A voice from the business world

The call for action could not be more urgent: In July, the Intergovernmental Panel on Climate Change issued a warning that the world risks missing its target of limiting global warming to 1.5 degrees, or 2 degrees at the most − unless we implement very strict climate protection measures very soon.

The recent extreme weatherevents seem to be a warning of what’s to come. The scientific community agrees that climate change will increase the frequency of naturaldisasters such as heat waves, devastatingflash floods and forest fires. I believe thereare three key areas that we have to addressin order to limit climate change and its consequences:

1. A global, or initially EU-wide, market for CO2 emission certificates.
If structured correctly, it would be the most effective way to reduce emissions whilst sending clear price signals in the process. Companies from allindustries will also be in a better positionto anticipate the approximate price trend,eliminating the need for ad hoc adjustments.The emission volumes in the EU tradingsystem have been set until 2030, but now it is important to adjust this volume controlquickly and in line with the politically setdeadlines down to “net zero”.

2. The development of new technologiesfor a climate-friendly economy.
Transitioning to a low-carbon economy means wehave to boost technologies and innovations on an exponential scale. Germany is in des-perate need of an innovative and pioneeringmentality, because the know-how for futuretechnologies is already available.

3. Preventive measures to lessen the already unavoidable consequences of global warming.
A comprehensive disaster management system aimed at preventing damage and building resilience will not only reduce human suffering, but will also be increasingly important in the international competition for locational advantages.
Things that cannot be reasonably prevented can generally be covered by insurance. Whether purely private or in partnership with the state, risk transfer must be linked to prices that accurately reflect the risk. This is the only way consumers, companies and communities can understand the risks and have the motivation to reduce them. It is up to insurers to use their expertise and data to provide the underlying basis.

As a risk carrier, we take climate change very seriously. We have been dealing with the consequences for almost five decades and focus on lower emissions on both sides of the balance sheet − in investments and insurance business. We play an important role in bringing renewable energy and other climate technologies to market and scaling them up, making them easier to finance and invest in using specific risk solutions.

A few examples: We have been covering performance guarantees for photovoltaic modules for many years and similar coverage is now being provided for large-scale energy storage systems. We provide cover for the yield of offshore wind farms when there is too little or too much wind. We are actively working on insurance solutions for hydrogen technologies. In other words, we are focusing on technology trends and the specific requirements of a climate-friendly economy in order to provide know-how, experts and eventually suitable risk management solutions.

Having in-house know-how and data is an important foundation for insurers −but it’s not enough. Close ties to research are also required, especially applied research, such as the research being conducted by the Fraunhofer-Gesellschaft. Their research projects on better water storage in cities during heavy rainfall through “urban greenery” or on storage systems in roads are particularly relevant for us as insurers. That’s why we often cooperate with Fraunhofer, for example in the operation of test fields for photovoltaic systems or the development of a wind energy data pool. All of these projects are very close to implementation and are important for investors in future technologies.

These technologies are essential in the fight against climate change; without them, climate protection would only be possible by compromising our prosperity. New technologies also provide an invaluable advantage that goes far beyond meeting climate targets: They would dramatically increase Germany’s and Europe’s competitiveness in key technologies of the future. This would also enable us to take our destiny into our own hands again — something that would do this country a great deal of good.