By J. Eric Smith, CEO Swiss Re Americas
It was an important few weeks in New York City with the UN Global Compact Leaders Summit and the opening of the 68th UN General Assembly, followed by The Clinton Global Initiative Annual Meeting and Climate Week NYC.
As a participant in many of these events, these busy days don’t just mean full agendas or increased traffic in Manhattan. To me, this represents a key turning point where we need to answer a critical question: How does business join forces with government and communities to create meaningful impact in the face of climate change?
The answer lies in resiliency. Resiliency doesn’t just mean our ability to recoup or rebuild following a natural disaster; it’s about understanding and preparing for the potential risk of climate change and developing solutions around those risks to enable sustainable growth.
As a global reinsurer, my company has been mitigating large-scale risk around natural disasters like floods, hurricanes, or earthquakes for over 150 years, working closely with businesses and governments. We believe this gives us unique insights on the power of collaboration.
The need for action is clear: these events are all occurring against the back drop of the forthcoming one-year anniversary of Hurricane Sandy. There is no need to rehash the devastating consequences of that storm or how we’ve managed to rebound – evidence of both is clear. Rather, we must focus on real solutions to create more resilient communities in the face of climate change, and importantly, how business can contribute to this cause.
As we wrap up these series of events, here is some of what we’ve learned from our history of collaboration. I urge my co-participants from the business world to consider these lessons for ways they can contribute to develop true solutions.
- Reapplication for innovation. Innovation does not have to mean starting from scratch. At Swiss Re, we have seen new applications of existing business models create a completely new outcome. For example, we’ve again partnered with the Rockefeller Foundation and Oxfam America on a pilot program in Tigray, Ethiopia that is aimed at helping farmers anticipate, prepare for and survive drought. Through an innovative application of technology and insurance models developed previously for hydropower companies, we can use meteorological data on rainfall to hedge the risk of drought and allow the entire community to become more resilient. When the program started there were zero insurance policies in the area; by the end of the third year, nearly 19,000 farmers had bought them across more than 70 villages.
- IP as your greatest contribution. Business should think beyond solely monetary contributions, and look within their business for ways to make a meaningful impact. Many times, this comes in the form of data and IP. What many don’t know is there is a plethora of information within the four walls of a reinsurance company. From technology that assesses natural hazard exposure for any location worldwide, to data on the aging of our society, it is our business to analyze this information to better identify risk. What we’ve found is this information can be extremely helpful to other organizations for different reasons, especially when coming up with solutions for major global issues such as climate change. Swiss Re’s collaboration with the Rockefeller Foundation on 100 Resilient Cities Centennial Challenge will bring to bear our underwriting expertise and natural catastrophe data to vulnerable municipalities around the world that are in need of climate adaptation solutions. Other initiatives such as the GreenXchange are a good example of this open sourcing-approach to information sharing. The effort aims to accelerate and scale sustainability innovation through sharing intellectual property assets and includes leading companies such as Nike, Best Buy and Salesforce.com.
- Realize the incentive. We realize that every company is at different inflection points in the transition towards a more sustainable future. There are visionaries such as Coca-Cola and Unilever, who have evolved over their long histories to put the environment at the forefront. And then there are cutting-edge new entrants who are already leaders in sustainable business, such as Elon Musk and Tesla Motors. In their own way, each of these companies is proving that sustainable commerce makes good business sense.
From our point of view, though, resilience – and the ability for communities to survive, grow and prosper – is the critical incentive for business to focus on climate change solutions: business simply cannot succeed if we don’t have growing, prosperous communities. Climate change puts us all at risk.
The stress on the environment is unsustainable and only unconventional thinking and action will alter the course of climate change. Business is well equipped to provide this. By joining forces with governments and communities, I am confident that business will see success in creating a more resilient future for us all.
J. Eric Smith, Chief Executive Officer Swiss Re Americas, was appointed to the Group Executive Committee in January 2012 and appointed Regional President Americas in January 2012. He joined Swiss Re in July 2011 as Chief Executive Officer of the Americas Division and as a member of the Group Management Board.
Prior to Swiss Re, he was President at USAA Life Insurance Co., where he led the effort to provide life, health, and annuity solutions through direct channels. Before USAA, J. Eric Smith was President of Allstate Financial Services where he was responsible for the Allstate agency line of business. He spent over 20 years with Country Financial, helping to build its Property and Casualty business. He has an MBA in Strategy, Marketing and Corporate Finance from the Kellogg Graduate School of Management.