The frequency and intensity of natural catastrophes are increasing such that the UN has declared a climate crisis. We are here to support the insurance industry in working with legislators, businesses, communities and individuals to reduce all climate change risks.
Climate change risks can be broken down into three categories: physical risks (damage directly caused by meteorological and climatic incidents), transition risks (risks resulting from adjustments made for a transition to a low-carbon economy) and liability risks (risks related to the financial impact of claims).
197 countries have signed the Paris Agreement to date. They have pledged to transition to a low carbon economy by taking measures to limit the global temperature increase to 1.5 degrees C by 2050. The UK has gone further and has legally committed to reduce the UK’s carbon emissions to “net zero”, namely to release virtually no increase in carbon emissions by 2050.
Physical risks will increase due to the frequency and intensity of natural catastrophes. However, transition risks are also on the rise because of the global commitment to transition to a low-carbon economy.
The UK and Italy will be hosting the next global climate summit, known as COP26 (26th Conference of the parties) in Glasgow next year. The goal is to obtain agreement from all countries to commit to further cuts in carbon emissions by 2030 and to reach net zero emissions as soon as possible and no later than 2050. As such, it is described as the most significant climate event since the Paris Agreement. COP26 will focus on the global achievements of this transition to a low-carbon economy and is therefore aligned to this campaign.
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Climate change was once the concern primarily to carbon emitters. It is now an issue that all entities and every board should address; failure to do so could be very costly.
John Bruce, Partner