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Climate Change Risks and Opportunities

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Title: Talk title Author: Jeremy Baskin Last modified by: Dave MacNeill Created Date: 11/7/2005 4:45:08 PM Document presentation format: On-screen Show – PowerPoint PPT presentation

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Title: Climate Change Risks and Opportunities


1
Climate Change Risks and Opportunities
  • Oliver Dudok van Heel

2
Climate Change the Financial SectorAn Agenda
for Action
  • Andrew Torrance, CEO Allianz Cornhill
  • London, December 2, 2005

3
Agenda
  • 1 Facts on Climate Change
  • 2 Climate Change the Financial Sector
  • 3 Agenda for Allianz Action

4
Agenda
  • 1 Facts on Climate Change
  • 2 Climate Change the Financial Sector
  • 3 Agenda for Allianz Action

5
Facts on Climate Change
The Facts
  • Hurricane activity increased- Katrina costs
    60bn for insurance industry and 470m for
    Allianz Group
  • Weather disasters are hitting Europe hard
  • - 1999 storms, 2002 floods, 2003 heat wave
  • Governments react by curbing CO2 emissions

6
Facts on Climate Change
The Facts
Global Warming Temperature Rise over Past 100
years Source IPCC
7
Agenda
  • 1 Facts on Climate Change
  • 2 Climate Change the Financial Sector
  • 3 Agenda for Allianz Action

8
Facts on Climate Change
The Impact
  • Climate change increases claims for insurers
  • Climate change could have an impact on mortality
    and diseases
  • Climate policy can change investment portfolio
    and share price
  • Climate related risks can have an impact on all
    financial services

9
Climate Change and the Financial Sector
New Risks, New Demands
  • Insurance
  • - climate change related losses are rising at
    2- 4 per year
  • - larger, more frequent natural catastrophes
  • Banking
  • - credit risk is increasing due to uncertainty
  • - potentially large new climate change
    markets in emissions trading, re- newables,
    weather derivatives
  • Asset Management
  • - climate change is a mainstream risk and not a
    socially responsible investment (SRI) issue
  • - climate policy can alter the risk profile of
    companies

10
Agenda
  • 1 Facts on Climate Change
  • 2 Climate Change the Financial Sector
  • 3 Agenda for Allianz Action

11
Risk Mitigation and Investment Opportunity
The Agenda for Allianz Action
  • Address climate change at board level and put it
    on a par with other business risks when taking
    decisions
  • Screen climate change risks in our business
    through an internal task force
  • Increase investment in renewable energy sector by
    500 million euros over the next years.

12
Climate Change andthe Financial Sector
New Solutions
  • Awareness raising through risk consultancy
    Consulting with clients and governments
  • Product Development Upgrading to environmentally
    friendly technology
  • Climate Change and Poverty Can micro-insurance
    provide a safety net against natural
    catastrophes?

13
Tackling Climate Change A View from the Finance
Sector
  • Karina Litvack
  • FC Asset Management plc

14
Debate
  • Why dont companies invest more in clean
    technologies?
  • Why dont investors channel more capital to clean
    technologies?
  • What does business want to do about Climate
    Change
  • What does business want from government?
  • How can the market be used to crack this problem?
  • What has worked before?

15
Agenda
  • Introduction Who is FC
  • Investors and Climate Change
  • Where we were and where we are
  • What next?
  • Market failure
  • The Business of Politics
  • Mobilising the markets
  • Debate

16
Who is FC Asset Management
  • No. 4 UK asset manager Top 15 in Europe
  • 190 billion Assets Under Management (129.9
    billion as at 30.09.05)
  • Global investor
  • Long-term holdings Pensions Life Assurance
  • Specialist in Governance Sustainability
  • Growing activism of investment community
  • Governance scandals
  • Client and regulatory pressure to mind the
    store
  • Engaged shareowners Dialogue and Advocacy

17
Investors and Climate Change
  • Where we were
  • Governance
  • Risk Assessment
  • Policies
  • Strategy
  • Targets
  • Disclosure
  • Energy efficiency
  • Products
  • Public Relations
  • Where we are
  • An impasse
  • Risk/Reward ratio
  • Investment Horizon
  • Lack of policy clarity
  • Market failure
  • Political paralysis
  • EU ETS

18
What next?
  • Market failure
  • The Business of Politics
  • What has worked
  • Health Safety regulation non-tradeable
  • SOx and Acid Rain tradeable
  • Mobilising the market
  • Success of ETS in changing Utility Sector
    valuations
  • Impact of oil prices on Renewables IPOs

19
What next?
  • The Business of Politics
  • Has Governance implications
  • for Business
  • for Government
  • The Politics of Litigation
  • When rules and markets fail
  • Costly disruptive
  • Global trading markets
  • Corruption

20
Climate Change Risks and Opportunities
  • Questions?
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