The Journal, The Chartered Insurance Institute
April 10, 2025
https://thejournal.cii.co.uk/2025/04/10/ensuring-planetary-solvency
Linkedin: https://www.linkedin.com/in/praveenguptafcii/recent-activity/all/
My Op-Ed for The Journal of The Chartered Insurance Institute.
The estimates keep rising: “The global economy could face a 50% loss in domestic product (GDP) between 2070 and 2090 unless immediate policy action is taken to address the risks posed by the climate crisis. Populations are already being impacted by food system shocks, water insecurity, heat stress, and the spread of infectious diseases. If left unchecked, the likelihood of mass mortality, large-scale displacement, severe economic contraction, and conflict increases.”
As #climatemodels increasingly tend to be overwhelmed by climate events, the drivers of this inadequacy have been laid bare by a pre-eminent actuarial body – Institute & Faculty of Actuaries (#IFoA) in their recent release: Planetary Solvency – finding our balance with nature. For a change a critical function of insurance – actuarial science – converges into climate science. I allude to the brilliant work of Professor Johan Rockström on planetary boundaries.
Sandy Trust, lead author: “Nature is our foundation, providing food, water and air, as well as the raw materials and energy that power our economy. Threats to the stability of this foundation are risks to future human prosperity which we must take action to avoid.”
A ‘Planetary Solvency Risk Dashboard’ – developed by IFoA in collaboration with University of Exeter – makes it possible to visualise and assess the risks of exceeding planetary boundaries. It includes a novel risk commentary on nature, society and economy.
What next? After this spot-on diagnosis by IFoA, would insurers choose to follow their prescription? Or would they merrily continue in a #BAU mode? Thereby leaving behind a legacy of aiding and abetting climate breakdown?
Desiree Lucchese is founding NED of Impact Alpha Partners (IAP) and is an advisor to the Responsible Investment Association of Australasia (RIAA). She collaborates with the Investor Group on Climate Change (IGCC) and Investors Against Slavery and Trafficking (IAST). Desiree is an Honorary Associate of the Finance Department at UTS Business School and in 2022-23 she was a future skills industry mentor with RMIT Online. Since 2011, she has been an Al Gore Climate Ambassador.
In the course of her consulting career, Desiree has successfully assisted companies and market participants in the collaborative design and delivery of corporate sustainability strategies & governance, stakeholder management, ESG integration and climate risk mitigation, adaptation plans, analytics & reporting.
As Sustainability Solutions Specialist at S&P Global, Desiree helped tailor sustainability solutions for a broad range of clients to better meet their business goals and needs. At MLC Life Insurance she reviewed and elevated the Group’s sustainability strategy and action plans’ initiatives. In fund management, she led a responsible investment strategy, with oversight for the integration of ESG data and climate risk analytics into the investment process alongside active stewardship responsibilities. These included direct engagements with portfolio companies, collaborative engagements with industry peers and advocacy initiatives.
Praveen Gupta: Despite the growing frequency and severity of floods in Australia, why would home owners be dropping coverage against flood?
Desiree Lucchese: Building homes in floodplains is one of the most acute and persistent challenges facing both climate adaptation and the insurance industry. Globally, increased rainfall intensity and sea-level rise are expanding flood-prone zones. In the UK, flooding’s impact stretches far beyond immediate damage to assets with nearly 40% of UK adults affected by flooding in their lifetimes – and one in four properties at risk by 2050.
The Climate Council reports that one in twenty-three of properties across Australia are already at high climate risk. In Australia and across the Pacific, a legacy of poor land-use planning has compounded the risk: many developments continue to be approved in vulnerable areas, driven by housing demand and political pressures at the local level. On the one hand, local and state authorities have not adequately re-zoned local development plans due to either conflicting interests or inertia.
The pressing needs to house residents is often mismatching the ability of strategic planning to respond and adapt
On the other, insurers have been pressed to balance the need to provide coverage with the financial realities of escalating claims. In 2022-23, for example, Australia recorded one of its highest insured losses ever from floods. I do not think home-owners have deliberately dropped cover but they have found themselves at the bitter end of changing insurance dynamics.
Without stricter zoning, better urban design, and resilient building codes, the insurance market will either withdraw or become unaffordable in these high-risk zones – an outcome already visible in certain parts of northern NSW and southeast Queensland. There is also the less discussed challenge of where and how to reconstruct following major disasters: the pressing needs to house residents is often mismatching the ability of strategic planning to respond and adapt.
PG: How would you rate exposure to wildfires?
DL: Exposure to wildfires remains extremely high, both globally and regionally. Climate change is intensifying fire weather: hotter, drier conditions and higher wind speeds are leading to longer fire seasons and more severe fire behaviour across temperate regions. Australia’s Black Summer fires of 2019-20 were a stark illustration, resulting in $2.4 billion in insurance claims and broader economic impacts many multiples higher.
Similar trends are evident in the western United States, Canada, southern Europe, and even previously less fire-prone areas. In the Pacific islands, while the risk of large-scale wildfires is generally lower, shifts in vegetation and land-use practices are increasing local exposure. Australian insurers now view wildfire risk as a “chronic” rather than “episodic” threat, and reinsurance pricing is starting to reflect this permanency.
The scale of risk now demands much greater investments and strategic planning
Investment in fuel management, early warning systems, and community resilience is critical, but uneven across jurisdictions. Planned burning in collaborations with Traditional Custodians – a land management practice where controlled fire is used, under carefully monitored conditions, to reduce fuels such as grass, leaves, bark, shrubs and fallen branches – has demonstrated over and over again the value of fire risk preparedness. The scale of risk now demands much greater investments and strategic planning.
PG: Do you see the risk of homes getting unaffordable and uninsurable – as in parts of the US?
DL: Yes, this is a very real and growing risk. In parts of California, insurers have either dramatically raised premia or exited markets altogether due to unsustainable wildfire risk. Australia is seeing similar dynamics emerge in high-risk flood and fire areas. In northern Queensland, for instance, cyclone and flood risk has already led to extremely high insurance premia, prompting government intervention via reinsurance pools.
Without stronger resilience measures, including land-use reform, government-backed mitigation & adaptation investment, and better data transparency, we risk seeing “insurance deserts” emerge – communities where cover is technically available but economically out of reach. This not only affects household budgets but also impacts property values, local economies, and social cohesion. The Pacific islands face an even sharper threat, as insurance penetration is lower to begin with, and sovereign risk pools like the Pacific Catastrophe Risk Insurance Company (PCRIC) are increasingly vital.
PG: Are insurers leveraging their investments to correct any adverse trends in your market?
DL: Yes, leading insurers are increasingly recognizing that their investment portfolios are powerful levers for systemic change. Through responsible investment strategies – such as ESG screening, thematic investing, and active stewardship – insurers can push for better climate resilience and sustainability outcomes. For example, major Australian insurers have joined alliances like the UN-convened Net-Zero Asset Owner Alliance, committing to align portfolios with the 1.5°C target.
The most sophisticated players are using scenario analysis and climate stress testing to ensure their portfolios are future-proof
In the Pacific, investment options are more limited, but there are efforts to channel capital into resilient infrastructure and renewable energy. Still, the scale of investment needed significantly dwarfs current flows. Climate megatrends – like deglobalization, demographic shifts, and technological disruption – are also influencing how insurers assess and price long-term risks.
The most sophisticated players are using scenario analysis and climate stress testing to ensure their portfolios are future-proof, although industry-wide consistency remains a work in progress. Other insurers drive risk-adjusted returns from the relative infrequence of predicting major loss events and therefore invest in alternative assets such as natural catastrophe reinsurance or Insurance Linked Securities (ILS). Whilst acknowledging its potential for driving some returns, these are in my view a form of ‘disaster capitalism’ and I think we have better ways to create positive futures.
PG: How would you rate the Australian market’s investments in community and business resilience?
DL: Some progress has been made, but not nearly at the scale or pace required. Climate risks and their impacts are a complex interaction of exposure, sensitivity, and adaptive capacity. These, in turn, determine the degree of vulnerability. Vulnerability is multi-faceted and needs to account not only for individual asset vulnerability but also for socio-economic factors and ecological vulnerabilities, the susceptibility of ecosystems to damage. The Australian federal and state governments have started shifting from a reactive to a proactive disaster management approach, notably through initiatives like the Disaster Ready Fund, which aims to invest AU$1 billion over five years in resilience projects.
Resilience funding still represents a small fraction of disaster recovery spending
Insurers themselves are also investing in community education, retrofitting programs, and risk research. However, resilience funding still represents a small fraction of disaster recovery spending – estimates suggest less than 3% of disaster-related expenditure in Australia goes toward pre-event mitigation. In the Pacific, challenges are even more pronounced, as many island nations face existential climate threats but have limited fiscal capacity for large-scale resilience investment. Effective public-private partnerships, improved building standards, and new insurance mechanisms will be crucial to closing the protection gap.
PG: Forthcoming elections – the Coalition appears intent on winding back the 2030 target if it is elected next month. Would it weaken the bipartisan commitment to net zero by 2050?
DL: Yes, weakening interim targets would pose significant risks. The 2030 targets are critical “stepping stones” to achieving net zero by 2050 – without ambitious short-term action, long-term goals become unattainable. From a global perspective, Australia’s credibility is already under scrutiny given its per capita emissions profile and reliance on fossil fuels. A rollback would damage international relationships (particularly with key trading partners like the EU and Japan), slow clean investment inflows, and expose Australian businesses to carbon tariffs.
For insurers, the implications are direct: slower emissions reduction means greater physical risk (more severe weather), transition risk (abrupt policy shifts later on), and liability risk (climate litigation). In the Pacific, where countries are already experiencing devastating climate impacts, any perceived retreat by Australia could also strain regional partnerships and undermine joint resilience efforts.
PG: Brilliant! I really appreciate these all round insights, Desiree. Best wishes in your efforts to keep Austalasia on track for a timely and successful climate transition.
Sanctuary Asia
April-May 2025
The link: https://www.sanctuarynaturefoundation.org/article/the-last-roar
Sanctuary Asia
April-May 2025
LinkedIn post: https://www.linkedin.com/feed/update/urn:li:activity:7313447498721714178/
Online version: https://www.sanctuarynaturefoundation.org/article/the-last-roar
illuminem
March 26, 2025
https://illuminem.com/illuminemvoices/natural-capital-went-from-overlooked-to-unstoppable
“We are facing a global crisis. We are totally dependent upon the natural world. It supplies us with every oxygen-laden breath we take and every mouthful of food we eat. But we are currently damaging it so profoundly that many of its natural systems are now on the verge of breakdown”: Wrote David Attenborough in his foreword to The Economics of Biodiversity: The Dasgupta Review.
The ‘Review’ released in early 2021 reminded, as Dr. Partha Dasgupta explains, about “Nature’s worth to society – the true value of the various goods and services it provides – is not reflected in market prices because much of it is open to all at no monetary charge. These pricing distortions have led us to invest relatively more in other assets, such as produced capital, and underinvest in our natural assets… Many of our institutions have proved unfit to manage the externalities. Governments almost everywhere exacerbate the problem by paying people more to exploit Nature than to protect it, and to prioritise unsustainable economic activities…
Illuminem
March 13, 2025
LinkedIn post:
Vilhelmiina with son Veikko
Vilhelmiina Vulli (VV) is the Head of Media at illuminem – which has emerged as world’s largest and premier expert network in sustainability. She devises comprehensive communication strategies, manages content creation, and nurtures the vibrant community of illuminem Voices.
Working with a creative agency gave her a front-row seat to the rise of AR, VR, and AI. She has been closely following their adoption, independently testing tools, and engaging with the evolving conversation. At university, Vilhelmiina focused on media studies with international politics and linguistics.
Originally from Finland, she has always been drawn to technology. She was part of a SaaS startup in Helsinki focused on 3D performance optimization and has worked with large players such as Kone, Valmet, and Yaskawa.
Vilhelmiina’s deeply international perspective is shaped by living across Europe, including the UK, Ireland, Finland, Germany, Italy, and Spain. She shares her unique perspective on the eve of IWD.
PG: US exiting the Paris Agreement and abandoning DEI. Isn’t this a significant environmental and societal setback? Your personal thoughts?
VV: Sustainability is not only about the environment, it’s about sustaining life — creating a world that supports livable conditions for all.
Far-right extremism and focus on the US domestic economy are part of the on-going development since Trump’s previous term and will affect Europe. Financially struggling governments and individuals are trying to find solutions to cope with actual and perceived aggressors, and this naturally leads to a focus on defence in Europe. Not to mention how the EU is already preventing immigration and with nationalising agendas often focusing on the part of population “born and raised” in a country. This is something we will need to actively try to prevent.
How do we attempt that at illuminem: by diverse hiring (team mates for example from Zambia and Liberia), by working with and listening to diverse groups/people, by representing diversity through our news and illuminem Voices, and making sure that this is part of our editorial policy.
On a positive note, I see sustainability as an incremental part of defence in terms of resilience and adaptation, on a regional and global level. With more resources in innovation there is a possibility to use tech and solutions for good. I’m also hoping that the market that is evolving around sustainability (from nature-based solutions, to EVs, to renewables, to CDR) grows inclusively and with the value of sustaining life (not only for the few, but for the many). Climate change has a global effect, and we cannot predict how the weather will change in a specific place, for a specific person — sustainability should be a concern everywhere, and those who have the financial means and power have a responsibility to drive it forward.
I’m also hoping that the market that is evolving around sustainability (from nature-based solutions, to EVs, to renewables, to CDR) grows inclusively …
PG: How is it being perceived in Europe? Would an imminent NATO reorder be any surprise?
VV: The general perception has been devastation, but I also see the sustainability community reacting quickly. Everyone from politics and academia to engineering to finance or charity, are reacting to the US/Ukraine/China/Russia situation. The way I see it, is that even if the US stepped out of NATO, it would be first and foremost for cost reasons, not spending money on military or other aid for Ukraine or elsewhere, but taking care of domestic “sustainability”. In the same line of thinking, thinking about the economy and future costs, one could argue that it is in US interest to adopt sustainable solutions.
PG: Given your insights into AI, are the virtues and vices too hyped?
VV:
1. Inclusivity: AI is a technology, developed and trained by humans. With any technology there will be a chance to develop it in many directions — and of course, we should intentionally develop inclusive technologies. Unfortunately, we humans are naturally afraid of anything different and at times of war or defence – nations and individuals have the tendency to turn inward, find the enemy, fight the difference. This is why the EU is investing in developing its own AI solutions. How inclusive they will be, is a great question.
2. Energy: AI and our digital environments in general, require a lot of data processing, which requires a lot of space, energy, and infrastructure. Whether we really need all of this technology is one question, and another one is, what do we power it with? From what I see, all energy options are on the table, but should be used in the most sustainable way, i.e. if you must continue using fossil fuels, it still makes very much sense to invest in alternatives like renewables to safeguard remaining natural resources.
3. Information: I think the biggest potential problem, even an existing one, is humans being “locked-in”, separated from each other, not having conversations and sharing information, whether through writing, reading, etc. but taking information from a selective system, in a selective format, and failing to make their own informed and critical decisions. AI has the potential to entirely monopolise what we think — therefore should be developed with this consideration in mind.
Unfortunately, we humans are naturally afraid of anything different and at times of war or defence – nations and individuals have the tendency to turn inward, find the enemy, fight the difference.
PG: How to mitigate the gender and racial bias of AI? Would the likes of Deep Seek be the answer?
VV: Kind of in the above 🙂 And yes, more options typically means less monopoly, which is more democratic, so to speak. The driver behind different countries developing their own solutions is a political one now. If there is war, data and information equal direct power. Thus, the US wouldn’t like all of their data to be shared with China, and so on.
Equally, it’s evident that innovation is constant and somehow information has ways of finding people. But, will the right information find the right people at the right scale?
PG: A recent HBR report finds women adopting AI slower than men. Is it about digital divide and accessibility, or a more discerning and judicious usage?
VV: With a background in the tech industry, I’d say the whole process starts from a societal level. Are women encouraged to be inquisitive, encouraged to enter tech, are they supported if faced with obstacles, what is the surrounding culture and working culture in the industry? Is it easy for women to attain the education and respect needed?
Of course, one could argue, that whether for genetic or cultural reasons, women are more altruistic/empathetic (or am I just repeating a false narrative?) and that they don’t want to jump into new tech because it perpetuates one view-point more than the other. I strongly believe you can be both discerning and learn new things 🙂
PG: “The next civilisation is being birthed in large part by deep-thinking women, but hundreds of millions are highly vulnerable to planetary and social risks… and likely to become more so unless we can change the systems of resilience and self-sufficiency”. I quote Dr. Phoebe Barnard. What are your thoughts?
VV: Fully agree, but also think we have come to a level of education/economic stability/know-how for larger global minority communities, who have power to create change — for the many.
PG: Grateful for these unique perspectives, Vilhelmiina. Happy IWD!
It was a privilege running these three seminars – three hours each – with a very diverse representation including some distinguished members of Hong Kong SAR insurance community. All exceptionally participative.
Well done Team CII HK for identifying two of the most challenging risks facing us today – Climate and AI – and pioneering to address these.
Day One at the Hong Kong Club facility
Post lunch with Alpha Ho (to my right) – Regional Corporate Development Manager HK & Asia Pac and Kenny Siu – Regional Director
Day Two with Ellen Ho – Regional Project & Membership Engagement Executive & Alpha Ho
Day Three with the go-getter Alpha Ho!
TGIF: At the CII HK office. Vincy Ho, Regional Operations and Engagement Manager – Hong Kong & Asia Pacific also here.
Key takeaways:
Compelling case for embedding Climate risk in mainstream insurance/ risk management theory and practice.
Urgent need for a serious course correction the way we educate and train insurance workforce.
Heartening to see the resolve of a broad spectrum of practitioners wrt Artificial Intelligence: Leverage it as and when necessary. Tap into natural intelligence as much as possible. In the growing noise, look for the signals.
February 20, 2025
Blog interview published by Illuminem
Zaneta helps clients turn biodiversity and climate liability risks into opportunities for her clients. As any professional working in this area, she spends her days reading the narratives of fear and shame. Many of them present a grim or even a doomsday picture of our common future.
The current narratives are largely fear or shame based, says Zaneta. “Fear completely inhibits us from imagining our shared future. Shame is paralysing and more often than not leads to denial or backlash.”
“We need to change the narrative about climate change to bring everyone on board. This is where reframing may help…If we remove fear and shame and instead approach it with neutrality, our future becomes visible and attainable for us all.”
The Diversity Blog 