Ladies and gentlemen, I am very grateful for your kind invitation to speak this morning and for inviting me to launch the ClimateWise Principles – particularly after I have been such a nuisance to you over the past year! This is a very important day for the insurance sector and I am so pleased to be able to congratulate in person those who have been involved and, if I may say so, shown such remarkable leadership within the business community. Incidentally, I also want to thank you for the support which you give to my Prince’s Trust. Indeed, I understand that some of your offices may be somewhat denuded later today by the first Prince’s Trust Insurance football tournament, generously supported by AXA and, I hope, well-insured against injuries!
Now, perhaps rashly, I thought you might be interested to know something of the genesis of the principles which Tom Woolgrove will be telling you more about in a moment or two - or perhaps you might not!
I really don’t need to remind you that no-one takes a longer term or more carefully calculated view of the future than the insurance sector. And there can be few other sectors which are so directly affected, at the end of the day, by climate change. It was for both these reasons – and, of course, because I could not resist another spot of meddling! – that it occurred to me about a year ago to ask the Association of British Insurers and leading insurance companies if they might consider working together to find ways of tackling global warming. I felt that if insurance companies could take a strategic view across all aspects of what they do and look at the problem as part of the whole business, it just might make a difference. For instance, incorporating climate change into your investment strategies; encouraging customers to mitigate the effects of climate change and reduce their greenhouse emissions through the insurance products you sell them; and making climate change central to your business strategy and planning at Board level. That is the key, of course. It has to be at Board level.
I can only say that I have been delighted by the way in which the ABI and leading companies have engaged with me on this and, indeed, tolerated my importunate demands. After nine months’ intensive activity by a working group involving my Business and the Environment Programme and Business in the Community – both of which I am President - the ClimateWise principles have been developed. I am enormously grateful to all those involved, particularly Peter Hubbard, Stephen Haddrill and Katy Cornish. Thanks to them and the team, the insurance sector now has a minimum standard for action on climate change. Already we have thirty-seven companies signed up and I cannot thank them enough for being prepared to take a lead in this way. From today, I hope we will see the rest following their lead. And I need hardly say it would be splendid if this whole initiative could provide a template for other sectors and that we might see the same approach being taken in every business sector.
Well ladies and gentlemen, the insurance sector is now in the vanguard, but I am convinced there is a lot more we can do. We need whole sectors of our economy to collaborate, with each other and with other sectors of society, in an extraordinary effort to make a difference - before it is altogether too late. And it is all moving so very fast. Until recently climate change was perceived as a problem for the next generation. Now scientists are saying the problem is so grave and so urgent that we have less than ten years to slow, stop and reverse greenhouse gas emissions. A pretty sobering thought if you think about it long enough…
Over the years I think I have heard just about every excuse as to why companies can’t work together. There are suggestions that even talking to one another will bring down whole armies of corporate lawyers breathing fire and bearing writs for anti-competitive behaviour. And I have heard that shareholders won’t like it and that benchmarking is unfair because not everyone can come top. But you have proved that this is not the case; that in the face of the almighty threat the world faces from global warming, people can do things they never thought possible. And that is the only way forward for us now. I have said it before – and I will say it again - we have to think of this as if we were in a wartime situation. Not easy to do, I know, but that is the seriousness of the threat faced by mankind. (And if you don’t believe me, look at Al Gore’s film.)
There are signs of optimism ... I was, for instance, struck by the success of my May Day business summit earlier this year, organized by Business in the Community, which involved over one thousand companies and resulted in 600 of them making over 5,500 pledges to take action to combat climate change. And I dare say it, there are a lot more companies out there! Secondly, I have been particularly encouraged by the growing influence and success of the Corporate Leaders Group on Climate Change, which now has a sister organization in the European Union and the ear of President Barroso. And it was very encouraging to hear Former Vice President Al Gore say in July that in his vast experience there is no country in the world where business and Government are so aligned on this issue as here in the United Kingdom.
Ladies and gentlemen, there really is, I think, no alternative to the kind of collective action I am talking about. No-one here surely needs me to tell them that climate change is happening now and is having devastating consequences. Since 1990, weather-related insurance claims have cost an average of £825 million per year in the United Kingdom, and have exceeded £1 billion in four out of the last fifteen years. Estimates suggest that this disruption cost the British economy £3.9 million for each day above 32 °C and £8.7 million for each day above 37 °C. This is bad enough, but there is a very human cost to these stark figures. I have stood with families in their devastated houses in Toll Bar, in Rotherham, in Tewkesbury and in Upton on Severn – their possessions gone, their lives disrupted beyond imagining. I have seen businesses all but wiped out – a blow for the economy and countless families made anxious as jobs are put at risk. Incidentally, I have also heard some encouraging stories of the speed with which some insurance companies have responded to these disasters and have gone the extra mile for their customers, so I just wanted you to know how much this is appreciated when things are so desperate for people.
Now I realize that one has to be careful about making direct links between climate change and individual weather events. But the scientists are clear that there is a link, albeit complex, between changes in climate and regional and local weather events, and that changes in the global climate can be expected to lead to extreme weather events on an increasing scale. What we have witnessed in this country recently – and in the United States two years ago – is bad enough. But perhaps the great injustice of climate change is that it is poor people and nations that are clearly going to suffer most from it, and yet have contributed least to the problem. The UN’s Intergovernmental Panel on Climate Change published a report earlier this year on the impacts of climate change. It made harsh reading. It projected that 75 to 250 million people across Africa could face water shortages by 2020. Crop yields could increase by 20 per cent in East and Southeast Asia, but decrease by up to 30 per cent in Central and South Asia. Agriculture fed by rainfall might drop by a half in some African countries by 2020. Twenty to 30 per cent of all plant and animal species are at increased risk of extinction if temperatures rise between 1.5 and 2.5 degrees Celsius. In fact, I saw a report yesterday evening about the effects on species of animals, plants and birds that will be driven towards extinction as a result of exactly this.
And glaciers and snow cover are expected to decline, reducing water availability in countries supplied by melt water. Already we hear the alarming news that Arctic ice is melting three times faster than any of the computer models predicted.
There is an African saying that “we have borrowed the present from our children”. Ladies and gentlemen, if we go on as we are, we are not borrowing it, we are stealing it. This is why we – the rich countries in the Northern Hemisphere - must accept responsibility and take the necessary action. And it is why what you have launched today is so enormously important.
After all, what could be more important than concentrating our minds and working together to save this planet from disaster? Never before has human activity had such irreparable consequences. Each age has had its own driving force, whether the age of discovery, conquest, economic expansion, or imperial endeavour. Now, surely, protecting the future for our descendants and for those worst off in this world must be the driving force.
Insurance companies are today playing a leading role on climate change – helping society to take decisions to reduce carbon emissions in the future and thus enabling everyone to both mitigate and adapt to the realities of climate change. However, this is just the beginning of the process of real change. These principles set out a common platform to take forward the measures that the insurance companies need to put in place to help business and society make the changes needed to tackle climate change.
I can only reiterate my gratitude to the Association of British Insurers and the founding signatory companies for displaying such foresight and decisiveness and I pray that every insurance company (they tell me there are some four hundred of them) can find a way to follow your example and sign up to these principles in the very near future.