Optimism exists that damage to the world’s oceans, including overfishing, pollution, rising sea levels and ever more powerful hurricanes driven by warmer temperatures, can be reversed.
Bermuda’s signature international business — insurance and reinsurance — is seen as one of the brightest hopes for positive change. Discussions about how the industry and wider business community can assist the plight of the world’s oceans got under way at the inaugural Ocean Risk Summit in Bermuda.
The creation of an ocean risk index could be one of the most significant outcomes for the summit. Whether that happens is not a certainty, but The Economist Intelligence Unit and delegates will be working towards that goal.
Mike McGavick, chief executive officer of XL Catlin, which is the presenting sponsor of the summit, was one of the speakers on the opening day. He said: “Tomorrow we will be joined by the Economist Intelligence Unit who want to work with the group collectively to see if we can figure out how to create a genuinely meaningful index of the ocean risks. We can start using numbers to explain the objectives.”
Such an index could be a tangible and accessible way to promote a wider understanding of the risks faced by the world’s oceans, and to show progress in mitigating and reversing those risks.
The importance of addressing the plight of the world’s oceans was highlighted by experts from the spheres of science, conservation and business.
Queen Noor of Jordan, who works internationally on environmental issues with a focus on water, ocean health and human security, said: “Ocean impact has no borders, climate change has no borders and will impact us all.”
She spoke about how millions of people around the world are being put at risk by rising sea levels combined with increasingly powerful storms, and how warmer oceans are spreading dangerous bacteria across wider regions.
Queen Noor mentioned the loss of about half of the world’s mangrove forests, which are highly effective at capturing carbon dioxide from the atmosphere, and protecting coastlines from storms. She said increasingly acidic ocean waters are bleaching and killing coral reefs, which are home to 25 per cent of marine life and protect coastlines and islands.
José María Figueres, founder of Ocean Unite and former president of Costa Rica, said: “An ocean in trouble means that all of us are in trouble.”
He said the challenges demand a multisectoral response, and added: “Insurance companies have been at the front line dealing with ocean-related hazards for many years. This year will stand out as the year the risk management sector really began to mobilise around rising ocean threats.”
Mr Figueres said the best weapons against ocean risk are knowledge, innovation and collaboration; three elements that the summit is designed to generate.
“Insurance has already proven it can play a catalytic and transformational role in mitigating and minimising these risks. And we should bear in mind when we devise solutions that we ourselves will have to take risks, test new ideas and share our experiences and expertise,” he said.
Peter Thomson, the United Nations’ special envoy for the ocean, said a quickening cycle of decline has been brought upon the health of the ocean by the accumulating effects of harmful human activities.
However, he is confident that by 2030 the negative cycle of decline will have been reversed due to comprehensive plans to save the ocean. He mentioned the 2015 Paris climate agreement and UN sustainable development goals. He also pointed to mounting public concern about plastic in the oceans that has led to major food and beverage corporations and retailers pledging to make their packaging recyclable or compostable.
Mr Thomson added: “We should not underestimate the powerful attraction of the sustainable blue economy, whether by way of aquaculture, offshore energy, green shipping or eco-tourism. It’s clear that almost limitless business opportunities lie ahead in the sustainable economy.
“The sustainable blue economy is on the cusp of great advancements. It is our greatest route to success, but only if the private sector, in partnership with government and science, is fully engaged. It will have to incorporate the global insurance industry to attract massive investment augmented by philanthropic funding.”
How the insurance sector can assist was discussed by Mr McGavick, and by Rowan Douglas, of Willis Towers Watson. Key factors are the risk-modelling capabilities and innovation that the sector has demonstrated and refined during the past three decades.
Mr Douglas, head of capital, science and policy practice at Willis Towers Watson, said he believes the ocean blue economy agenda is going to leapfrog the wider green climate sustainability agenda because of “intellectual engineering that is going to be done right at the beginning”.
He said the trick was to make capital sensitive to risk. He added: “The final thing is to blend insurance and risk thinking with mainstream finance. Bermuda [in the 1990s] was also a hotbed for innovation around how science, analytics, indices and data were used to create brand new financial instruments.
“Bermuda can be the laboratory with our new friends in the ocean community to take these innovations through the ocean and blue economy.”
Kathy Baughman McLeod, global environmental and social risk executive at Bank of America, noted that green bonds have been a successful strategy and are currently oversubscribed because there are not enough projects to go with the interest. She spoke of the possibility of blue bonds, or resilience bonds, driving change and practices related to the ocean, such as sustainable aquaculture businesses.
Responding to that suggestion, John Huff, CEO of the Association of Bermuda Insurers and Reinsurers, said capital captivity is at record levels in the private insurance market. He said: “There is certainly capacity and capital available to meet these demands. It is critical to define and price the risk out there.”
Meanwhile, in her speech to the conference, Queen Noor said: “We have faith that together we can defend and build upon the encouraging global climate initiatives of the past several years. If we are going to be successful it is absolutely vital that we have citizens, governments and business leaders who understand the complexity of these issues and are motivated to take bold and urgent action.
“We need each of you individually, and collectively as an industry, to help us reverse the damage we have inflicted upon our absolutely vital life support systems. Human health, security and prosperity depend on it.
“You have a voice, an influence as well as the ability as an industry to help drive the change that we so desperately need. The next ten years may be the most important in the next 10,000 for us to secure an enduring future for ourselves. We can not do it without you.”
The Ocean Risk Summit is being staged at the Fairmont Southampton. It concludes today.
• The event has a website at www.oceanrisksummit.com