On 20 June 2014, WWF, RSA and PwC brought together participants from insurers, environmental analysts and campaigners to discuss environmental systemic risk (ESR). Here are my thoughts on how it went.
I was both excited and nervous going into the roundtable to launch the report on ESR. Would we get good representation at the meeting? Would we have an engaged and challenging debate? How might we take it forward?
This is such an important subject as we know that we have limited natural resources and the consequence of our actions (consumer and business) already mean that more than 60 percent of our ecosystems are in decline. If we want to reduce the threats on our natural environment and manage our natural resources more effectively, we need businesses to start factoring this thinking into their business strategy and assess the links between their activities and the impact on ecosystems. In particular, deteriorating ecological systems have the potential to create impacts that cannot easily be predicted on historical experience alone. This increases the importance of investigating the links between economic, political and ecological systems or in other words understanding systemic risk.
The signs were good when we struggled to fit everyone around the table and introductions indicated we had a good mix of representatives from industry, academia, government and civil society.
The event was ably chaired by Nick Robins, Co-Director, Inquiry into the Design of a Sustainable Financial System at UNEP, who challenged attendees to really engage in the debate. The use of case studies in the report really helped illustrate the complexity of the issues we are facing and were very useful in terms of framing the debate – how do you anticipate how seemingly unconnected events such as deforestation, use of fertilisers, straightening of rivers might combine to have a significant detrimental effect on a business or industry or even range of industries?
It was clear from the discussion that the insurance industry is already bearing the consequences of these impacts and recognises that changes are required, whether within the data used, the models applied, or through engagement and education leading to behaviour change. I was very pleased to see the theme of collaboration and partnership coming through the discussion and a desire to continue to work together and to engage others who were not at the table in the debate.
The discussion was broad ranging covering risk and opportunity both from the liability and asset perspective and it was encouraging to see what work was already under way in terms of working with clients on adaptation, mitigation and resilience. However the audience did recognise that it is early days, that the insurance industry needs to take the lead and act together and momentum needs to be maintained.
So how do I feel now?
I came away feeling energised by the level of engagement and willingness to commit (thank you PwC for offering to host a follow up meeting).
This is a complex issue and not one which will be solved in the short term, but unless we do start to act, globalisation and the interconnected nature of the world we live in means that changes in regions, markets and the environment will have increasing repercussions for the economy and society as a whole.
For more information download the report on Environmental Systemic Risk (PDF)