Understanding drought risk, insurance company seeks to reforest landscape

trees in port elizabeth SA photo
CC BY-ND 2.0 Dave H

As more and more corporations voice their support for robust climate action, insurance companies in particular are becoming increasingly vocal about the need to curb emissions and reduce climate risk.

Their ability to reduce the specific risk they are exposed to, however, is often limited. While they can buy renewable energy and call for strong legislative action, no single insurance company—however large—can really hope to move the needle on global climate action by itself.

On a local level, however, that's not always the case. Take this recent story in The Guardian, for example, documenting how Santam, South Africa's largest provider of agricultural insurance, has teamed up with conservation non-profits to support large-scale tree planting and water catchment restoration.

Specifically, the company has been working with its partners in the countryside surrounding Port Elizabeth—South Africa's 5th largest city—to plant 3.7 million trees in the hopes of improving water catchment, prevent erosion and alleviate drought conditions that have persisted off and on since 2007.

Far from being a simple case of corporate philanthropy, Santam couches its investments firmly in terms of a business imperative. In fact Ray-Ann Sedres, head of integrated sustainability at Santam, told The Guardian that the company's likelihood of sustainability is "highly dependent on this."

As climate change impacts move increasingly from predictions into reality, I expect to see many more such projects cropping up from insurance companies. Not only will they continue with mitigation efforts, like Legal & General's recent €250m investment in onshore wind, but they will also be looking at new and innovative ways to reduce exposure in regions hardest hit by climate change. Whether it's large-scale reforestation and agroforestry, drought resistant farming or climate-resilient cities, there's no shortage of ideas needing support and funding.

The insurance industry would be wise to step up its search for solutions now.

Tags: Agriculture | Corporate Responsibility | Forestry

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