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Frankfurt/Geneva/Nairobi/Bonn 12 January 2011 - Current availability of and access to climate change information remains insufficient, both in format as well as quality. A pioneering study launched today confirms the increasing financial relevance of climate change and the fact that financial institutions need better information regarding the physical impacts of changing weather patterns, and further information services.
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. A total of 60 institutions from all continents took part in the survey, including both developed and developing countries.
Already today, financial service providers and their customers are affected by the impacts of climate change, e.g. by extreme weather events. The survey shows that insurers, reinsurers, lenders, and asset managers expect these kinds of risks to increase in the future.
Financial institutions express strong needs for enhanced access and availability of climate information in order to further enhance climate change related risk management within their industry. Given that financial institutions are able to influence their clients and investee companies across all sectors of the economy and throughout geographies, they can play a key role in accelerating the implementation of adaptation measures by the private sector more broadly.
To be able to manage climatic risks affecting their business portfolios and to be able to give advice to their customers, financial institutions need to improve respective expertise. Therefore, applied information is needed - in the form of predictions, analyses, and interpretation - that is relevant for their decisions. It 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.
Climate change forecasts and predictions of the resulting economic impacts will never be perfect and always feature uncertainty. The better the knowledge and expertise regarding climate change and its uncertainties though, 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 affected regions as well as the social well-being it underpins.
The survey identified gaps in the availability of information that need to be addressed and 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-oriented information. Such efforts are likely to require more intensive collaboration between users and suppliers, public and private actors, scientists and decision makers.
"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. 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," said Paul Clements-Hunt, Head of UNEP Finance Initiative.
"This survey shows that Financial Institutions are concerned with the potential impacts of climate change and that they see the need to react and respond to such changes through the systematic integration of climate change factors into their decision-making. The study confirms that what is needed now 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, increasing the accuracy and granularity of climate models," said Mark Fulton, Managing Director at Deutsche Bank Climate Change Advisors and Co-Chair of UNEP FI's Climate Change Working Group (CCWG).
"We welcome the initiatives of the German Government, UNEP and others to strengthen climate information services. We need these services as a common reference framework for our investment decisions in renewable energy and infrastructure projects and other purposes. With our improved climate expertise we can support our clients to adapt to climate change and manage their risks," said Stefan Löbbert, Head of Corporate Sustainability Division at HypoVereinsbank (Member of UniCredit), Co-Head of "Climate Change Finance Forum", Germany
"As a leading insurance group we can observe in our data base in some regions a change of loss patterns from weather catastrophes in the past decades. To secure risk transfer to the private insurance sector in the future, the understanding of potential impacts from climate change on losses from atmospheric perils is essential. The relevance of climate data and their interpretation for business purposes will play a more and more important role in the future," said Ernst Rauch, Head Corporate Climate Centre at Munich Re.
"The development of climate change expertise within the financial sector is economically relevant. For some institutions, this is a success factor already today," said Paschen von Flotow, Sustainable Business Institute (SBI).
"The Federal Ministry of Education and Research welcomes the initiative taken by financial institutions to cope with the challenges of climate change. The study underlines the importance of developing climate information services in international networks. This will only be possible through cooperation between the research community, the finance industry, and other private- and public-sector institutions. That is why the BMBF initiated a research and dialogue process on this subject with the financial sector (organized in the "Climate Change Finance Forum"). The fact that this dialogue is now being extended to the international level through the collaboration with the UNEP Finance Initiative offers an excellent outlook," said Wilfried Kraus, Deputy Director General of Directorate 72 "Sustainability, Climate, Energy" at the Federal Ministry of Education and Research (BMBF).
Notes to Editors:
[1] The launch of the survey 'Advancing adaptation through climate information services' will be on 12 January 2011.
[2] The survey will be available at www.unepfi.org and www.cfi21.org 1300 CET on 12 January 2011.
For information please contact:
Remco Fischer, UNEP Finance Initiative, remco.fischer@unep.org, +41229178685
Anke Hummel, Sustainable Business Institute (SBI), hummel@instoec.de, +496723996320
The United Nations Environment Programme Finance Initiative (UNEP FI) is a global partnership between UNEP and the financial sector. Over 190 institutions, including banks, insurers and fund managers, work with UNEP to understand the impacts of environmental and social considerations on financial performance. Through its Climate Change Working Group (CCWG), UNEP FI identifies the roles of the finance sector in addressing climate change, and advances the integration of climate change factors - both risks and opportunities - into financial decision-making. This is done through a comprehensive work programme encompassing research, training, events and regional activities. For more information, please visit www.unepfi.org
The Sustainable Business Institute (SBI), Germany, is a research centre founded in 1987 - the year in which "Our Common Future", the Brundtland Report, was published by the United Nations World Commission on Environment and Development. Since then, SBI has been working on a wide spectrum of issues and conducted studies with several national and international stakeholders including United Nations Conference on Trade and Development (UNCTAD) and United Nations Environment Programme (UNEP) and the German Government. Among these were studies on sustainable and responsible investment, Foreign Direct Investment (FDI), voluntary agreements and environmental management. Furthermore, SBI publishes www.sustainable-investment.org
SBI is currently focused on the role of financial service providers regarding climate change adaptation and mitigation. For further information, please visit www.cfi21.org
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