Discussing Durban: why it matters

Swiss Re is active in shaping the global climate agenda through research and dialogue with key stakeholders. In Durban, Swiss Re joined the annual UN climate summit for the third year in a row as an official member of the Swiss government delegation. David Bresch, our Head Sustainability & Political Risk Management, explains how we contributed and what the outcome of the Durban conference means for Swiss Re.

Were the climate talks in Durban a success?

Judging by what’s actually needed to tackle climate change, Durban was not a success. But compared to what’s politically possible, the talks were very constructive. Negotiators confirmed their commitment to a second period of the Kyoto Protocol, which will ensure the continuation of its rules and mechanism beyond 2012. However, the current framework only covers 15% of global carbon emissions. Other outcomes of Durban are equally ambiguous. Governments agreed on the modalities of the Green Climate Fund, but more details have to be worked out before it can be implemented – for example, who will pay and who will benefit. The Durban agreement also provides the mandate to negotiate a global deal, to be concluded by 2015 and ratified by 2020. It’s significant that it makes no a-priori distinction between developed and developing countries, but stresses that they have “common but differentiated responsibilities” (CBDR). Yet, the exact legal form of this new pact remains subject to debate, and the goal of keeping  global warming to  2° C above pre-industrial levels is very unlikely to be met – global emissions would have to peak by 2017 at the latest.

So what needs to happen to make this possible?

To effectively address a global problem such as climate change, we need a global response. The easy answer would be to put a price tag on carbon and manage emissions through a global system of cap and trade. This would solve one of the biggest market failures, according to the Stern report, since it would take into account the environmental and social costs associated with emissions. In the absence of such a regime, the second-best solution is a set of commitments by countries and regions to reduce their emissions. But this poses the question of whether the targets they set are sufficient and how these are enforced and implemented in a coordinated way. What remains is the fundamental challenge of how to de-couple economic growth from energy demand. And let’s keep in mind that even if we were to stop all emissions today, societies would still have to adapt to a changing climate. This means climate risks need to be managed pre-emptively.

Given these enormous challenges, why is Swiss Re part of Switzerland’s climate delegation?

As a matter of fact, this was the third time that Swiss Re attended  the UN climate change conference as an official member of Switzerland’s country delegation. The Swiss government invited us to join on behalf of the Swiss Insurance Association because of our long-standing experience in modeling and pricing climate risks as well as our track record in designing solutions that help societies better respond to climate change.

What was Swiss Re’s role in Durban?

As in previous years, the Swiss country delegation was particularly interested in tapping into Swiss Re’s risk management expertise and our work on the economics of climate adaptation.  The empirical facts that we brought to the negotiating table strengthened Switzerland’s position and contributed key elements to the conference work programme on loss and damage. It was adopted by the negotiating parties in Durban to identify the most effective ways to assess and manage climate-related risks. More specifically, it will explore "the links and synergies between risk reduction and other instruments such as risk transfer".

What implications does the Durban agreement have for Swiss Re?

Swiss Re has been a strong advocate of cuts in greenhouse gas emissions for over twenty years. But since we know that our climate will continue to change, we invest a great deal of research in low-carbon strategies and adaptation measures. The Durban agreement seeks concrete action on both of these fronts while reconfirming the mechanisms of the Kyoto Protocol until a more stringent policy regime comes into force. With our global offerings on renewable energy and risk transfer for adaptation, Swiss Re is already at the forefront of providing innovative climate solutions. Many of our existing transactions involve key partnerships with the public sector and can be redeployed in different regions of the world. So we are well positioned to play a major role in driving forward the low-carbon economy and shaping climate-resilient development today and in the future.

For those who would like to know more

The Economics of Climate Adaptation (ECA) methodology, developed by a consortium of partners including Swiss Re, charts out ways to access fast-start finance to address climate-related loss and damage. It gives decision-makers the facts to properly assess climate risks, develop an approach to manage those risks and make informed choices about investing in the most cost-effective measures. Through its cost-benefit analysis, the ECA provides the basis for funding discussions on measures that strengthen local resilience.  For more information, see “Shaping climate resilient development.”

Published 26 December 2011

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