As we embark on a new year and reflect on the past 12 months there is certainly a lot of news to digest. It is no surprise that the dominating news this year concerned the global coronavirus pandemic, but there was also a considerable amount of news of significance in the area of climate change and the environment which at times overlapped with coronavirus news. See below for a round-up of notable climate change stories from 2020 which highlight promising developments in the global road to recovery with private and public actors taking steps to secure a greener and more sustainable future, as well as the current climate change risks and the impact of these on society and the insurance market.
Global stories
- China's President Xi Jinping pledged that China would become carbon neutral by 2060. This surprise announcement was announced at the UN climate meeting in September 2020.
- The oil industry experienced a price collapse largely due to the global pandemic in 2020. At the same time and for the first time ever, NextEra Energy Inc., the world’s largest supplier of wind power, overtook Exxon Mobil Corp. and Chevron Corp. to becomethe world’s most valuable energy company in terms of market value. This could be a strong indicator that people are embracing clean energy and rejecting fossil fuels on a global scale.
- In November 2020, the U.S. voted to make Joe Biden, who adopted climate change as one of his signature campaign issues, its next president. On his first day as President, he moved to reinstate the US to the Paris climate agreement. A promising start for a more sustainable future, and a stark change to 4 years of the Trump administration that had rolled back more than 80 environmental rules and regulations.
- The west coast in the U.S. as well as large parts of Australia suffered from widespread wildfires and there was a record-breaking number of Atlantic hurricanes. The world’s 10 most costly weather disasters of 2020 saw insured damages worth $150bn, topping the figure for 2019 and reflecting the long-term impact of global warming. Munich Re reported that worldwide, natural disasters produced losses of US$ 210bn, with insured losses of US$ 82bn and that floods in China were responsible for the highest individual loss of US$ 17bn, only around 2% of which was insured.
- Oil major Exxon Mobil Corp announced plans to reduce its greenhouse gas emissions over the next five years.
- Sustainable investing has been on the rise for a few years and 2020 saw that trend continue. According to PwC, almost 60% of Mutual Fund Assets in Europe will be held in funds that consider environmental, social and governance factors by 2025, or 7.6 trillion euros ($8.9 trillion), up from 15.1% at the end of last year.
- In 2016, a group of organizations including Greenpeace Nordic launched a lawsuit against the Norwegian State regarding the allocation of new oil drilling licences in the Barents Sea. They argued that it violated the Norwegian Constitution, which states that citizens have the right to a safe and healthy environment. The case reached the Supreme Court in November 2020. The majority voted in favour of the Norwegian state. A statement from Greenpeace Norway read “The Court has let the government off the hook at this time, but leaves the door open for an assessment on climate impacts, including emissions after export, at the later production stage. This should be a warning to the oil industry.”
UK / Regional stories
- In regional news, UK Energy Ministry BEIS announced in November 2020 that its fourth round of the Contracts for Difference (CfD) scheme, opening late 2021, will aim to double the capacity of renewable energy compared to the last round and expand the number of technologies supported. The Government has ambitious plans for a green industrial revolution as BEIS will allocate supports for up to 12GW of new renewables projects at its CfD auction which will open in late 2021.
- On November 9, 2020, the United Kingdom became the first country to move towards mandatory climate-related disclosures when it announced its intention to require such disclosures (aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures) across seven key sectors of the UK economy by 2025.
- In December 2020, SHEChangesClimate sent an open letter to the UK Government, calling on them for greater accountability and transparency on gender equality in the COP26 leadership team. The letter has been supported by over 400 female climate leaders calling for 50:50 split of men and women in the top negotiating team. When their campaign began in November 2020, there were just 15% women that could be identified on the UK COP26 Leadership Team.
- In 2020, a UK coroner ruled that the death of a nine-year-old girl with severe asthma in 2013 was partly caused by the illegal levels of air pollution she was exposed to near her London home. A Southwark Coroner's Court found that air pollution ‘made a material contribution’ to the girl’s death. This was the first time anyone in the world had air pollution listed as a cause of death on their death certificate. “While the science has been unequivocal for years that air pollution is significant threat to public health, the coroner’s unambiguous finding is a legal first and will certainly send a signal to the U.K. government,” said Katie Nield, a lawyer at environmental law charity ClientEarth.
Facing up to climate change must now be top of the agenda for the insurance market. We discuss how best to respond to the challenge on Informed Insurance.
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