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.
