Alister Doyle Reuters 12 Jan 11;
OSLO (Reuters) - Major financial firms feel they lack information about climate change to help clients manage increasing risks ranging from heatwaves to rising sea levels, a U.N.-backed study showed on Wednesday.
"Climate expertise is an emerging factor of competition," according to the survey of 60 insurers, banks and asset managers including Aviva, Banco Santander, Deutsche Bank, Mitsubishi UFJ and Citigroup.
"More than half of the respondents feel that the level of information today is not sufficient," according to the study by the U.N. Environment Programme's (UNEP) Finance Initiative, sponsored by the German Ministry of Education and Research.
Better information could help financial institutions to assess and adapt to increases in floods, heatwaves and droughts as well as creeping threats such as higher sea levels and the encroachment of desert, projected by the U.N. panel of climate scientists.
Respondents reckoned the risks of climate change were likely to increase.
"To date, the key role financial institutions and other private sector decision-makers can play in increasing the climate resilience of economies and societies has been neglected at best," said Paul Clements Hunt, head of UNEP's Finance Initiative.
MATTER OF TRUST
"The relevance of climate data and their interpretation for business purposes will play a more and more important role," Ernst Rauch, head of the corporate Climate Center at Munich Re, said in a statement.
Respondents most wanted to know how far they could trust predictions and statements about the climate, closely followed by calls for more detailed regional climate projections.
The study showed 89 percent of financial groups operating in Africa felt inadequately informed about the regional climate risks. Percentages were lower on other continents, with just 56 percent feeling inadequately informed in Europe.
Respondents reckoned there was a lack of knowledge about the impacts of climate change on individual business sectors, including healthcare, chemicals, tourism and mining.
The credibility of the U.N. panel of climate experts has suffered after its latest report in 2007 exaggerated a thaw in the Himalayas. Expert reviews, however, have endorsed its main conclusion that climate change is very likely man-made.
(Editing by David Hulmes)
Current climate information insufficient, say world's financial institutions
UNEP 12 Jan 11;
Frankfurt/Geneva/Nairobi, 12 January 2011 - The availability of and access to climate change information remains insufficient, according to many of the world's leading financial institutions. A pioneering study launched today confirms the increasing financial relevance of climate change and the fact that insurers and lenders need better information regarding the physical and economic impacts of the world's changing weather patterns.
The report, sponsored by the German Federal Ministry of Education and Research, presents the results of an international survey undertaken by the Climate Change Working Group (CCWG) of the United Nations Environment Programme Finance Initiative (UNEP FI) and the Sustainable Business Institute (SBI), Germany. More than 60 institutions, from both developed and developing countries, took part in the survey.
Financial service providers and their customers are increasingly affected by the impacts of climate change, such as extreme weather events. Moreover, the survey shows that insurers, reinsurers, lenders, and asset managers expect these kinds of risks to increase in the future.
Given that financial institutions are able to influence their clients and investee companies across all sectors of the economy, they can play a key role in accelerating the implementation of adaptation measures by the private sector.
But in order for the sector to manage climatic risks affecting their business portfolios and to give the best possible advice to their customers, financial institutions need access to applied information such as climate change predictions, modelling, analysis, and interpretation. Such information needs to be appropriate to the duration of contracts, the regions where customers hold assets or undertake operations and the hazards that are material to the operations of borrowers, investees, and the insured.
"To date the key role that financial institutions and other private sector decision- makers can play in increasing the climate resilience of economies and societies has been neglected at best", said Paul Clements-Hunt, Head of UNEP Finance Initiative. "The rapid reduction in greenhouse gases and the adaptation to the unavoidable effects of global warming need to go hand-in-hand if we are to cope with the climate challenge. This study is a first step in identifying what is needed so that financial institutions can start playing their important role in accelerating the shift to climate-resilient economies", he added.
Climate change forecasts and predictions of the resulting economic impacts will never be perfect and will inevitably feature some element of uncertainty. But the more information and expertise regarding climate change and its uncertainties that is available to financial institutions, the better these risks can be calculated. This will enable insurers, reinsurers, lenders, and asset managers to price and absorb these risks more effectively.
This can be crucial not only to the performance of individual businesses and financial institutions, but to the entire economic tissue of communities affected by climate change and the social well-being it underpins.
"Financial institutions are experts in identifying, quantifying and pricing risks. This expertise can be of great value to society at large when faced with the sheer uncertainty linked with changing climate patterns and the significant risks of resulting impacts", said Mark Fulton, Managing Director at Deutsche Bank Climate Change Advisors and Co-Chair of UNEP FI's Climate Change Working Group (CCWG). "This study confirms that what private sector institutions need in order to become real 'adaptation catalysts' is objective and reliable information. We need to work towards enhancing the access of private sector decision makers to climate information as well as, most importantly, improving the reliability and accuracy of our climate models and forecasts", he added.
The survey identified that such information gaps can be closed by continued research towards more reliable climate modelling and forecasting, as well as enhanced translation of scientific knowledge and existing information into user-friendly information. Such efforts are likely to require more intensive collaboration between users and suppliers, public and private actors, scientists and decision makers.
The survey is available at www.unepfi.org
