2 November 2015: The UN Environment Programme Finance Initiative (UNEP FI) Principles for Sustainable Insurance (PSI) Initiative and the AXA Group, a global institutional investor, have published a report that showcases how cities and small and medium enterprises (SMEs) are building resilience to climate risks, and highlights the important role the insurance industry plays in working with cities and SMEs to help build resilient and sustainable communities and economies.
The study, titled ‘Business Unusual: Why the climate is changing the rules for our cities and SMEs,’ is based on a survey of more than 40 urban/city leaders, and a survey of more than 1,000 SME directors and urban leaders from major cities in 18 developed and developing countries.
The report addresses: how cities and SMEs will adapt to the impacts of climate change; how they manage economic, social and environmental risks; and challenges and obstacles that hinder resilience efforts. In addition, the report acknowledges that many urban and SME leaders believe “we have already come too far to fully mitigate the threat of climate change.” Thus, cities have developed and built adaptation strategies to ensure their infrastructure and populations are more resilient to climate impacts.
According to the report, many SMEs are unprepared to deal with the impacts of climate change. Only 26% have a strategy or plan in place to deal with potential climate-related risk, 65% are worried about climate change impacts on their business, with the figure rising to 75% among SMEs from emerging markets, only 25% believes their business is well prepared to deal with climate impacts, and 74% of SMEs believe that insurance companies can help reduce climate-related risks.
The report: explains that the insurance industry can advise SMEs on how to assess climate risks and develop resilience plans; emphasizes dialogue with insurers to better understand the evolving nature of risks faced; and highlights education and awareness, and the pricing and design of products services that incentivize resilience measures.
Butch Bacani, UNEP FI PSI, said the report shows how the insurance industry can work with cities and SMEs in helping build resilient and sustainable communities and economies. He emphasized that risk management and collaboration are “at the heart of sustainable development.” [Axa Group Press Release] [Publication: Business Unusual: Why the Climate is Changing the Rules for Our Cities and SMEs] [UNEP FI Website]