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Climate Change Risks and Opportunities

Climate Change Risks and Opportunities. Oliver Dudok van Heel. Climate Change & the Financial Sector: An Agenda for Action. Andrew Torrance, CEO Allianz Cornhill London, December 2, 2005. Agenda. 1 Facts on Climate Change 2 Climate Change & the Financial Sector

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Climate Change Risks and Opportunities

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  1. Climate Change Risks and Opportunities Oliver Dudok van Heel Investing in the Future London, December 2005

  2. Climate Change & the Financial Sector:An Agenda for Action Andrew Torrance, CEO Allianz Cornhill London, December 2, 2005 Investing in the Future London, December 2005

  3. Agenda • 1 Facts on Climate Change • 2 Climate Change & the Financial Sector • 3 Agenda for Allianz Action Investing in the Future London, December 2005

  4. Agenda • 1 Facts on Climate Change • 2 Climate Change & the Financial Sector • 3 Agenda for Allianz Action Investing in the Future London, December 2005

  5. Facts on Climate Change The Facts • Hurricane activity increased- Katrina costs: $60bn for insurance industry and $470m for Allianz Group • Weather disasters are hitting Europe hard • - 1999 storms, 2002 floods, 2003 heat wave • Governments react by curbing CO2 emissions Investing in the Future London, December 2005

  6. Facts on Climate Change The Facts Global Warming Temperature Rise over Past 100 years Source: IPCC Investing in the Future London, December 2005

  7. Agenda • 1 Facts on Climate Change • 2 Climate Change & the Financial Sector • 3 Agenda for Allianz Action Investing in the Future London, December 2005

  8. Facts on Climate Change The Impact • Climate change increases claims for insurers • Climate change could have an impact on mortality and diseases • Climate policy can change investment portfolio and share price • Climate related risks can have an impact on all financial services Investing in the Future London, December 2005

  9. Climate Change and the Financial Sector New Risks, New Demands • Insurance - climate change related losses are rising at 2- 4% per year - larger, more frequent natural catastrophes • Banking - credit risk is increasing due to uncertainty - potentially large new “climate change markets” in emissions trading, re- newables, weather derivatives • Asset Management - climate change is a mainstream risk and not a socially responsible investment(SRI) issue - climate policy can alter the risk profile of companies Investing in the Future London, December 2005

  10. Agenda • 1 Facts on Climate Change • 2 Climate Change & the Financial Sector • 3 Agenda for Allianz Action Investing in the Future London, December 2005

  11. Risk Mitigation and Investment Opportunity The Agenda for Allianz Action • Address climate change at board level and put it on a par with other business risks when taking decisions • Screen climate change risks in our business through an internal task force • Increase investment in renewable energy sector by 500 million euros over the next years. Investing in the Future London, December 2005

  12. Climate Change andthe Financial Sector New Solutions • Awareness raising through risk consultancy: Consulting with clients and governments • Product Development: Upgrading to environmentally friendly technology • Climate Change and Poverty: Can micro-insurance provide a safety net against natural catastrophes? Investing in the Future London, December 2005

  13. Tackling Climate Change: A View from the Finance Sector Karina Litvack F&C Asset Management plc Investing in the Future London, December 2005

  14. Debate • Why don’t companies invest more in clean technologies? • Why don’t investors channel more capital to clean technologies? • What does business want to do about Climate Change • What does business want from government? • How can the market be used to crack this problem? • What has worked before? Investing in the Future London, December 2005

  15. Agenda • Introduction: Who is F&C • Investors and Climate Change • Where we were and where we are • What next? • Market failure • The Business of Politics • Mobilising the markets • Debate Investing in the Future London, December 2005

  16. Who is F&C Asset Management • No. 4 UK asset manager – Top 15 in Europe: • €190 billion Assets Under Management (£129.9 billion as at 30.09.05) • Global investor • Long-term holdings: Pensions & Life Assurance • Specialist in Governance & Sustainability • Growing activism of investment community • Governance scandals • Client and regulatory pressure to ‘mind the store’ • Engaged shareowners: Dialogue and Advocacy Investing in the Future London, December 2005

  17. Where we were Governance Risk Assessment Policies Strategy Targets Disclosure Energy efficiency Products Public Relations Where we are An impasse Risk/Reward ratio Investment Horizon Lack of policy clarity Market failure Political paralysis EU ETS Investors and Climate Change Investing in the Future London, December 2005

  18. What next? • Market failure • The Business of Politics • What has worked • Health & Safety regulation: non-tradeable • SOx and Acid Rain: tradeable • Mobilising the market • Success of ETS in changing Utility Sector valuations • Impact of oil prices on Renewables IPOs Investing in the Future London, December 2005

  19. What next? • The Business of Politics • Has Governance implications • …for Business • …for Government • The Politics of Litigation • When rules and markets fail • Costly & disruptive • Global trading markets • Corruption Investing in the Future London, December 2005

  20. Climate Change Risks and Opportunities Questions? Investing in the Future London, December 2005

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