Heads of state, foreign ministers, and religious leaders have spoken before the United Nations’ General Assembly about the world’s most pressing issues. Allianz Chief Operating Officer Oliver Bäte told the assembly how an insurer can help to fight climate change, and what governments should do to let the finance industry help.
 | Oliver Baete, Chief Operating Officer, Allianz SE"To be able to make investments in clean and low-carbon technologies, we need stable political and regulatory frameworks" (Photo: Allianz) |
Why is the UN General Assembly interested in what Allianz, an insurance and financial services company, thinks about climate change?
Since at least the Stern Report, we know that addressing the threats posed by climate change will require large investments. The president of the UN General Assembly, Srgjan Kerim, said that over 200 billion dollars would probably be necessary just to stop a further increase of greenhouse gas emissions by 2030. Doing nothing is no alternative, for it will be even more expensive.
These investments cannot only come from the public sector; private investments have to play a role if we want to build a low-carbon economy. Allianz, representing the interests of millions of its customers, is one of the major private investors worldwide. But to be able to make investments in clean and low-carbon technologies, we need stable political and regulatory frameworks. So the UN invited us and other financial institutions to get a better understanding of our needs.
As an insurer and asset manager, we are also a leading risk manager with good knowledge of how climate change will impact our customers and our business. We have collected a lot of our know-how in our Allianz Climate Solutions company, which offers climate-related products. We also work with the World Wide Fund for Nature (WWF) to improve our understanding of climate change effects and create more innovative climate-friendly products and services.
What exactly can the insurance and finance sector do for climate change?
Well, the United Nations Framework Convention on Climate Change, its top climate change body, has estimated that more than 80 percent of the money needed to respond to climate change would come from private investment.
And it is not just about specific investments in solar power or other renewable energies. Institutional private investors hold a big chunk of the 54 trillion dollars invested in global equity markets. If we can make some of these investments climate-friendly, then a lot would already have been gained. And if we convince companies that we invest in to disclose the financial risks they face from climate change, then this creates a lot of momentum for companies to improve their climate record.
As an insurer and asset manager, we can also reward customers that take care of environmental issues and use climate-friendly technologies. Our ECOmotion policy, for example, rewards drivers that have climate-friendly and fuel-efficient cars.
 | Graphic (click on the image to enlarge)Kyoto Emission Targets |
What significance does climate change have for the business and strategy of Allianz?
Our business is to empower our customers to manage their risks and opportunities and to find solutions for the challenges they face. Climate change is one of most important challenges of the next centuries. If we manage to provide innovative and sustainable solutions like insurance and investments for clean technology, it will help our customers, and ultimately us, to generate sustainable growth.
Can Allianz customers do something about climate change, as well?
The simplest and most important thing is to save fossil fuels and electricity - drive less and use energy efficient technology. And then we offer our clients a number of climate-friendly products. Fireman’s Fund, our American insurance company, offers green home insurance that allows you to rebuild your house with low-energy technology and environmentally friendly materials.
We also have special investment vehicles like our Ecotrends fund, which allows customers to put their money in clean technologies and profit from their strong growth. Plus, we need to be a "role model" as a responsible corporate citizen!
What can the UN do?
The UN, basically the world’s governments, has to come up with frameworks that provide planning security for investment from the private sector. In order to shift to a low-carbon economy by 2020, for example, we need investments of some two trillion dollars in clean energy.
In order for that to happen, prices for carbon dioxide have to become standard globally, accompanied by stable regulatory regimes. And governments have to ensure that the money they make through a carbon tax or emissions trading is invested in cleaner technology and other ways to fight climate change.
In addition, climate change-focused investments should be heavily promoted by sovereign wealth funds and national funds run by countries like Norway, Saudi Arabia, and Singapore. As current assets under management by sovereign wealth funds amount to three trillion dollars, these funds can play an essential role in addressing climate change in the future.
Allianz currently participates in the Financial Initiative of the United Nations Environmental Programme (UNEP), which gathers together all the major players of the financial sector. Here, the UNEP offers us a great platform to develop and promote linkages between the environment, sustainability, and financial performance on a global scale.
editor: Thilo Kunzemann
publishing date: June 16, 2008
