The European Forum for Risk and Insurance professionnals
It means reconciling the many aspects of our lives as workers, consumers, citizens, neighbors, parents & sons and daughters, dreamers! … with the environment that sustains it.
It is about reducing cognitive dissonance between what we know is good for our planet, our health, our societies, with the way we actually go about our lives using transport, energy, water, food, shelter, the way we shop, we produce, we invest.
Growth is often used as a measure of economic prosperity but in truth growth should be seen as a fundamentally human movement, embracing life and progress. We like to see our children grow, or our gardens grow.
Making this connection between the economy and the social and environmental outcomes that determine our wellbeing and the livability of the planet is the objective that the European Commission has been pursuing for a while now, but which will take a new dimension with the incoming administration in a few weeks. The last European elections were marked by a strong concerns on climate and environment and these are now in the top priorities of most EU citizens.
The EU has set itself the target to become the first climate-neutral major economy, and we also want to move towards a more circular economy and less pollution, a sustainable agriculture and better protection of biodiversity and generally we want to promote stronger collective actions to make our people, assets and ecosystems future proof.
All this will require decisive action, which we will aim to take forward urgently, but also, the European-way: leaving no-one behind and making sure that the economy works for people and not the other way round. It will also require that financial markets and the private sector move with us, in the same direction.
We are on track to meet our ambitious Paris Agreement goals and 2030 targets. However, we need to go further and faster if we are serious about climate neutrality in 2050.
We currently have a goal of 40% emissions reduction by 2030. The new President elect has committed to putting forward a comprehensive plan to increase the European Union’s target for 2030 towards 55% in a responsible way.
We can be more ambitious, but this will require an in-depth transformation of the economy and society in a way that is socially fair. Every person and every sector will have to contribute.
At the same time, we need to increase our resilience against climate change.
In addition, to achieve real impact the world has to move together. Therefore, the EU will step up efforts to increase the level of ambition of other major emitters.
The European Commission has already made great strides in many policy areas to make climate action a priority. But going to net zero will mean looking at every emitting sector with fresh eyes, for example for industrial processes, sea and air transport or agriculture, where net zero solutions are not yet available.
To help drive change, we notably need to review our industrial strategy and invest massively in clean technologies, we need to design a more circular economy where materials and nutrients are reused rather than disposed of. We need to review our land use practises, the way we farm and probably what we eat, hence the forthcoming “Farm to Fork” initiative. It also requires accelerating the transition to already known solutions such as renewables, energy efficiency, and clean mobility.
This requires massive investments in infrastructure but also record amounts in cutting-edge research and innovation beyond the reach of the public purse. This is why the European Commission has made it a priority to reform capital markets to put sustainability at the heart of the EU’s financial architecture.
Risk management is not an option. It is a necessary condition to build a sustainable economy. Independently of the success of our collective efforts to reduce greenhouse gases emissions, we should ready ourselves for an inevitable increase in frequency and destructiveness of extreme climatic events such as storms, floods, wildfires, droughts and heatwaves for at least the next three decades.
How we make use of this knowledge and how we deal with risk in the decades to come can make a world of difference to Europeans.
At one end of the spectrum, business as usual can mean a sustained string of economic losses and human suffering as diverse extreme events compound into costly business interruptions, productivity losses, failing crops, critical infrastructure disruptions potentially leading to a cascade of failures in the food and feed, energy, water, ICT and transport sectors.
At the other end of the spectrum, if handed out easy to use and relevant climate risk information, public authorities, businesses and individuals can exercise their independence of choice in how they navigate their way through challenges and opportunities brought about by climate change, while protecting and supporting those who are genuinely vulnerable.
This is the vision the European Commission will be working on in its adaptation policy design in the next years.
I would take a page out of the kids’ workbook: dare to be inconvenient.
Above all, we cannot let inertia, business as usual and shortsightedness impede action. Global interconnectedness of economic, social, technical and biological systems means that we fail or succeed together. Those who understand and manage climate-related risks will not only emerge stronger but will make everyone stronger.
While governments are responsible for incentivizing and leading risk prevention and reduction. Risk is ultimately the result of decisions that we all make, either individually or collectively. We must own the consequences of our decisions, our action or inaction, and the risks that we create and propagate. Because we cannot own what we do not know or cannot measure, this puts you, Risk Professionals at the heart of our current predicament. You can inspire change, hence you must.
A call for confident, informed, swift action to fight climate change while at the same time increasing our resilience to its impacts, and assurance that the European Union is designing a political, legal, and financial framework that supports and stimulates such action, with only one shared objective: a just transition to a climate neutral world.
Yvon Slingerberg will open our Sustainable Growth Panel on Tuesday 19 November, click here for more information on her session – How can risk management help business build a sustainable economy ?