My personal reflections on COP28: The year Insurance came of age. Reasons to be cheerful and a reality check
By Andy Cox, Head of Energy Transition, Howden Group.
Last time I was lucky enough to attend COP was back in 2008 – COP14 – where I had the honour of chairing a panel of financiers, wind & solar developers and Sir Nicholas Stern. There were just 6,000 people in attendance back then. Wow, how things have changed – or have they? Yes, there were between 60,000 – 100,000 delegates at COP28 (depending who you include) but the dirty secret is, the subject matter being discussed really hasn’t changed much, we still need to work out how on earth we solve the climate crisis.
Even the private roundtable that I chaired in the first week of COP28 covered similar ground to that discussion 15 years ago but with one notable difference. The arrival of the insurance industry firmly at the table.
King Charles started the ball rolling when he commented in his keynote opening address how impressed he is with the role that the insurance industry is starting to play when it comes to climate change. I think this was a light bulb moment for some but for many, it was more of a trigger to start grey matter cogs rotating.
Across many forums at COP28 I attended conversations which included much discussion about risks – new and emerging risks, as well as those more fully understood. But frequently didn’t hear people articulating the role that insurance can play beyond its traditional protection. At least that was true in the first few days. But, like a virgin spring on an alpine mountain, the word started to trickle out in two areas: Loss and Damage Fund and Financing.
The launch of the University of Cambridge report (Risk sharing for Loss and Damage: Scaling up protection for the Global South) detailed how a relatively low insurance premium can release huge amounts of risk capital to pay out within 14 days of a climate related disaster. An important, practical action that will go some way to turn words into action for many of the most vulnerable countries.
Financing of the energy transition is proving to be a formidable challenge. So, I was encouraged to hear many people commenting positively about the role innovative insurance solutions could play, by wrapping around many of the emerging risks that lenders won’t shoulder and transfer those risks on to the 1$30 trillion of ‘assets under management’ held on the balance sheets of the insurance industry.
Stepping back and reflecting on COP28 as a whole, things certainly got off to a strong start with the announcement of a consensus among all countries regarding the Loss & Damage Fund. By the end of the conference nearly $800m had been pledged for the Fund. This was swiftly followed by a series of individual country announcements where significant new funds were committed to climate change programmes. On day 3, I was delighted to see at least 118 countries commit to the tripling of renewables and doubling of energy efficiency targets. And, I was especially pleased to see the US, with the world’s 3rd largest coal power capacity, join 34 other OECD countries in the Powering Past Coal Alliance. Bravo!
Sadly, things started to slow down after that and culminated in a set of words that many criticise for failing to call for the full phase out of fossil fuels. But, in a positive way, by referring to “transitioning away from fossil fuel…” a landmark was reached. For the first time in 30 years of COP a lowering of fossil fuel use was mentioned. One step at a time!
So, yes, in that regard COP28 was a success. However, here’s the reality check. Regardless of the hours and hours of debate and discussion and the many positive announcements and commitments that were made in Dubai, the world remains way off the path we all know we need to follow to achieve the climate change goal of 1.5 degrees. It will of course take all of us across the globe to play our part. We mustn’t listen to the negative rhetoric that tends to overshadow the efforts being made. Instead, let’s work out what action we as individuals within society or as employees can do to turn words by some, into actions by many. I for one, as Head of Energy Transition at Howden, will continue to champion the role the insurance industry must play in what remains the greatest challenge mankind has ever faced.
About Howden
Howden is a leading global insurance group with employee ownership at its heart. Founded in 1994, it provides insurance broking, reinsurance broking and underwriting services and solutions to clients ranging from individuals to the largest multinational companies.
The group operates in 50 countries across Europe, Africa, Asia, the Middle East, Latin America, the USA, Australia and New Zealand, employing 15,000 people and handling $35bn of premium on behalf of clients.
For more information, please visit www.howdengroup.com and www.howdengroupholdings.com
1 Estimate provided by Rebekah Clement, Corporate Affairs Director, Lloyd’s of London 05.12.23 during the “Role of insurance in de-risking the Energy Transition” panel
