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The polluter should pay and that must apply also to extreme weather

Extreme weather gives rise to a growing carbon footprint through increased material and energy usage when things that have been damaged are repaired. One could see insurers, reinsurers, and state-run natural perils protection schemes take a stab at how to ensure that the negative climate impact from the extreme weather event itself is minimized. Tools such as sustainable claims settlement with greener repairs, correct pricing of carbon risk, and funding of carbon removal projects could be included in today’s (re)insurance schemes.

Scope 3 calculation challenges

Challenges when calculating scope 3 emissions

Due to the increased focus on scope 3 GHG emissions, more and more financial institutions have begun reporting their scope 3 emissions. That’s good news from a climate perspective, because in order to define meaningful reduction targets, one must first understand the emission sources. It is, however, also worth acknowledging that there are challenges involved in determining these emissions.

Do your best, remove the rest

It’s important to distinguish between carbon offsetting and carbon removal, because they offer two very different outcomes when it comes to reaching net zero. Considering the climate crisis we’re facing, it’s clearly not enough that businesses just pay others to avoid emissions in their place, because emissions still enter the atmosphere and remain there. If we want to reach net zero fast enough, carbon removal is needed.

Is the World Economic Forum too downbeat?

Only 15% of the respondents to the WEF annual risk report feel positive about the outlook for the world. In hindsight of Covid-19, almost all material risks have significantly increased in the perception of this influential group of decision makers.

It’s interesting to note that Climate action failure is now clearly the number one risk both in the medium and long term, whilst Extreme weather is on top of the list for the short term.

Forerunners in the insurance industry are taking climate action

Given the challenges the world is facing in reaching net zero, it’s great to see that many large insurance companies are showing leadership and setting strong examples by disclosing ambitious climate goals.

Forerunners will be in a unique position to meet the needs of stakeholders and attract new customers through public disclosure of emissions, progress toward climate targets, and demonstration of environmental stewardship.