100 days after COP26

It has been 100 days since COP26 – the meeting in Glasgow we all pinned so much hope on to make progress on climate change. And even in that time, several outbursts of extreme weather have reminded us of what a warmer climate may bring and how important action is.

The warmest ever December created the conditions for a devastating spate of storms and tornadoes in the US. Neighbourhoods were razed and people lost their lives across states including Arkansas, Tennessee, Missouri and Kentucky.

In Malaysia, tens of thousands of people were displaced by massive flooding, with the government drawing criticism over how ill-prepared the country is for such disasters. Similarly, floods in Brazil have also forced many out of their homes, and have affected the commodity market so vital to the country’s economy.

In the Northern hemisphere, powerful winter storms wreaked havoc across the British Isles and northern Europe, and a fierce snowstorm brought sustained blizzard conditions to the US East Coast and Canada at the beginning of this year.

These natural catastrophes and severe weather events are increasing in severity and frequency. Global insured catastrophe losses hit USD 112 billion in 2021 – the fourth highest on record. The costliest event of the year, Hurricane Ida and the remnants of torrential rain it brought to the US Northeast, was a stark reminder of the peril presented by extreme weather hitting densely populated areas.

While we cannot attribute a single natural catastrophe event to climate change, climate change is creating the conditions for more severe weather impacts.

Climate change also poses the biggest long-term risk to our economies, since our prosperity and wellbeing are tightly tied to the state of the natural world.

We therefore need decisive, immediate and coordinated action across the globe to prevent us careering headlong into a planetary disaster and all the economic implications that will bring.

Businesses and governments must start putting the health of our planet at the heart of everything we do.

Fundamentally reshaping the global economy to be “planet first” is a challenge too big for any one group to tackle alone. We need collective action now to limit emissions and protect our fragile biodiversity. Without it, the cost will be great to economies and society.

Decarbonisation is certainly easier for some industries than others. However, if we are to reach net-zero, then all companies must take action.

The insurance industry has a vital role to play in this regard – both by spreading best practice and paving the way for other industries, and as an enabler for the investment and innovation necessary to make carbon reduction and removal a reality.

The UN-convened Net-Zero Insurance Alliance, of which Swiss Re is a founding member, is a prime example of this. Together with other industry leaders, we are committed to reducing our carbon emissions in our underwriting portfolio to net-zero by 2050. We will also set science-based intermediate targets every five years on the road to 2050. We aim for our own portfolio to reach net-zero by 2025.

Through targeted underwriting and risk transfer, we can support the transition to a low-carbon economy. And as an industry we can help get us back on track for the Paris Agreement commitments that too many have strayed from.

A guiding framework for the private and public sectors is necessary because although there are promising signs of action – with a growing number of companies putting in place sustainability plans – we need to do more, and faster. We are a long way off meeting the Paris goals, so we must accelerate change and scale up solutions as a priority.

This means us all working together to drastically cut our carbon emissions.

It also means recognising how nature-based solutions can complement and multiply our reduction and removal efforts: these must be maximised if we are to meet net-zero targets.

But we continue to undervalue biodiversity and ecosystem services, which, as well as being important economic drivers, are also key tools in helping us limit the impact of climate change.

And even if we manage to reach net-zero by 2050, a lot of work will still be needed to keep emissions net-negative. So, we not only need to double down on carbon reduction efforts, but we also need to massively ramp up the technologies that can remove CO2 from the atmosphere. Our carbon removal industry is still nascent – but by 2050 we need to be able to remove 10 billion tonnes of carbon dioxide from the atmosphere every year. That’s a quarter of what we currently emit every year.

We can only do this together and support industries in their transition. One such effort is to help the shipping industry transition to net zero. This is a massive endeavour, in which the insurance industry plays a key role. The Global Maritime Forum (GMF), together with Swiss Re, has developed the Poseidon Principles for Marine Insurance (PPMI). The Poseidon Principles require signatories to quantitatively assess and disclose their absolute carbon emissions in a standardised way.

Climate change presents the biggest challenge we face as a society, but it is one we must all step up to. Under the current global temperature trajectory, we estimate that rising temperatures could cut global GDP by as much as 14% by 2050 – that’s equivalent to USD 23 trillion – compared with a world without climate change.

Governments and the private sector can no longer drag their feet. Our planet is suffering, and the longer we take to decarbonise and protect precious biodiversity, the greater the cost will be. Partnerships across and beyond the insurance industry – including existing coalitions like the Net Zero Insurance Alliance – offer a real opportunity to turn things around.

All we need to do now is seize it.