World Financial Leaders Call on G-8 for ‘Deep Emission Reduction Targets’

June 6, 2007

The leaders of more than 20 of the world’s largest companies – many from the insurance industry* – have signed a “Declaration on Climate Change by the Financial Services Sector.” The document, published by the United Nations Environment Program (UNEP) calls on the G8 “to back deep emission reduction targets” on the eve of the summit in Heiligendamm, Germany.

The financial leaders offered a stark summary of their views on the perils posed by global warming/climate change as follows:
— Unequivocally, human activity is a fundamental driver of climate change, as confirmed in the IPCC Fourth Assessment Report.
— Unless action is taken now to set in motion a worldwide transition to a low carbon economy, some scenarios suggest that by 2040, the world could experience annual economic losses as high as USD 1 trillion; and grave social and environmental harm from climate-related disasters.
— Climate change could result in a reduction in global GDP equivalent to the economic impacts of the 20th century’s major conflicts, as predicted by the Stern Review to the UK Prime Minister.
— The most severe impacts of climate change, including extreme weather events, drought, crop failure and disease will fall most harshly on those regions and people least able adapt to the impacts of climate change – the world’s poor.

The statement, signed by 23 Chief Executive Officers, Presidents, Chairmen and Managing Directors of banks, insurance and re-insurance companies, calls on the Heads of State “to formally adopt emission reduction targets no later than 2009,” said a UNEP bulletin. “They suggest that proposals by the UK and the European Union, setting out mandatory emission reductions of between 20 per cent and 30 per cent by 2020 and 60 per cent to 80 per cent by 2050, should be central to all industrialized country goals.”

The UNEP pointed out that such a declaration from the financial community provides further strong evidence that “there has been a seismic shift in how climate change is perceived and it is widely considered to be the greatest market failure ever”.

Achim Steiner, UN Under-Secretary-General and UNEP Executive Director, speaking on the occasion of World Environment Day (WED) hosted in northern Norway, welcomed the initiative. He stated: “We are here in Norway for WED under the banner Melting Ice-A Hot Topic [See related article]. We have heard at first hand from local communities, including indigenous peoples such as the Saami how climate change and disappearing ice is impacting on livelihoods, natural resources and ecosystems.

“Scientists advise us that melting ice at the poles and in mountains will also impact on water supplies, coastlines and communities across the globe. So the issue of melting ice is as much an issue for the Arctic as it is for peoples south of the Equator”.

He called on the G-8 leaders and others to “acknowledge the truth as evidenced by the rigorous scientific findings of the Intergovernmental Panel on Climate Change in their striking reports this year “[See IJ web site Feb. 2, April 6 and 7]. Delaying action will “will only make the task harder and the solutions-be they market-led or technologically driven-slower in responding to the challenge,” Steiner added.

Dr. Joachim Faber, Member of the Executive Board, Allianz SE, commented: “Setting clear and mandatory, medium and long-term emission reduction targets and implementing appropriate incentive schemes should be part of a new climate change regime. Politics should not disappoint the trust of the market. What the economy needs is planning reliability for future investment decisions”.

Dr. Torsten Jeworrek, Member of the Board of Management Munich Re, added that the reinsurer had “signed the declaration on climate change by the financial services sector because climate change is one of the greatest challenges of our time. The latest studies show that it is cheaper to invest in climate protection than to pay for the losses that result from inactivity. It is thus prudent to act now from an economic perspective as well.”

The full statement by the members of the UNEP Finance Initiative and the organization’s own bulletin is available online at:

* Insurance executives who are members of the UNEP Finance initiative and signers of the declaration include the following:
— Mr. Maarten Dijkshoorn – Chairman and CEO, Achmea
— Dr. Joachim Faber – Member of the Executive Board, Allianz SE
— Mr. Dirk Kohler – CEO, Carbon Re
— Mr. Michael Hawker – Managing Director and CEO, Insurance Australia Group Limited
— Dr. Torsten Jeworrek – Chairman of the Reinsurance Committee, Munich Re
— Dr. David Morgan – CEO, Westpac Banking Corporation

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