The Involvement of Insurance Companies
in Climate Finance:
Tackling a Global Challenge
by Investing in Local Solutions
Francesca Romanin Jacur
Milan University
Francesca.romanin@unimi.it
S
Plan of the presentation
S A Dynamic International Regulatory Framework
S Climate finance
S The Increasing Involvement of the Private Sector
S Challenges and Opportunities for (Re-) Insurance
Companies
Climate Change basic glossary
S Mitigation: reducing GHG emissions
S Adaptation: managing the effects of climate change, reducing
vulnerability of human and natural systems
S The target: the global scientific community (IPCC) calls for
limiting global warming to 2o C above 1990 levels
S Current pledges to reduce emissions meet ½ of the emissions needed
S Towards a “low carbon economy”…
Climate Change Regime:
the UN Framework Convention and the
Kyoto Protocol
UNFCCC (1992) : Stabilization of greenhouse gases (GHG)
concentration
KP (1997) : by 2012: global GHG reduction target of -5%.
S Shortcomings deriving from limited active participation (no
USA, no commitments by emerging economies – China,
India, BRIC)
S Post 2012: … ongoing negotiations!
S COP meetings and the crisis of multilateralism, but what’s the
alternative?
S Climate change regime financial pledges: (nonbinding political
agreement)
S 100 billion every year by 2020 (long term finance)
S 30 billion of fast start finance in 2010-2012
Climate Change Regime Architecture
SB for
Implementation
UNFCCC
COP
IPCC
KP
COP/MOP
SB for
Technical
Advice
Compliance
Committee
World
Bank
Secretariat
IE
T
GEF
Grenn
Climate
Fund
SCC
Fund
LDC
Fund
Adapt.
Fund
2% of levy on proceeds
CDM
JI
Climate finance
S Working Definition: The channeling of public resources (towards
developing countries) (for mitigation & adaptation) through
frameworks and mechanisms that leverage private sector capital,
and are in line with national development goals.
S Many sources: 50 international public funds, 6000 private equity
funds, carbon markets, taxes, Clean Development Mechanism)
S Challenges:
S Catalyze new investment into climate mitigation and
adaptation sectors
S Develop new products with replication potential across markets
and geographies
Combining Developing Countries
and the Private Sector Needs
S Gaining the trust of Developing Countries
•
… and of the Private Sector
S Need of coordination among financial institutions (national, bilateral,
international)
S Trust in institutions and their procedures (Consistency of funding
resources, transparency and inclusiveness, legitimacy)
S The impact of the financial crisis
S The need to conciliate different interests:
S Effective mitigation and adaptation action and environmental integrity
S Economic development and poverty reduction in Developing Countries
S Economic gain for the Private Sector
Financing Adaptation
S GOALS:
S Generate new finance
S Design and distribute goods and services that reduce vulnerability
of individuals and communities to climate change
S Provide risk management tools
S TOOLS:
S Drawing on capital markets to raise new finance for adaptation
(climate bonds)
S Direct credit lines to local finance institutions
S Innovative means: microfinance
The role of insurance
companies
S Risk Reduction and Insurance
S Catastrophe prevention, Risk assessment, emergency responses
S Low rate of insurance penetration in developing countries
S Technical assistance for setting up innovative financial
products, programmes or services for the low carbon energy
sectors
Climate Risk Management by
the Insurance Sector
S Public-private partnerships
S With International Financial Institutions (World Bank)
S At the country level
S Index-based insurance solutions
S Case studies
S Challenges and opportunities of implementing climate
insurance
Thank you!
Dr. Francesca Romanin Jacur
francesca.romanin@unimi.it