Executives representing more than 70 insurance companies around the world yesterday indicated that they would be reviewing their investment strategies to support more environment-friendly alternatives to burning oil and coal. One of them, Ms Tessa Tennant of NPI Global Care Investments, even suggested that advertisements for oil and petrol should carry government health warnings to raise public awareness about climate change.
Mr Andrew Dlugolecki, assistant general manager at General Accident, said insurance companies with large shareholdings are now analysing their strategies, in particular for the energy, transport and tourism industries.
"If they have not got a strategy to deal with climate change, they will not be a good investment. We are not saying to member-companies that they should not invest in coal or oil, but to give serious thought to whether these industries can cope with the future".
Mr Dlugolecki was speaking at a news conference on the fifth day of the Kyoto Climate Change Summit as delegates representing 147 countries continued their negotiations on a legally-binding protocol to reduce greenhouse gas emissions.
The 70-plus companies involved in the UN Environment Programmes Insurance Industry Initiative have annual revenues exceeding $2 trillion and thus cannot be ignored. They have emerged as an important counterweight to the fossil fuel lobby.
It has been estimated that as much as one-third of investments in global stock markets, amounting to more than $15 trillion, are managed by insurance companies and pension funds. "We have a serious duty to safeguard our funds", Mr Dlugolecki said.
In their position paper, published yesterday, the companies allied with UNEP said it was "in the interests of the industry to understand better the investment opportunities and challenges which will arise from measures to reduce greenhouse gas emissions."
They warned that even small shifts in regional climate zones or storm patterns, brought about by global warming, carried the risk of a "large increase" in property damage, which would leave the industry exposed to massive claims. Natural disasters already represent 85 per cent of insured catastrophes world-wide, amounting to $12.4 billion in 1995.
But climate change poses other risks, too. For example, changes in human health due to the spreading of diseases may affect the life assurance and pension industries, while shifts in agricultural production could have an impact on crop insurance.
