example, has not only helped to keep elk numbers under control but also improved the herds’ resilience to a more volatile climate. The success of this rewilding project has inspired others, such as the reintroduction of giant anteaters to Patagonia. Another example of the benefits of rewilding can be found in China, where millions of trees have been planted by farmers to help combat sandstorms and further desertification. This program will continue until 2050.
As we build resilience into our future, we must continue to use the levers available to us — be they financial, technological, or social — to support a smooth transition to a net-zero world.