We cannot turn a blind eye anymore. Global warming is a fact. The natural disasters that come with it and hit the world call for different policies apart from short-term measures. Different policies must be initiated by governments and businesses with big CO2 emissions.
Given the disaster scenarios that serious science is predicting with ever greater certainty, in my opinion the only conclusion possible is that the CO2 flow should be contained and reduced to nil as soon as possible. I also believe that we owe it to our children not to burden them with untenable future situations.
I was therefore not surprised by the judgment of the Supreme Court at the end of 2019, ordering the Dutch State to ensure, through policies, a faster reduction of CO2 emissions. Being the small country that it is, the Netherlands emits approximately 0.46% of the worldwide CO2. Only 33 out of the 208 countries are emitting more. Only nine countries have a higher per capita emission; India and China, for example, are not among these. How a small country can be big…
In the meantime, the Court of The Hague has ordered Shell, one of the world’s major CO2 emitters – larger than the Netherlands, even – to reduce its emissions by net 45% at the end of 2030, compared to 2019.
Besides these two examples close to home, thousands of climate-related lawsuits against governments and businesses are currently underway around the world. Growing scientific certainty about the consequences of climate change, and occurrences of large damage, strengthen the call for damages to be awarded by the courts. The courts, for their part, will be tempted to become less reticent on this point. The reason why many of these cases are won is the overwhelming evidence of imminent disasters. For example, it cannot be ruled out that a Peruvian farmer will successfully bring the German energy giant RWE – a large CO2 emitter – before a German court, to claim compensation of a pro rata part of the costs he has to incur in order to prevent flooding in his home town Huaraz.
Impact on the Insurance Sector
In light of the above, we observe that these developments will prompt insurers to consider seriously what current and future global warming means for their insured risks, such as storm and flooding. Here are some questions insurers are confronted with:
Which damage they do or do not wish to cover?
Which climate responsibilities do insurers and other financial institutions have?
To what extent do these responsibilities go beyond pondering the question what the impact of climate change will be for their insured or for insurable risks?
Please read the full, candid article by Chris van Dijk, originally published in VNAB Visie, a publication of the Dutch Insurance Exchange Association, volume 26, 2021, no. 2.
