LEADING INSURANCE FIRMS TAKE ENVIRONMENTAL PLEDGE
Press Release
HE/919
LEADING INSURANCE FIRMS TAKE ENVIRONMENTAL PLEDGE
19951124 GENEVA, 23 November (UNEP) -- Recognizing the role of the insurance industry in managing and reducing environmental risks, 14 insurance companies from around the world are signing a statement of environmental commitment here today at the United Nations Office at Geneva.The statement commits its signatories to incorporate environmental considerations into risk management and to adopt best practices. Managing and reducing environmental risk should be considered a core activity. For example, insurance products and services can contain loss-prevention and other contract terms and conditions that promote sound environmental practices by industry.
The statement also emphasizes that sustainable development goes hand in hand with sound business management. It further recognizes the precautionary principle, which states that where there are threats of serious or irreversible damage, lack of full scientific certainty or the inability to fully quantify costs should not be used as a reason for inaction. It adds that environmental responsibility should be communicated to employees, government and the public.
The initiative will encourage research that identifies effective, implementable solutions. Dialogue with regulators is essential to create an appropriate economic framework. The statement adds that good communication with all stakeholders, including the media, the public and customers, will improve society's response to environmental challenges such as pollution, conservation and climate change.
The companies represent a significant force in the insurance industry. The United Nations Environment Programme (UNEP) Steering Committee for the group includes General Accident Fire and Life Assurance Corp. (United Kingdom), Gerling-Konzern Globale (Germany), N.P.I. (United Kingdom), Sumitomo Marine & Fire Insurance Co. Ltd. (Japan), Swiss Re (Switzerland), and Uni-Storebrand SA (Norway).
"Insurers understand that environmental risks are business risks, pure and simple", says Hans Alders, Director of the UNEP Regional Office for Europe, which is sponsoring the signing ceremony. "They know that a few major disasters caused by extreme climate events or toxic waste spills could literally bankrupt the industry in the next decade."
- 2 - Press Release HE/919 24 November 1995
Insurers are still reeling from a series of unprecedented multi-billion dollar losses caused by extreme events. Over $50 billion in claims have arisen in just 12 storms since 1987. At the same time, there has been a significant increase in severe floods and droughts worldwide. A soon-to-be published report by a United Nations panel of scientists and experts reveals that there is strong evidence that human-induced global climate change has already begun. It is expected that incidents of extreme drought and precipitation will increase as a result.
Other major sources of environmental risk are hazardous wastes, contaminated landfills, and industries that pollute.
Because assessing uncertainty and quantifying risk is the essence of their business, insurance firms are naturally more sensitive -- and more sensitized -- to environmental risks than many other businesses. They have a strong financial incentive to promote better environmental management by the firms and industries that they insure. In addition to reducing their costs and risks, environment-friendly insurance firms can benefit from good publicity, new customer leads, and encouragement from government regulators.
They can also profit from new opportunities in environmental investing. Insurers, pension funds, and other asset managers increasingly recognize that "green" industries such as renewable energy and ecotourism offer good long- term earnings potential. Investors with good environmental knowledge are best positioned to take advantage of this.
All insurance companies with an environmental policy in place or in the process of preparing one are eligible to become signatories to the statement. The UNEP and the participating companies will continue to sponsor workshops and other events to promote wide acceptance of the statement by the insurance industry world-wide.
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