New UN framework on climate risk includes business for first time

Reading time: 5 minutes
18 March 2015

LONDON: World leaders have just finalized new guidelines on how countries can address increasing natural disasters related to by extreme weather, inaction of which The Climate Group CEO Mark Kenber warns can have huge economic impacts. For the first time, the framework also shows how the private sector can boost its climate resilience.

A total of 186 governments attended Third UN world conference on Disaster Risk Reduction (DRR) in Sendai this week to discuss reducing disaster risk and prevention, and adopt the new 15-year-long global plan. It will replace the 2005 Hyogo Framework for Action (HFA) to be known as HFA2.

According to a United Nations report, the economic impact of natural disasters amounts to US$200-250 billion per year, which means more investment is needed to act on prevention, rather than on the post-disaster phase.

“If we combine the scientific impetus with the economic benefits of acting on climate change, there’s even less reason to delay action,” underlines Mark Kenber, CEO, The Climate Group. “Action saves money – and inaction costs money. A lot of money.”

The UN report points out that investing US$6 billion in disaster risk management strategies every year would generate total benefits, in terms of risk reduction, of US$360 billion - a 20% reduction of new and additional annual economic losses.

BUSINESS CASE

One of the pledges made by country leaders and stakeholders at DRR - which attracted several big companies and investors this year - was the need for closer collaboration between the public and private sectors to fund new emergency plans, improve the security of cities and tackle climate change.

As a result, for the first time, the framework includes the private sector in disaster resilience, in line with five suggestions the insurance industry made in a joint statement during DRR:

  • Creation of public-private partnerships is needed both at the local and national levels.
  • Insight, data and tools from the private sector can be used as the basis for the public sector to define rules to improve building safety.
  • The involvement of the insurance industry can provide necessary information to protect investment and economies, as all financial decisions are risk-sensitive.
  • Collaboration between the private and public sectors can raise awareness about DRR among the business community and civil society.
  • Models and analytics about risk management, which are already available in the insurance sector, can be shared with the public sector and drive new plans quickly.

CLIMATE RISK

The multi-national insurance company Swiss Re, a member of The Climate Group which is also committed to our RE100 campaign, attended DRR and signed the statement.

Ivo Menzinger, Head Global Partnerships Asia at Swiss Re told The Climate Group: "The establishment of healthy insurance markets is therefore another important element in the government toolbox, helping nations achieve their Hyogo Framework commitments. This is the part that helps speed up recovery and reconstruction, reducing the economic hiatus and loss of important development goals that disaster often causes."

During the UN Climate Summit last year, Swiss Re pledged US$10 billion in insurance capacity to improve the climate-risk management of both national and sub-national governments by 2020.

At this week’s conference, the Chair of the United Nations Office for Disaster Risk Reduction Private Sector Advisory Group Sandra Wu, commented: “We want the government – including local government – to realise that we, the private sector, are a resource and that we want to partner with you.

“We would like to ask local governments to call in the private sector as partners from the beginning not later, or otherwise we are limited in what we can do. We really want to play our part.”

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by Denise Puca

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