The Room Where it Happens: The Indispensable Role of the Observer

_104735890_dui0ypwwoai5suoAs TIME Magazine recognizes its 2018 Person of the Year, observers, reporters, and advocates of the truth find themselves lauded among activists. The Guardians and the War on Truth were recognized as the Person of The Year for “taking great risks in pursuit of greater truths, for the imperfect but essential quest for facts that are central to civil discourse, for speaking up and speaking out.” These Guardians are being praised for their ability to hold our public officials accountable and to bring to them to the task at hand.

Similar to The Guardians, UNFCCC representatives of observer organizations hold sovereign Parties accountable for their actions. They remind Parties of their task at hand—creating international IMG_9729_0environmental policy on climate change. UNFCCC observers can do this by releasing sassy newsletters, publishing revealing emissions reports, and advocating for and commenting on text released by the Parties. As independent actors — with fewer political repercussions than Parties themselves — NGOs interact in spaces and ways that Parties cannot. Where Parties are constrained by politic mannerisms, NGOs can act bombastically, like casual vandalism,*  and subtly, like “liaising with the UNFCCC Secretariat on behalf of the business community.”

Baby-Groot-750x500UNFCCC observers act in between the spaces of international politics, diplomacy, and decision making. Their role in the negotiations of transparency, adaptation, and finance are indispensable because there is no force quite like them. So as discussions of global stock take move forward and rumblings of excluding observer organizations rise, Parties, civil society, and the people** need to defend these staunch Guardians of the Green.

 

*This is in reference to a situation where some observers were de-badged or stopped by police when entering Poland.

**This is in reference to David Attenborough’s “People’s Seat,” which encouraged civil society to be able to encourage world leaders to do more for climate action.

 


Market, Makers, and Mitigation

There’s something intoxicatingly distinct and unique about a Bordeaux red. Those deep earthy flavors that mingle perfectly with its subtle fruitiness have tantalized French tongues and international markets for years. But in 2050 that is projected to all change due to climate change.

And that is the premise Bordeaux 2050. Thumbnail for Bordeaux 2050

It is a new wine meant to show what wine will become in the next 30 years. It is the Bordeaux of the future; the Bordeaux of extreme weather climates; drought; famine; and devastation. It is a wine that is the creation of researchers, scientists, and journalists to showcase to the public that the “gravity of climate change is real.” Half PR stunt, half sincere experiment–the root agenda of Bordeaux 2050 is to cause public apprehension about the impact of climate change on everyday goods that are dear to consumers.

In a way, this wine brings the message of climate change to the everyday French person. Reviewed as “disgusting” by Europe 1, Bourdeaux 2050 is a “symbol of [French] responsibility towards [] future generations.” The makers assert that if they do not “insist on sustainable practices from [their] government, [their] industries, and most importantly [themselves] the world heritage as [they] know it will be lost.”

To this end, consumers of such fine goods should see themselves at a crossroads. Although global policy and top down approaches towards climate change mitigation are necessary to reach 1.5, individual choice and lifestyle play an important part in climate change mitigation. So, is a weekly steak night worth the loss of coffee? Is a car ride versus a walk really worth chocolate? Is driving a F-150 really worth beerAs we all approach these crossroads, each one of us needs to understand the weight of our power as consumers. Maybe, through collective action and prudent choices, we can help mitigate the impacts of climate change.


Is Insurance Betting on a Green Future?

The insurance industry is now one of the many actors in the private sector that are adapting to climate change. Insurance companies like Alianz or Prudential are taking actions to adjust. These big insurance companies work with groups like ClimateWise to navigate the financial world in light of climate change. But as climate change progresses, it is still uncertain whether this big insurance money will benefit or deter environmentalists’ efforts against climate change.

Traditionally, insurance companies do not like to invest in risky business. Their business model is sustained through pooling funds, investing to grow funds, and paying out funds only when necessary. To invest and to grow, insurance companies price their clients based on their behavior. They consider what to charge clients based on how often these clients would have to be compensated. Insurance companies rely heavily on data and statistics to determine the options of their customers. For example, data has shown that most auto accidents involve young drivers. So the pricing model for teenagers is much higher than the average 25+ year old. In health insurance, smokers are charged higher rates than non-smokers.

'It's standard procedure. Your rates will come down after a few years in the risk pool.'

‘It’s standard procedure. Your rates will come down after a few years in the risk pool.

From an insurance company’s perspective, this practice is merely smart business. It is simply charging the riskier clients a higher premium to compensate for the higher likelihood of a pay out. In one way, this business model looks like insurance companies penalize certain client groups due to cold studies and statistics. Conversely though, insurance companies can use their pricing model to encourage certain behaviors. Their pricing models are tiered to prefer some customers over others. This subtle encouragement can shift behaviors to reduce the risk pool.

Insurance companies like Allianz are already practicing this scheme with climate change in mind by offering their clients “Green Solutions”. Their Green Solutions model charges clients based on three main elements. The first is to facilitate and promote green technology. The second is to mitigate climate change and conserve the environment. And the third is to help customers adapt to, and protect against, increasing environmental risk. Considering Allianz’s second element, behavior that is “environmentally friendly” is seemingly financially encouraged.green_solutions__288x200

Alternatively, other companies like Illinois Farmers Insurance Co. are getting involved within climate change by instigating litigation against the government. After extreme storms in 2013, sewer water flooded many of their customers. Illinois Farmers sued the “greater Chicago, Cook County, the City of Chicago and numerous other cities, towns, and villages” for the costs of its increased pay outs. Under the claims of negligent maintenance liability, failure to remedy known dangerous conditions, and takings without just compensation, Illinois Famers Insurance sued for just remedies.

chicago+riverwalk+flooded+4+thumb Within their complaint, they cite negligent action being taken in the face of climate action. They accuse the government for failing to “implement reasonable stormwater management practices and increase stormwater capacity.” They alleged that the government knew of the city’s limitations for rainwater overflow despite knowing the consistent yearly precipitation increase. They claim that the government’s negligence on climate change adaptation resulted in higher costs to private insurers. So rather than sue polluting companies for contributing to climate change, Illinois Farmers Insurance used its litigation to bring attention to the lack of adaptation action by the government.

In their desire to reduce risk and costs, insurance companies are reacting to climate change with more speed than governments. From encouraging climate friendly behavior to discouraging negligence, it is interesting to note the ways that the insurance industry can shape the response to climate change. Because money talks, the insurance industry could be an ally for environmentalism.

 


Nefarious Nets: Private Insurance in the Public Sector?

At the end of the day, the insurance industry is a business. But they are also a risk pool. So while they may be companies with stockholders and CEOs with a bottom line, they are still risk shares that are meant  to minimize damage impacts amongst their insured customers. But as the insurance industry becomes savvier with personalized data about who to insure and how much to charge them – customers should ask themselves whether they can really trust their insurance company to be less of a capitalizing business and more of a safety net against damage.

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As climate change damages rise, big insurance companies have begun to calculate risk costs with extreme weather events in mind. This calculation development has put insurers like Munich Re and Willis Re on the forefront of early action planning and early risk warning conversations at COP23. These two insurance companies are currently in partnership with InsuResilience. InsuResilience is a recently launched UN initiative that operates as a financial mechanism to buoy those who are vulnerable to climate change.

As a financial mechanism, InsuResilience will operate as a climate risk insurance provider to vulnerable people groups. This could occur directly with smallholder farmers or governments themselves. They have multiple programs and insurance plans that can provide service for small countries or service for small farmers. InsuResilience says that their plans will have the means to provide for “rapid emergency assistance and reconstruction, as it can very quickly disburse cash to the insured party.” The website claims that they will provide an effective and proactive approach to extreme weather events compared to the reactive measures taken by humanitarian charity efforts. Their unique position to act quickly could “save lives, protect[] livelihoods and assets, and safeguard[] development gains.”

As it affects developing countries and their campaign to receive compensation for climate change loss and damages, InsuResilience is a boon. InsuResilience allows developing and vulnerable countries to minimize the detrimental effects of climate change. In that way, InsuResilience follows a basic risk pooling example as countries pool their resources to protect and rebuild after an extreme event. For example, Cook Islands, Marshall Islands, Tonga, Samoa, and Vanuatu have pooled their resources into the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) Insurance. PCRAFI proved itself to be a successful program when Tropical Cyclone Pam hit Vanuatu in 2015. Because of PCRAFI, Vanuatu was able to receive a US$1.9 million cash pay out. Vanuatu received its funds within one week of Tropical Cyclone Pam and Vanuatu was able to use those funds to support their recovery process by mobilizing nurses into the affected provinces. 150316073014-01-cyclone-pam-0316-super-169PCRAFI is just one of the regional programs that InsuResilience supports. InsuResilience works with African Risk Capacity (ARC), Global Index Insurance Facility (GIIF), India, Caribbean Catastrophe Risk Insurance Facility (CCRIF), and more. 2cb97666-2c50-4fb7-a0c4-d0dfade57163But PCRAFI is also being “complemented by reinsurance provided by Sompo Japan Nipponkoa Insurance, Mitsui Sumitomo Insurance, Tokio Marine & Nichido Fire Insurance, Swiss Re, and Munich Re.” PCRAFI is not unique in that its funds are being complemented by private insurers. Granted, this position is not unique – but private insurers are taking a larger role in Climate Change than just reinsurance.

So while PCRAFI, its counterparts, and InsuResilience are providing vulnerable people groups safety nets against the financial costs of climate change damages – it is still being funding by private insurers. While private insurers are not inherently “nefarious”, the capitalist goals behind their operation provide a shadow of whether developing countries can trust these insurance companies to be less of a capitalizing business and more of a safety net against climate change damage.

 

 


Justice Not Charity: It’s Just Compensation

Article 8 of the Paris Agreement was monumental for advocates of Loss and Damage. But the first draft of Article 8 reveals the concessions and compromises developing countries made to get it. Notably struck from the final version are the words and concepts of “compensation.” In the early draft, “compensation” was referred to as a “regime” for developing countries to receive support – specifically “LDCs, SIDS, and countries in Africa affected by slow onset events.” Without this clause, developing countries are left to the ambiguity of the current Article 8. Ever since, there has been financial tension between developed and developing countries to provide for the tragic loss and damage costs climate change has incurred.

Without the context of “compensation” in the Paris Agreement (and without any formal agreements afterwards), many developing countries are left with a seemingly lack of avenues to finance their recovery efforts. Fortunately, not all these avenues have closed against them. Formal litigation efforts for climate change damages is one burgeoning justice avenue developing countries may use to collect remedies from historically polluting countries. As climate change litigation gains traction, advocates should pay attention to framing loss and damage issues as a matter of justice rather than a matter of humanitarian aid. As Sabine Minigner of Brot for die Welt said on Tuesday (11/14/2017), climate change compensation is not charity but justice. Developing countries should not be penalized for carbon emissions they did not emit.

This burgeoning legal environmental justice concept can be seen in U.S. courts of common law. For example, the monumental case of Kivalina v. ExxonMobil began with a vulnerable people’s group in Alaska. The eventual plaintiff-appellants alleged that many fossil fuel giants (oil, coal, electric utilities, etc.) had contributed to global warming. Under tort law they sued for remedies of $400 million under public nuisance. The case was unfortunately dismissed for judicial doctrinal reasons. But even though the plaintiffs in Kivalina did not succeed, their litigation proves an important stepping stone as U.S. courts grapple with justice for those impacted by climate justice.

The U.S. is not unique in its litigation – many other countries are establishing legal avenues through plaintiff actions to bring polluters to justice. Screen Shot 2017-11-17 at 1.43.13 AMBut the Kivalina case is still unique in that the plaintiffs were not seeking injunctive or immediate action, but reactive after-the-fact measures to bring them to their previous status quo. This was not litigation with goals for unjust enrichment. It was a matter of loss and damages and how a plaintiff can get a tortfeasor to compensate them for such. In that sense, climate change litigation parallels concepts of tort litigation.

And in most, if not all, tort casebooks the themes of justice, equity, and fairness are featured. The basic concept being that if one person hurts another, the tortfeasor (the one hurt) should be held liable in court to restore that person as far as they have damaged them. With this in mind, climate change litigation – as an arm of justice – may operate similarly.  Maybe climate change litigation will gain more traction as those without, sue those who have and courts get more comfortable with climate science within their courts. So even though the Warsaw Implementation Mechanism will wait for another Excom to determine its finance arm, vulnerable people groups may have another avenue to recover incurred climate change damages from polluters. And really they should, it would just be justice taking form in compensation.


Stories of Loss and Damage: Non-Economic Loss

Non-Economic Loss (NELs) can be – simply – understood as loss that is not economic and “not commonly traded within the market.” It is complex and its worth can be misunderstood because it has no commercial value. But that does not mean it is any less harmful for a country or vulnerable people group to incur a non-economic loss. NELs can destroy or undermine an entire society or culture. So although they are abstract, their place within Loss and Damage (L&D) conversation should not be forgotten.

Most of the L&D negotiation sessions that have taken place at COP23 have focused on matters of finance, but after an inspiring conversation with Koko Warner of the U.N, I have realized that L&D negotiations need to tell the stories of loss. The classic tension between developed countries and their neglect to pa climate change damage to developing countries is an institutional story that dehumanizes the issues of L&D. L&D is more than just a compensation mechanism for developing countries, it is the story of vulnerable people who have been impacted by climate change. In the future of negotiations, the narrative of NEL within L&D should not be forgotten. So, readers should please consider a few narratives of NEL.

First, is the story of the Italian farmer – Ms. Guidobaldi – and  her “children.” As climate change rises  average temperatures, farmers in the Mediterranean have noticed inconsistencies within their crops. Crop loss and inconsistent yield would be a simple economic loss, but the impact of losing an eight generation farm and business due to climate change has consequences. 314B5D0200000578-3449847-image-a-19_1455656461413A loss of identity, culture, or lifestyle can easily be categorized as a NEL. This specific type of loss is what happens to many people groups impacted by climate change. They often find themselves displaced or forced into an alternative culture where the costs of assimilating are high.

The second story is that of the Quechua in the glacial Andes. The Quechua face a NEL in that as the glaciers recede, their religious doctrine decree the world’s end. On top of that – and maybe more importantly – the glaciers serve the Quechua as a water source. With a receding water source and a religious belief in retribution, the Quechua face a unique choice of evils.5m2a6101-501_custom-92b8cd1377b6116e2d7fdc45424d380270cb259c-s1500-c85

As climate change disasters become more consistent and temperatures higher, neither the Quechua’s or Ms. Guidobaldi’s problems will easily disappear. In fact, they will likely exacerbate with the changes in climate. For these reasons, it is important that negotiators humanize L&D and remember that behind bland conversations of shall and should there are victims whose entire livelihoods and realities have been completely upended.

 

 

 


React Slow, Lose More

To truly relieve climate change damage in the future, status quo relief measures must change. On Monday, November 13, 2017, the START Network hosted an event to precisely describe how to do so. In the “Risk Informed Early Warning & Early Action for Less L&D in Drought Contexts and Forest Fires,” speakers Michael Kühn, Matthias Ahmling, and Emily Montier discuss parametric insurance measures and full paradigm shifts on how we approach loss and damage. (Parametric insurance is different from traditional insurance measures in that the pay out occurs through a triggering event. Traditional insurance measures pay out once damage assessments of the triggering event occur.)

Climate change damage will continue to worsen as climate change induced extreme weather events (like hurricanes) occur with more and more frequency. Today, approximately 27 billion dollars are spent to alleviate climate damage in vulnerable countries. As damages increase, humanitarian charity will likely stagnate and be unable to provide help to the needy. To prevent this, fundraising for humanitarian aid must shift from being a reactive measure to a proactive measure.

Reactive measures occur when extreme weather events provoke humanitarian giving. Rather than wait for extreme weather events, proactive measures provide means to immediately react to climate change damage. This is accomplished through risk sharing pools or insurance schemes. This is beneficial because vulnerable countries no longer have to wait for funds to be raised to receive aid. An example of this action is the NGO, START Network, which provides aid through its pooled funds.

The START Network is a collaborative NGO made up of “42 national and international aid agencies from five continents.” They aim to “deliver effective aid” by “harnessing the power and knowledge of the network to make faster and better decisions to help people affected by crises.” Their mission statement highlights their commitment to early action measures. (Early action measures are those taken using pools of money prepared in advance of climate change damages – which are gathered via proactive measures). As climate change causes more predictable extreme weather events, the international community should look to loss and damage aid and compensation through a proactive rather than reactive lens.


Trusting Corporations by Weakening Antitrust?

This September, many socially conscious corporations have donated to climate change mitigation and sustainability. Ikea has devoted $44.6 million to the We Mean Business coalition, which began at a UNFCCC Business and Industry Day to provide a platform to “amplify the business voice and catalyze bold climate action.” Mars just pledged $1 billion in investments towards climate change, poverty and scarcity of resources by targeting renewable energy, food sourcing, industry coalitions, and support for farmers. Energy companies such as Pacific Gas and Electric have pledged their support for renewable energy. On a global scale, even supermarkets have collaborated to show their environmentally progressive intent for the future (although they were ultimately shut down because of antitrust and collusion issues). This current corporate support is a good sign for climate change as corporations prove their influence on climate policy.

Corporate Influence and Climate Change

Click on image to see full spectrum of corporate stances on environmental sustainability.

In light of all of this, legal scholar, Inara Scott, asks if U.S. antitrust law makes it “nearly impossible for corporations to collaborate on sustainability initiatives.” Scott asks whether the Sherman act (the original 1890 statute that broke up major U.S. monopolies) is actually a barrier for corporations to act sustainably because it outlaws collusion and collaboration amongst companies. Scott tells a story of Proctor & Gamble and Unilever. In the late 2000s the two companies planned to release a more efficient laundry detergent but were concerned about consumer reactions. So to avoid a price war they agreed to freeze their prices and market share. This violated antitrust laws so when regulators in Europe found out, they fined the companies more than 300 million Euro.

Two brand names tried to work together to fight climate change rather than each other.

Consumer protection was the ideal that spurred current U.S. antitrust law.  Scott invokes consumer to protection to muse that companies should be able to argue that collusion and collaboration is best for long term consumer protection. Scott imagines that long term consumer protection would include sustainability goals that consider the scarcity of resources and is mindful of GHG emissions. Weakening antitrust policy would allow corporations to collaborate and respond to the problems of sustainability, resource depletion, and climate change in a market efficient manner. A particular issue with Scott’s antitrust theory is whether the American courts or legislators could trust corporations enough to allow them the power to collaborate.

Ikea displays their commitment to renewable energy in its stores.

Ikea displays their commitment to renewable energy in its stores.

Scott’s solution is to create a regulatory counsel to analyze cases of collusion for environmental protection. This will alleviate concerns about corporate greed and corruption. There is a lot of distrust amongst American consumers and American corporations. Capitalist ideals often push corporations to strive for the lowest cost with maximum benefit, often forsaking consumers or the environment. But “’sustainability issues are profitability issues so [Scott] think[s] the altruism is [of companies] tied up in the long-term health of these companies.” So between corporate environmental sustainability, corporate collaboration, and government regulation – climate change policy may look more and more like business.