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European insurers and reinsurers were among those in the business community sharply criticizing President Donald Trump’s decision to withdraw the United States from the Paris climate agreement, while their U.S. counterparts largely stayed mum — with a few exceptions.
The Paris agreement, which was reached in December 2015, reaffirmed a goal of limiting the global temperature increase below 2 degrees Celsius and committed countries to develop plans to reduce emissions and regularly report on their progress, among other actions. The United States, under former President Barack Obama, was one of 195 countries signing on to the agreement.
However, President Trump announced on June 1 that the United States would withdraw from the agreement and begin negotiations to re-enter the accord or a new agreement.
“The Paris climate accord is simply the latest example of Washington entering into an agreement that disadvantages the United States to the exclusive benefit of other countries, leaving American workers — who I love — and taxpayers to absorb the cost in terms of lost jobs, lower wages, shuttered factories, and vastly diminished economic production,” he said.
Mindy Lubber, president of Boston-based investor coalition and sustainability advocacy group Ceres, called pulling out of the Paris agreement “a grave mistake” and noted that the United States now joins Nicaragua and Syria as nonparticipants.
“This administration is making some wrong-headed decisions as it relates to our environment overall and to climate change as one part of that,” she said.
European reinsurers were among the business leaders sharply criticizing the withdrawal.
“The Paris agreement is a first and very important step in mitigating global warming and its risks, and it is therefore a serious blow for the U.S. to lessen its support of such measures,” Tony Kuczinski, CEO of Princeton, New Jersey-based Munich Reinsurance America Inc., said in a statement on Thursday. “Our absence from such a commitment defers important leadership on this issue, when, according to the (U.S. Environmental Protection Agency), the U.S. is the second-largest emitter of carbon dioxide, while representing only about 5% of the world’s population. Mitigation and resiliency efforts are especially important in the U.S., which is heavily exposed to natural disasters and would face greater risk in a warmer climate. From both an economic and societal point of view, the costs of mitigating risk from climatic hazards are far less than rebuilding communities after an event.”
“Swiss Re very much regrets President Trump’s decision to withdraw from the historical Paris climate accord,” the Zurich-based reinsurer said in a statement on Thursday. “We have been researching climate change and its effect for the past 30 years and we can say: It is a real threat.”
Munich-based Allianz S.E. signed on to a statement by the B Team — a coalition of business leaders that has pledged to address social, environmental and economic issues within their organizations even if a widespread policy is not followed — denouncing the decision but vowing to move forward with participating nations. The insurer declined to comment on specific political announcements, but stated that its understanding of corporate responsibility includes a comprehensive environmental social governance approach.
“We are convinced, that climate change poses a major risk to the livelihoods of millions of people worldwide,” Allianz said in a statement on Thursday. “Insurers are exposed in two ways: through policies covering damage caused by natural disasters, storms and floods, and as large-scale institutional investors with significant stakes in companies affected by changing weather patterns, tightening regulation and/or shifting consumer behavior. At the same time, this challenge creates opportunities and incentives for the development of new products and services that can drive economic development and generate social benefits.”
Ms. Lubber praised the leadership of Allianz and European reinsurers on climate issues.
“In many ways, insurance companies are not weighing in overall on policy and they don’t,” she said. “It’s not uncommon that they would stay out of the policy debate. That said, the insurance industry is profoundly impacted by climate change. If you look at the storm data, if you look at the areas that have been impacted by climate change, the tens of billions of dollars from Hurricane Sandy and the damage it created, the insurance industry has a very strong role to play, and sometimes I’m disappointed that short of some of the European reinsurers or a handful of insurers in the country, we’re not seeing enough action.”
Ms. Lubber highlighted the efforts of Hartford Financial Services Group Inc., which has earned high marks from Ceres for its climate risk disclosure efforts, and Boston-based Blue Cross Blue Shield of Massachusetts; both insurers advocated in favor of the Paris climate agreement.
“They have stood out and stood up on climate change policy,” she said.
Insurers will still face pressure from organizations such as Ceres and certain state regulators to disclose climate risks and address climate change. California Insurance Commissioner Dave Jones vowed in a statement on Thursday to continue to require insurers to disclose publicly their investments in oil, gas and coal “because of the financial risk that these carbon assets will become stranded assets of declining value as the world continues, despite the president, to move away from burning carbon.”
Mr. Jones said he will also continue asking insurers to divest from thermal coal because of the financial risks associated with these investments.
Climate change is likely to result in a higher number of more expensive wind storms in the United Kingdom, according to a study released Tuesday.