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The release of the 2023 United Nations (UN) Global Stocktake Report represents a crucial moment to evaluate our collective efforts to combat climate change, evaluate our progress since the Paris Agreement, and chart a sustainable course forward.
As the report highlights, this global stocktake is a process driven by the 193 parties to the UN, conducted transparently and with the inclusion of non-Party stakeholders. It serves as a comprehensive inventory of the world’s current state in terms of climate action and support, revealing both successes and shortcomings on the path to achieving the Paris Agreement goals by 2030 and beyond.
The report notes that there are opportunities for adaptation across systems and sectors, many of which have already been mainstreamed into existing development priorities and processes. It flags insurance as a key mechanism as part of a wider holistic approach to climate change adaptation, and points to the need to connect science with systemic action across hazards and sectors, such as advancing ecosystem-based adaptation or nature-based solutions and multi-hazard early warning systems.
As the report states, “Averting, minimising, and addressing loss and damage requires action across the spectrum of climate policies and sustainable development. There is an urgent need for more knowledge, understanding, support, policy and action to comprehensively manage risks and avert, minimise, and address loss and damage.
“Comprehensive risk management approaches minimise risks to the extent possible, offer opportunities for transferring that risk through climate risk pools and insurance programmes, internalise the risk and respond should an impact occur,” the authors add, “There are also significant barriers to accessing support for impacted communities, and a need to raise awareness of available sources of support and mobilise resources and technical assistance to those impacted.”
Insurance Development Forum Commentary
Notable aspects of the report are its emphasis on the importance of adaptation in the face of climate change, while the mentions of insurance in the context of opportunities for adaptation across various systems and sectors underscore the growing recognition of the need to prepare for and respond to climate-induced disasters.
While many adaptation efforts have been integrated into existing development priorities, the report makes it clear that these actions must be accelerated to enhance adaptive capacity, resilience, and vulnerability reduction.
Key Finding 2 highlights the necessity of systems transformations that mainstream climate resilience and low greenhouse gas (GHG) emissions development. To achieve this, governments and non-Party stakeholders must engage in credible, accountable, and transparent actions. This underscores the idea that climate action is not solely the responsibility of governments; it requires a concerted effort from all sectors of society.
The report also underscores the importance of transparent reporting on adaptation, which can facilitate better understanding, implementation, and international cooperation. Parties are encouraged to reflect their progress in mainstreaming adaptation and resilience actions when periodically updating their communications. Additionally, the increased inclusion of adaptation information in Nationally Determined Contributions (NDCs) and other reports reflects a growing awareness of the interconnectedness of climate impacts and adaptation progress.
Climate resilient development
Perhaps one of the most critical findings of the report is the urgent need to redirect financial flows toward low GHG emissions and climate-resilient development. Trillions of dollars are required to meet global investment needs, but many of these funds are still directed toward high-emission activities and infrastructure that lack resilience. Shifting these flows is essential to making rapid and sustainable progress toward the goals of the Paris Agreement.
In light of these findings, it is evident that the global community must accelerate project implementation and scale up ambition for new projects.
The role of insurance and risk financing
Climate change-induced disasters are becoming increasingly prevalent, causing significant economic and social impacts, particularly in low-income countries. Insurance and risk financing have proven to be crucial tools for resilience and recovery in the face of climate change-induced disasters – and it is the Insurance Development Forum’s (IDF) mission to extend these solutions and related risk management capabilities to the world’s most vulnerable communities.
The IDF is a public/private partnership led by the insurance industry and supported by international organisations. It was first announced at the United Nations Conference of the Parties (COP21) Paris Climate summit in 2015 and was officially launched by leaders of the UN, the World Bank and the insurance industry in 2016.
As well as optimising and extending the use of insurance and its related risk management capabilities, the IDF has a vision to improve global risk understanding and to create resilience platforms for sustainable growth and human dignity – a mission that aligns with the overarching goal to address climate change as a global community.
As the UN Global Stocktake Report and the IDF’s purpose and subsequent initiatives demonstrate, climate action is not just a governmental responsibility; it is a collective endeavour that requires urgent, coordinated efforts across public and private sectors.
Momentum and implementation
Since the launch of the IDF, we have worked to implement a range of ambitious projects to deliver on our mission and with a focus on vulnerable communities. In 2019 we launched a Tripartite Programme with UNDP and the German Government to support 20 countries by 2025 with technical assistance and focused support to strengthen their disaster risk financing systems. Since then, and despite challenges created by covid, we have surpassed this target with engagement already initiated with 23 countries. Of these 23 countries we have issued six sovereign risk transfer projects under the Tripartite Agreement, including Uzbekistan, Nigeria, Ghana, Mexico, Colombia, and Peru, with more in the pipeline for 2023.
The first 20 Tripartite projects are projected to benefit more than 80 million people, if implemented as planned with these benefits also having long term positive lasting impacts.
We have also achieved significant operational progress by pioneering the Global Risk Modelling Alliance (GRMA), which aims to provide countries with access to climate and disaster risk insights through new risk management tools, data, and access to operational risk finance expertise. This partnership with the V20 Group and joint GRMA programme is a practical operational expression of the urgent call expressed in the Global Stocktake report for “more knowledge, understanding, support, policy and action to comprehensively manage risks and avert, minimise, and address loss and damage”.
As an institution we have also driven and supported the momentum that has also been achieved with the Global Resilience Index Initiative (GRII), which aims to deliver the next generation of analytics to model the impacts of climate change across systems and supply chains, helping to define the asset level that is required for climate disclosure and risk management for the first time.
Our three pillars focused on implementation, engagement and advocacy have allowed the IDF to consolidate and deliver on our operational priorities, deepen and expand our engagement and influence across public and private sectors, and strengthen the convergence between insurance and disaster risk management and its contribution to society.
We plan to continue our series of implementation updates over the coming months, and as we head towards COP28 we will show the tangible impacts of our in-country projects so far.
As we move forward, it is imperative that we heed the call to accelerate project implementation, transform our systems, and redirect financial resources towards a more sustainable and resilient future for all.
14th September, 2023