Climate Change Action

Prince Charles leads insurers to ‘war’ on climate change

Environmental Finance, 13 September 2007 - The UK insurance sector today launched a new initiative to tackle climate change and encourage more climate-friendly behaviour among customers (Video Intro).

ClimateWise, initiated by the Prince of Wales and developed by the Association of British Insurers, has attracted 37 signatories including the UK businesses of Swiss Re, Allianz and Aviva.

They have agreed to six principles (PDF) that will help the insurance sector deal with climate change risk. The companies have pledged to:

* analyse climate risk;
* inform public policy making;
* support climate awareness among customers;
* incorporate climate change into investment strategies;
* reduce the environmental impact of their business; and,
* publish an annual statement on actions taken.

Speaking at the launch in London today, Prince Charles said insurers had a crucial role to play in tackling climate change and applauded the companies for achieving an unprecedented level of co-operation on the issue.

“We have to think of this as if we were in a wartime situation. If you don't believe it, just watch Al Gore's film,” he said.

Coinciding with the launch of ClimateWise asset manager F&C launched a report (PDF), warning that some insurance companies have been slow to act and urgently need to develop climate change strategies.

Insurers must also engage with policy makers and regulators to bring about systemic changes, urged the report, In the Front Line: The Insurance Industry's Response to Climate Change.

Vicki Bakhshi, London-based associate director of governance and sustainable investment at F&C and co-author of the report, said: “Insurers are currently standing at a crossroads. If they don't act they are in real danger of becoming the victims of climate change, subject to ever increasing risks in their investment portfolios and claims that exceed their projections. However, it doesn't have to be like that.”

She warned that traditional risk models, which rely on historic data to price forward-looking risk, are likely to become unreliable owing to climate change. This could significantly affect the profitability of the sector, in which F&C holds investments.

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