During the Disaster Risk in the Financial System session today (Monday 16 March) at the UN World Conference on Disaster Risk Reduction the insurance sector, represented by the International Cooperative and Mutual Insurance Federation (ICMIF) and the International Insurance Society (IIS), elaborated its commitment to its innovative planet-smart investments initiative. Under the initiative, the insurance industry has pledged to double its investments in planet-smart investments to USD 84 billion by December 2015 when the COP21, also known as the 2015 Paris Climate Conference, takes place. The insurance sector furthermore pledged to increase planet-smart investments tenfold to USD 420 billion by 2020.
In order to facilitate this, the insurance industry will define planet-smart investments and provide a framework which will enable the integration of disaster and climate risk and resilience considerations across all asset classes. The long-term goal of the initiative is to drive a major change in the behaviours and practices of the USD 30 trillion market of institutional investors within the insurance industry, which will shift how capital is invested so that it embraces the highest environmental, social and governance standards.
The planet-smart investments framework will incorporate the recommendations of the post-2015 framework for disaster risk reduction which has particular relevance to infrastructure and building investments; and in addition, it will incorporate the social impacts of investments, thus aligning with and promoting the SDGs which will be agreed later this year. The provisions of the framework will increase institutional investors’ understanding of disaster risk and emphasise the viability of community-based microinsurance projects that increase the resilience of the poorest segments of the most vulnerable populations.
Shaun Tarbuck, CEO of the International Cooperative and Mutual Insurance Federation (ICMIF), said: “The insurance industry manages a third of the world’s investment capital. Yet according to an International Finance Corporation (part of the World Bank Group) report in 2012 only USD 42 billion of this can be classified as green or climate-smart investments. As the most climate-risk aware sector in finance, insurers can lead the asset management world, by overlaying good capital disciplines to manage our own climate risk which must be understood and managed across all of our investments, and thereby creating the resilient cities, communities and assets we all desire.”
Photo: World Bank/Wu Zhiyi