Making cents

摘要

Financial institutions are increasingly paying attention to environmental matters and, more specifically, to climate change. However, the response needs to be more than just a PR exercise or CSR activity. Climate change is a reality and bottom lines are at risk. Climate change needs to be at the heart of financial institutions' concerns. These institutions are vulnerable, as the timing of their liabilities lies in the future. For example life insurance liabilities last around 30 years; general insurance long-tail claims are around 10 years; pensions cover individuals' lives; and bank loans typically last around 20 years. As a result, according to the experts, the timing of climate change's catastrophic consequences may well coincide with liabilities of financial institutions and significantly increase these insurance claims.