the involvement of insurance companies in climate finance: tackling a global challenge by investing...
TRANSCRIPT
S
The Involvement of Insurance Companies
in Climate Finance:
Tackling a Global Challenge
by Investing in Local Solutions
Francesca Romanin Jacur Milan [email protected]
Plan of the presentation
A Dynamic International Regulatory Framework
Climate finance
The Increasing Involvement of the Private Sector
Challenges and Opportunities for (Re-) Insurance Companies
Climate Change basic glossary
Mitigation: reducing GHG emissions
Adaptation: managing the effects of climate change, reducing vulnerability of human and natural systems
The target: the global scientific community (IPCC) calls for limiting global warming to 2o C above 1990 levels Current pledges to reduce emissions meet ½ of the
emissions needed
Towards a “low carbon economy”…
Climate Change Regime: the UN Framework Convention
and the Kyoto ProtocolUNFCCC (1992) : Stabilization of greenhouse gases (GHG) concentration
KP (1997) : by 2012: global GHG reduction target of -5%. Shortcomings deriving from limited active
participation (no USA, no commitments by emerging economies – China, India, BRIC)
Post 2012: … ongoing negotiations!
COP meetings and the crisis of multilateralism, but what’s the alternative?
Climate change regime financial pledges: (nonbinding political agreement) 100 billion every year by 2020 (long term finance) 30 billion of fast start finance in 2010-2012
Climate Change Regime Architecture
UNFCCCCOP
KPCOP/MOP
Secretariat
IPCCSB for
Technical Advice
Compliance
Committee
World Bank
SB for Implementati
on
LDCFund
GEF
SCC Fund
Grenn Climat
eFund
IET CDM JI
Adapt.
Fund 2% of levy on proceeds
Climate finance
Working Definition: The channeling of public resources (towards developing countries) (for mitigation & adaptation) through frameworks and mechanisms that leverage private sector capital, and are in line with national development goals.
Many sources: 50 international public funds, 6000 private equity funds, carbon markets, taxes, Clean Development Mechanism)
Challenges: Catalyze new investment into climate mitigation and
adaptation sectors Develop new products with replication potential across
markets and geographies
Combining Developing Countries and the Private Sector Needs
Gaining the trust of Developing Countries• … and of the Private Sector
Need of coordination among financial institutions (national, bilateral, international)
Trust in institutions and their procedures (Consistency of funding resources, transparency and inclusiveness, legitimacy)
The impact of the financial crisis
The need to conciliate different interests: Effective mitigation and adaptation action and environmental
integrity Economic development and poverty reduction in Developing
Countries Economic gain for the Private Sector
Financing Adaptation
GOALS: Generate new finance Design and distribute goods and services that reduce
vulnerability of individuals and communities to climate change Provide risk management tools
TOOLS: Drawing on capital markets to raise new finance for adaptation
(climate bonds) Direct credit lines to local finance institutions Innovative means: microfinance
The role of insurance companies
Risk Reduction and Insurance Catastrophe prevention, Risk assessment,
emergency responses
Low rate of insurance penetration in developing countries
Technical assistance for setting up innovative financial products, programmes or services for the low carbon energy sectors
Climate Risk Management by the Insurance Sector
Public-private partnerships With International Financial Institutions (World Bank) At the country level
Index-based insurance solutions
Case studies
Challenges and opportunities of implementing climate insurance
