environmental Strategist, between the lines: First off, I want to point out that it is very rare when I will use information or comment on climate change because to me there are to many variables for our experts to understand. Is the earth warming up? Since the last ice age came to an end in the 1800’s and they did not keep today’s standards of recognized meteorological records until the mid 1800’s, the answer is yes, the earth is warming up. Scientist also agree the earth has warmed up and cooled down before so this is not a first.
As we point out in our three part email series “Profiting In Today’s Environmental Market”, liability creates change. If liability did not create change then most of us would be out of work. As the first article points out, Lloyds and other insurance carriers see a major liability on the horizon. Lloyds feels change is a matter of “survival”. Lloyds goes on the say, “We believe that it is time for the insurance industry to take a more leading role in understanding and managing the impact of climate change.” Lloyds feels the insurance industry (insurance carriers, agents, risk managers, etc.) can be a leader in the environmental market place. Lloyd’s warns companies to take action to help protect themselves or face oblivion.
The second article points out why corporate America is reacting to what they see as the inevitable, environmental transparency. Once big business catches on to a good idea, it’s only a matter of time before it makes its way down the supplier chain. The article points out how business now realizes it’s critical to develop and execute an environmental Management Strategy (eMS) in order to compete in today’s business environment.
SOX, SAB 92 ruling, FIN 47, terrorism, ISO 14000 and much more, are components that make up the process to address transparency. As a professional, sharing this competitive environmental intelligence with client’s/colleagues, will allow you to assist them to proactively react to the scrutiny that is rapidly gaining momentum in addressing environmental transparency. Adjusting a businesses operations/practices is easily accomplished by utilizing an eMS.
Bottom line, environmental change is coming, assist your client’s/colleagues to react now and you are an indispensable professional.
Chris Bunbury, eS
Insurers must act on climate change, says Lloyd’s
LONDON, June 5 (Reuters) – Insurers must do more to understand the implications of climate change on their businesses or risk going out of business, Lloyd’s of London [LOL.UL] said in a report released on Monday.
Recent scientific evidence on the buildup of greenhouse gases has shown that some degree of climate change is now inevitable and could actually happen faster than was previously expected, the report said.
“The insurance industry must start actively adapting in response to greenhouse gas trends if it is to survive,” the report says.
Lloyd’s, the world’s leading specialist insurance market, said the insurance industry had been slow to analyse how the increasing weight of scientific evidence into climate change would affect its business.
“We believe that it is time for the insurance industry to take a more leading role in understanding and managing the impact of climate change,” the report concludes.
Insurers stand in the front line of climate change in terms of footing the economic bill of natural disasters. Last year was the industry’s costliest ever for catastrophes, with overall claims of $83 billion, of which $65 billion came from hurricanes Katrina, Rita and Wilma which hit the United States.
The report raises the prospect that insurers may face even higher claims from an increasing number of natural disasters in years to come, caused by climate change.
Lloyd’s warns companies to take action to help protect themselves or face oblivion.
LOOKING BACKWARDS, NOT FORWARDS
The insurance industry still bases too much of its decision-making on historical weather patterns rather than what is likely to happen in the future, the report said.
For example, insurers could take account more in their pricing of the generally accurate predictions made by a number of forecasters into the number and severity of Atlantic hurricanes that are likely to occur each year, the report said.
Lloyd’s echoed predictions from industry rivals such as Swiss Re (RUKN.VX: Quote, Profile, Research) that the number of severe hurricanes each year is likely to remain high in the coming years and that insurers should therefore raise their prices to reflect that.
The report said it was important for insurers to make a profit from their underwriting activities, because not only are they facing higher disaster-related claims, but also their investment income might be cut as climate change hits the business of firms in which insurers invest.
Insurers could use their influence as some of the world’s biggest investors to make companies in which they have stakes act more responsibly by encouraging “‘climate proof’ behaviour from the boards of large corporations”, the report says.
Lloyd’s also raised the question of whether most weather-related risks would remain insurable in the future.
It said it currently saw the vast majority as insurable, providing insurers are free to set the price of cover.
But if regulators were to try to limit the prices insurers charge to take disaster risks or if climate change were to occur faster than expected, then Lloyd’s might change its view, the report said.
Insurers may increasingly look to either restrict or even withdraw cover for flood risk in some areas, as the cost of flood claims rises, the report said.
“Solutions must be found now to reverse the trend towards further increasing population concentrations in affected areas, especially coastal areas,” the report concluded. © Reuters 2006. All Rights Reserved.
Is Corporate America Going Green?
June 05, 2006 — By Scott Malone, Reuters
BOSTON — Corporate America, which once dismissed fears about global warming as unfounded, appears to be changing its mind, publicly acknowledging its influence on climate change and striving for a greener image.
Major companies such as General Electric Co. and chemicals maker DuPont Co. are taking steps to make their plants and products more energy efficient and to reduce emissions of the greenhouse gases linked to global warming.
To be sure, U.S. companies have heavily promoted their change of heart in slick marketing campaigns such as Ford Motor Co.’s “I guess it is easy being green” television advertisements for its Escape hybrid sport utility vehicle.
Environmental activists say the changes go beyond lip service but they urge lawmakers to prod companies along even faster through tougher environmental regulations.
“We’ve barely just begun, but what we’ve begun is real,” said Mindy Lubber, president of Ceres, a Boston-based coalition of institutional investors and environmental groups that manages more than $3 trillion in assets.
Many scientists say a build-up of greenhouse gas emissions caused by burning fossil fuels such as oil and coal are raising temperatures around the world and could bring catastrophic changes — from severe heatwaves to rising seas.
For many years, major U.S. corporations asserted that natural swings in temperature made it impossible to tell whether greenhouse gas emissions were influencing the climate.
With some notable exceptions — including oil giant Exxon Mobil Corp. — U.S. companies have noticeably changed their tune.
Fairfield, Connecticut,-based GE — the world’s second-largest company by market value — last year unveiled its “Ecomagination” initiative to cut greenhouse gas emissions and increase sales of energy-efficient products.
Sales of “Ecomagination” products, ranging from washing machines to jet engines, reached $10.1 billion last year and GE aims to double that by 2010. It also aims to double its research spending on such products to $1.5 billion by 2010.
“Our customers are heavy energy users, customers that have fuel issues, that are seeking energy efficiency,” said Lorraine Bolsinger, a GE vice president who heads up the Ecomagination program. “When we talk to our customers, they tell us, ‘This is what we need.”‘
Fears that a warmer, wetter planet would spawn devastating storms like Hurricane Katrina, which flooded much of New Orleans and killed more than 1,500 people in Louisiana alone, have also caused insurers to shift thinking on global warming.
American International Group Inc., the world’s top insurance company by market value, said in May — after losing $2 billion after tax from Katrina and other disasters last year — that it would develop projects to keep greenhouse gases out of the atmosphere.
REGULATION THE NEXT STEP?
A tripling in oil prices to record highs above $70 a barrel is also accelerating the drive for greater efficiency.
DuPont has cut its energy bill by about $3 billion since kicking off an emissions-reduction campaign in the early 1990s, said Edwin Morgan, director of energy and environment at the Wilmington, Delaware,-based company. It has cut its greenhouse gas emissions by more than 72 percent over that time.
Ceres, in a March study, ranked DuPont’s efforts to reduce global warming second only to British petroleum firm BP Plc among major global companies.
U.S. greenhouse gas emissions have continued to rise since the White House declared in 2001 that the U.S. would not abide by the terms of the United Nations’ Kyoto Protocol to cut such emissions below 1990 levels by 2008.
While observers lauded the steps taken by U.S. companies in industries ranging from chemicals to electric utilities, they said the only reliable way to reduce U.S. greenhouse gas emissions would be regulation.
“One company doesn’t want to go alone. They want to move forward as industries,” said Brendan Bell, global warming analyst at the Sierra Club, a major U.S. environmental group.
Some investors have begun petitioning companies to fight global-warming-related regulation. The Free Enterprise Action Fund, a $6 million mutual fund, through proxy proposals asked GE and J.P. Morgan Chase & Co. this year to fight such regulation.
“Global warming activists are using these guys to get these laws passed. And once the laws are in effect, they are going to get more and more intrusive, and they’re not going to be able to control them,” said Steve Milloy, a portfolio manager.
Bolsinger said GE would be able to compete even in a tighter regulatory environment.
“Without some kind of legislation, we don’t see that there’s going to be significant progress made,” Bolsinger said. “We’re not afraid of whatever regulation will come.”
Source: Reuters