By Amy Barnes ,
Head of Climate and Sustainability Strategy
Today’s proceedings were opened by UK Chancellor, Rishi Sunak, who is also the COP26 Ministerial lead. His speech highlighted the need for the financial sector to support the efforts outlined in the Paris Agreement — including the outcomes of global warming mitigation and the adaptations needed to cope with those climate changes that cannot be reversed.
The discussion highlighted examples of how climate finance has been used to support emerging economies, along with progressive ways that the finance sector can help ensure the ambitious COP26 goals.
The early afternoon session — “Financing a More Resilient World” — doubled down on this need, with speakers outlining a roadmap for greater action and mechanisms that support these ambitious plans.
There was also opportunity for the sector to demonstrate how they had mobilized both public and private finance to support developing countries and markets, as well as how they had used innovative approaches to manage climate risk.
On this hugely exciting finance-focused day, 95% of the top 20 developed countries have made pledges beyond their 2020 commitments of mobilizing US$100 billion for climate finance in developing countries, to provide them with better access to funding that will help them adapt to climate change and keep to the 1.5 degree target.
The banking sector has also played a key role in driving net-zero emission initiatives. Banks are making their portfolios “greener” by incorporating emissions metrics and targets into their risk appetite, and developing lending strategies and policies that support the energy transition and environmental, social, and governance (ESG) more generally.
From an insurance perspective, one of the highlights of the day was an event co-chaired by the Association of British Insurers (ABI) and ClimateWise (of which Marsh is a member) titled “Risk Sharing in the Climate Emergency: A call to action for insurers, regulators and governments.”
In conjunction with this event, the University of Cambridge Institute for Sustainability Leadership (CISL) launched a paper that proposed 20 concrete steps to urgently govern, manage, and reduce climate risks for a just, resilient transition to net zero in developing and developed countries to expand risk-sharing systems at scale.
Although climate-related finance is increasing, the mechanisms to access it are still slow and complex. In response to this, the Taskforce on Access to Climate Finance was created. It aims to support developing countries by creating green growth pathways to finance.
Insurance has always played a key role in supporting and enabling societal change; now it needs to use its tools, expertise, and resources to build societal resilience and help smooth the transition for all industries.
This blog is part of the COP26 series.