First of all: what’s an ‘Ouroboros’?
An Ouroboros is a mythical creature that devours itself.
Pop quiz …
Now who said this?
- “Climate change is a slow-moving process, but it is no less dangerous for that. It is likely to be one of the key defining features of the coming decades. The longer action is delayed the more costly it will be to deal with the issues.”
Or this?
- “To contain the change in the climate, global net emissions need to reach zero by the second half of this century.”
Or indeed this?
- “We cannot rule out catastrophic outcomes where human life as we know it is threatened.”
No, not a climate scientist, or Greta Thunberg. It was JP Morgan, notwithstanding their own dire record of direct financing of fossil fuel projects to the tune of $62bn, they are proud purveyors of “dedicated support for insurance investors.”
In announcing their report, ‘Risky business: the climate and the macroeconomy’, they say:
“Partnering with our Global Insurance Solutions business provides access to our specialist team of insurance investors, strategists, client advisers and client service professionals, giving you the ability to customise investment strategies while benefiting from expert support on the issues most relevant to you.”
Climate change and risk management
Let’s hear from one expert cited in their report.
In his book Climate Shock, Martin Weitzman, research professor of economics at Harvard University (along with Gernot Wagner), examined the economic forces hindering sensible climate policies urging readers to approach climate change as a global risk management issue, akin to insurance, emphasising the need for proactive measures on a worldwide scale.
In his paper of 2012, ‘GHG Targets as Insurance Against Catastrophic Climate Damages’, Weitzman demonstrates how the probability distribution shape for the ‘Equilibrium Climate Sensitivity’ (ECS) impacts the chances of extreme outcomes. He evaluates the impact of a 600 parts per million atmospheric CO2 concentration on global temperature levels and concludes that in some scenarios there is an 8% likelihood of the temperature increase surpassing 6°C and a 1.1% likelihood of exceeding 12°C. Acknowledging the enormous challenges a 12°C temperature increase would pose to human survival, Weitzman contends that:
“The primary reason for keeping greenhouse gas levels down is to insure against the high-temperature catastrophic climate risks.”
So, a key ‘specialist advisor’ lays out the reasons that there are no ‘benefits’ to investment in insurance in a world wedded to a carbon economy and running headlong. The signposts to an existential crisis, both for us and the industry itself, are embedded in their own report. There will be nothing to insure on a dead planet.
Failed transition to net zero
The Institute and Faculty of Actuaries warns that a failed transition to net zero could lead to a breakdown of societal cohesion after 2060, a breakdown that will be irreversible and exponential as we pass climate tipping points. They foresee chaos, warning that insurance leaders predict assets becoming uninsurable at a 4°C temperature rise, leading to a complete halt in economic activities:
“We will no longer have an economy. Governments will no longer have a tax base from which to deliver vital services.”
It is sobering that the Committee on Climate Change, the UK Government’s own advisory body, has warned that 4 ̊C is our current trajectory if urgent action is not taken.
It is downright terrifying that the Chatham House Climate Risk Report warns:
“Any relapse or stasis in emissions reduction policies could lead to a plausible worst case of 7°C of warming by the end of the century (10% chance).”
7°C is, of course, not survivable.
If there was a 10% chance of a fatal car accident, you’d take precautionary measures. If your finances faced a 10% chance of a significant loss, you’d reassess your assets. So, considering the known heating of the world and the 10% chance it could lead to an unimaginable catastrophe, why aren’t we taking more action on climate change now? We insure our lives against an uncertain future, so why not our planet?
Why the continued investment in our own extinction? Why the continued suicidal underwriting of the instruments of our own demise?
How is it that an industry based on evaluating risk can be so complacent? It is a madness endemic in the cult of business as usual (BAU): Stockholm syndrome suffered in thrall of an immutable GDP. As Weitzman himself says, ignoring the reality, amounts to wilful blindness, a term familiar in criminal law. Just because you turned your back when your accomplice pulls a gun during a robbery doesn’t absolve you of the charge of joint enterprise.
In the US Supreme Court’s words:
“[P]ersons who know enough to blind themselves to direct proof of critical facts in effect have actual knowledge of those facts.”
JP Morgan’s limp, defeatist conclusion to their report says:
“Most likely, business as usual will be the path that policy makers follow in the years ahead. It remains to be seen what the consequences of this will be, but one thing is sure: BAU opens the earth to a greater likelihood of a catastrophic outcome […]. It also increases the likelihood that the costs of dealing with climate change will go up as action is delayed. And finally, it increases the likelihood that the changes in the climate will be irreversible.”
In other words, there can be no insurance industry on a dead planet.
So JP Morgan is indeed an ‘ouroboros’ – it predicts its own demise and that of the insurance industry in the wake of a global catastrophe.
This article appears during this global week of action by ‘Insure our Future’ whose objectives are:
- Stop insuring fossil fuels
- Respect human rights and
- Support a just transition.
Ed: West England Bylines does not support any particular political party. We do however give space to those who promote progressive and sustainable goals.
We want to hear your views. Please send any comments to editor@westenglandbylines.co.uk
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