And having heard that Lynn de Rothschild has just addressed you all before I came, I don't really need to say anymore, I don't think! She herself is a force of nature and I recently, at her insistence, addressed her Inclusive Capitalism conference, which she so brilliantly organised some weeks ago I congratulated her on that, and now she's doing so much to try and push the messages that I think you may be hearing quite a lot of today. And Ladies and Gentlemen, if I may again say so, it is enormously heartening to see such a large number of C.E.O.s and senior staff from the international insurance and financial sectors, alongside regulators from Basel and colleagues from the O.E.C.D., the World Bank, the U.N. Agencies and accounting organizations. Now, if I may, I would also like to congratulate Rowan Douglas on his achievement in organizing this meeting, as well too, for his wider work on insurance and risk reduction.
I must say, I was just thinking that presumably a gathering like this is at a bit of a premium? Talking of which, and bearing in mind the subject of this summit, it has always been something of a surprise to me that the precautionary principle does not seem to be appropriately reflected in insurance premia. I am sure people will be queuing up to explain precisely why that is the case, but as far as I am concerned, being a mere amateur and rather ignorant of all these niceties, precaution is certainly what we need in these challenging times! And, incidentally, it is what I was trying to get through to the Association of British Insurers when I asked them in my interfering way, to come and discuss disaster, risk reduction and climate change issues back in 2006, and which finally, I'm glad to say, led to their Climate Wise initiative, which for some reason or other we can't get any United States insurance company to join. So if there are any here today, it would be a jolly good thing if you actually thought of joining!
Now Ladies and Gentlemen, I am delighted that you have devoted so much of your meeting this week to discussing the essential issues of climate change, of disaster risk-reduction and resilience. I am convinced that your collective professional insight and expertise not to mention the combined financial assets for which you are responsible! can add great weight to the international discussion and agreement on these issues over the coming months.
It seems to me that a clear-sighted and lucid private sector voice is particularly critical as we approach the renewal of the United Nations Hyogo Framework for Action on Disaster Risk Reduction in March 2015. That will be of course a few months before the agreement in September 2015 of the U.N.'s Sustainable Development Goals (S.D.G.'s), and we hope beyond hope the successful conclusion of the next phase of the U.N.F.C.C.C. climate negotiations in Paris in December 2015, which I know we all expect, hope, will be given a boost by the U.N. Climate Leaders' Summit in September.
Well I certainly hope that your shared voice and insights will inspire a strong and ambitious private sector commitment to this three way interlocking and mutually reinforcing set of U.N. negotiations. Now to many people, these and other contributions will be just words, spoken in distant places and with only limited resonance. But those words will shape decisions that have a material impact on the future well-being of the entire planet and of its people. What the world needs to hear is words that amount to much more than aspirational declarations of intent. We have heard those before, endlessly. What we need now are concrete, substantial and measurable commitments. Nothing else will do.
I do pray that everyone concerned now really sees that the process of revising the Hyogo Framework offers an important opportunity to build on, and accelerate, the significant progress made in disaster risk-reduction in the last ten years. There is a pressing need for a revised Framework that can guide the targets and commitments that have to be made in the Sustainable Development Goal and Climate Change agreements. In fact, it can be both an important bridge between the S.D.G.'s and the U.N.F.C.C.C., and a critical reinforcement.
It is my strong conviction tested and honed in the fire, I can assure you, for, I suppose, over forty years now that truly sustainable development has to be founded on the principles of resilience and a proper appreciation of risk. But they in turn are underpinned by fundamentals such as systems health, ecosystem functionality and the need for all of humanity to live in harmony with the environment that sustains us. These natural interactions and interdependencies are in all our best interests wherever and however we live and in the interests of biodiversity and of the planet itself. But can I just emphasise that it is the poorest people on Earth who depend most crucially on the durability of biodiversity and healthy ecosystems what Pavan Sukhdev of The Economics of Ecosystems and Biodiversity (T.E.E.B.), now called the Natural Capital Coalition; he so brilliantly describes as the "G.D.P. of the poor", dependant, as again he points out, on the current economic invisibility of Nature. It's a very good way of putting it, because we don't actually think about it enough we don't measure it, we don't value it, we certainly haven't got to the stage where these are things we've tried and tried, whereby we all agree on methodology for valuing the services that Nature provides use with, through these functioning eco-systems now constantly under threat and therefore, as you can imagine the urgent need to develop a market for eco-system services, which I think would benefit the poorest people on earth.
Now you might think and I certainly do think - that disaster risk reduction should be a matter in which every sector of society should be fully engaged, yet I am told that only half of the countries currently assessing progress against the existing Hyogo framework report any engagement with businesses on disaster risk-management. That seems incredible, yet I am assured it is true. The private sector clearly has much to contribute to those discussions. Banks, financial institutions, insurance companies and institutional investors all have a role in assessing the risks to their businesses posed by climate change and natural disasters (and, mark my words Ladies and Gentlemen, the risks are untold and catastrophic, potentially) and then taking serious, long-term actions to address those risks. This can be done by the private sector in every country, acting in accordance with each national context. I have seen this myself here in the U.K. in the context of the flooding of the Somerset Levels earlier this year and in the private sector's plans for and response to those dramatic and devastating floods.
One problem we face when discussing the risks from natural disasters is that there is a lack of studies comparing the relative economic, environmental and social costs required to develop resilience against those avoided by not having to pay the costs of disaster relief. It is a similar picture when you look at the way the world's development and humanitarian agencies tend to operate. They have historically spent the majority of their resources on addressing immediate humanitarian needs at times of crisis, rather than on taking the steps needed to prevent and mitigate crises beforehand. It is easy to understand why they have adopted that approach, but that doesn’t make it right. In recent years, advances in many areas, including climate science and the assessment of ‘big data’, mean that this is an increasingly out-dated approach.
Put simply, a comprehensive understanding of risk including the risks of climate change, the food-water-energy nexus and resource scarcity is now increasingly straightforward. It is also the best possible way a company or a nation can align its incentives and secure its prosperity in the long term. I cannot help thinking that the disclosure of disaster risk on companies' balance sheets, and indeed those of nations, would certainly concentrate the mind, just as integrated and natural capital reporting initiatives do. My Accounting for Sustainability project, which reaches its 10th anniversary at the end of this year, has helped companies to understand, reduce and internalize their impacts on the environment. In the same way, the revised Hyogo Framework provides an excellent opportunity for the public and private sector to work together on establishing an approach which is capable of ensuring much more prescient, precise and holistic risk governance in the future.
Ladies and Gentlemen, I was also struck, during a meeting I hosted recently, that among the issues of critical concern is the fact that there is no common methodology to assess the cost and impact of disasters. It seems to me that this makes any effort at arriving at an accurate evaluation and planning process quite complicated so with such a distinguished audience here today, I do just wonder if something might be done about this?
Ladies and Gentlemen, I can only conclude by trying to emphasize, if I possibly can, and reiterate the urgency with which we have to act, if we are to broker the ambitious, far-reaching, equitable and, indeed, visionary combination of international agreements that we need in order to set the world on a more resilient course between now and 2015. After all, for a precautionary approach to be effective, we need both a proper understanding of the risk, and a clear and precise set of actions that we can take and take soon and decisively to mitigate the problem. After all, what on earth is the point of waiting until Nature's bank goes bust too? My support is there, for what it is worth, if you need it, and I do pray your deliberations during the rest of today will prove to be the breakthrough that is so desperately needed and, believe you me, as a grandfather with a grandchild who along with all of yours will likely inherit the beastly mess we leave behind, it is desperately important you break through the sceptic and denier barrier and go "supersonic!".
Thank you Ladies and Gentlemen!