Climate change: It’s a business matter too
How the private sector sees a growing business opportunity in tackling climate change
In 1973, a group of scientists published a report linking rising CO2 with global warming and some of the resulting meteorological patterns. It was one of the first publications on what would later be called ‘climate change’. Surprisingly, the report’s authors worked at Munich Re, one of the big players in the global insurance business. “Our industry […] started monitoring this issue long before the public even noted that there was a problem,” says Peter Höppe, head of the company’s Geo Risks Research division based in Germany. Höppe will join the roundtable “Climate: facts, figures and future” at the 4th European Conference of Science Journalism.
This anecdote is unusual, in that climate change is usually framed in the media as a public sector issue, concerning basic research, governance and policies. It is even portrayed as an ‘anti-business’ issue. “The private sector is actually playing a big role [in climate change matters] and the media have been bad at communicating that,” says Katherine Richardson, head of the Sustainability Science Centre at the University of Copenhagen, Denmark, who will also join the ECSJ’s roundtable.
Another panelist, James Painter, director of the Journalism Fellowship Programme at Reuters Institute for the Study of Journalism (RISJ), Oxford, UK concurs. “Several studies have shown a lack of business voices in the media coverage; that is now changing.”
Reinsurance and climate change
More than four decades after that report, Munich Re now has 35 researchers in its Geo Risks Research Division, spending a considerable proportion of their time on climate change as part of an effort to understand natural hazards.
Munich Re’s business is reinsurance. Primary insurance companies (like Axa, Generali, etc.) transfer larger risks to reinsurance companies – these include earthquakes in Japan and hurricanes in the USA. “To get a risk-adequate premium, we must make exact probability assessments,” says Höppe, who explains that “reinsurers take on the highest layer of risks of meteorological events.”
Some of the most visible and best-researched effects of climate change in the event of natural disaster losses are happening in thunderstorm-related events, he adds. These are linked to more humidity in the atmosphere in the northern hemisphere, caused by warmer oceans.
From problem to opportunity
Other business sectors are turning concerns about climate change into opportunities. An obvious example is the clean energy sector. “The investment in renewable energy has multiplied by six since 10 years ago, and two-thirds of the new electricity-generating capacity in the USA is based on renewable,” points out Richardson.
This trend has been widely adopted across the board. “Anything that can decouple greenhouse gas emission from our lifestyle has a market, from agriculture to IT,” she says. This may explain why companies, from Siemens to Microsoft, have formed joint climate change projects, called for urgent action, or supported the Paris Agreement.
However, the nature of the climate change discourse has yet to change. “A shift needs to take place in the way climate change is framed. The disaster frame and the scientific uncertainty frame are dominant in the mainstream media. However, the emphasis is slowly moving on [to] covering the solutions and opportunities,” says Painter. For example, projects like We Mean Business, the Corporate Climate Alliance, and the Risky Business Project are a starting point for those interested in this approach.
“The green transition is happening,” Richardson states, “and it’s so underway that one person, even if he is the President of the United States, is not going to be able to stop it.”