“America is now a global leader when it comes to taking serious action to fight climate change,” President Obama said from the White House after vetoing the Keystone XL Pipeline bill which would have allowed a Canadian company to build a 1,179-mile pipeline to transport 800,000 barrels a day of carbon-heavy petroleum from the Canadian oil sands to the Gulf Coast. “Frankly,” continued the President, “approving this project would have undercut that global leadership.”
The Keystone rejection is an important but largely symbolic move – this kind of oil is already being transported, and should (or “when”) oil prices ascend again it’s a safe bet that oil producers will find a way to get that oil from Canada out of the ground and to refineries Keystone pipeline or not. But it does send a strong message from Washington in advance of the 2015 United Nations Climate Change Conference (or Conference of the Parties, COP21) that opens November 30 in Paris. The objective is to achieve a legally binding and universal agreement on climate.
We’ve Gone Too Far
But while President Obama may aim to put the U.S. into a leadership position in the climate change issue, a new international study on how cities and SMEs are working to become more resilient to the consequences of climate change shows that more than 40% of those U.S. and UK SMEs studied have no resilience plans in place and no plans to develop one in the near future.
Additionally, Urban Leaders believe we have already come too far to fully mitigate the threat of climate change, according to parallel research from Penn Schoen Berland (PSB), an American market research, political polling and strategic consulting firm founded in 1975 and acquired by WPP in 2001. What’s needed, therefore, is a resilience strategy combining mitigation and adaptation at the local, national and global levels.
The study was conducted under the auspices of the AXA Group and the United Nations Environment Program Finance Initiative’s
Principles for Sustainable Insurance (UNEP FI PSI). Researchers conducted 1,104 online interviews with senior decision-makers at SMEs in 11 key global markets (Europe, Asia and the Americas), as well as 41 interviews with senior urban leaders across 18 markets between July 30-September 9, 2015. Markets were divided in to “developed” (Belgium, France, Italy, US, UK, Australia, Canada, Japan and New Zealand) and “emerging” (Brazil, China, India, Indonesia, Mexico, Thailand, Jamaica, Philippines, and South Africa). SMEs were chosen from 12 sectors, including retail, manufacturing, natural resources, technology/media and transport. Access the report here.
Urban centers were chosen as a focal point as they will hold some 75% of the world’s population by 2050,and currently account for 70% of global GDP and 70% of global CO2 emissions according to UN statistics. SMEs continue to be a driver of economic growth and urban leaders say developing business resiliency is a key factor in meeting the challenge of long-term climate change. But it is also an opportunity to create stronger, healthier and more efficient communities and businesses.
Climate Change Is The New Reality
It’s difficult these days for even hardline climate change disbelievers to dismiss the past few years of floods, severe storms, drought, record high and low temperatures and downright extreme weather around the world. The cost in human lives has been in the millions; businesses and global financial losses in the trillions, with an alarming drop in global productivity. Indeed, the Stern Review on the Economics of Climate Change (2006) notes that the cost of climate change could amount to some 20% of global GDP by the end of this century if nothing changes to mitigate the potential damage. The message is clear: climate change is here and is already having a significant impact.It’s not surprising to learn, therefore, that 59% of the SMEs surveyed said their businesses had been affected by climate change already – think of Super Storm Sandy in the New York City region (October, 2012), Cyclone Nargis in Myanmar (2008), the past summer’s record-breaking heat wave in continental Europe – and 65% are worried about the continued impact of climate change, especially in hard-hit merging markets. . Yet just 27% say they are adapting to becoming more resilient to climate change (for example, by taking measures to limit electricity use and adopting other energy-saving measures), while 19% actively interact with government on the issue of climate change – for example, proposing and adapting legally-binding environmental policies.
“What is at stake here is not just a profit & loss statement or the next election,” said Henri de Castries, Chairman and CEO of AXA, speaking to reporters in Paris as the report was released. “What’s at stake is the future of the next generations.”
Business Unusual
As an official COP21 sponsor, AXA is already engaged in a number of initiatives, such as divesting its investments (by more than 0.5-Billion Euros) in companies exposed to coal-related activities and aiming to triple (to over 3-Billion Euros) the green investment footprint of the Group’s General Account by 2020.
The report also showed that 74% of SMEs surveyed believe the insurance industry can take a leadership role in the climate change issue in several ways: through education and awareness, sharing publicly its research into risk; incentivizing resilience measures through product pricing, and designing products and services geared to help businesses and urban centers adapt to climate change.
“Our role as insurers is to deepen the debate and come up with creative solutions,” said de Castries. “Climate change is not a problem for tomorrow. It is a reality today. If temperatures rise 2% the world may still be insurable; if 4%...it is not.”
The UN Copenhagen Climate Change Conference in December 2009 ending in shocking disarray. Participants weren’t even able to reach consensus on what climate change meant. This year in Paris should be a different story. The heat, so to speak, is on.
