New Article: ‘So what is so unsustainable about the global economy?’

Abstract: In 1987 the World Commission on Environment and Development published Our Common Future. This report attempted to reconcile the ecological ‘limits to growth’, articulated by the northern green movement since the early 1970s, with the need for growth to eliminate poverty, as articulated by developing countries in the south, many of whom had recently broken free from colonial control.

Full Citation: Swilling, M. (2012). So what is unsustainable about the global economy? CME, 30 (3): 68-71 (Available for download with subscription at: http://www.sabinet.co.za/abstracts/m_cme/m_cme_v30_n3_a3.html).

New Report: ‘Extreme Events and Insurance: 2011 Annus Horribilis’

Summary: 2011 has been the most expensive year in recorded history both for the national economies and the insurance sector, with an estimated direct economic cost of US$380bn and original insured losses of approximately US$105bn.

It also showed an increasing severity arising from natural catastrophes, with a series of extreme events including the 11 March Japanese earthquake, the Australian and Thai floods, the New Zealand earthquakes, and the U,S, tornadoes.

These extreme events entail huge consequence in terms of human and economic losses but they also have important repercussions for the insurance industry.

This report presents the insurance’s role in managing extreme events and the mechanisms that make these insurable, both by the public and private sectors. In this context, it provides a detailed picture of the main extreme events that occurred in 2011 and analyse their impact on local insurance markets and well as the lessons learnt to efficiently manage these risks.

To download report click here

New Article: ‘Dire forecast: A theoretical model of the impact of climate change on crime’

Abstract: After providing an overview of climate change and its effects, this article draws on the leading crime theories to discuss the potential impact of climate change on crime. It is argued that climate change will increase strain, reduce social control, weaken social support, foster beliefs favorable to crime, contribute to traits conducive to crime, increase certain opportunities for crime, and create social conflict. An overall model of climate change and crime is then presented, along with suggestions for research. Even though neglected by criminologists, there is good reason to believe that climate change will become one of the major forces driving crime as the century progresses.

Full Citation: Agnew, R. (2012). Dire forecast: A theoretical model of the impact of climate change on crime. Theoretical Criminology, 16 (1): 21-42 (Available for download with subscription at: http://tcr.sagepub.com/content/current). 

Table of Contents Alert: Current Opinion in Environmental Sustainability 4 (1)

Global-change research to understand, handle and solve problems of a Planet under Pressure

Rik Leemans

Interconnected risks and solutions for a planet under pressure — overview and introduction

Mark Stafford-Smith, Owen Gaffney, Lidia Brito, Elinor Ostrom, Sybil Seitzinger

A vision for attaining food security

Alison Misselhorn, Pramod Aggarwal, Polly Ericksen, Peter Gregory, Leo Horn-Phathanothai, John Ingram, Keith Wiebe

Abstract: Food is fundamental to human wellbeing and development. Increased food production remains a cornerstone strategy in the effort to alleviate global food insecurity. But despite the fact that global food production over the past half century has kept ahead of demand, today around one billion people do not have enough to eat, and a further billion lack adequate nutrition. Food insecurity is facing mounting supply-side and demand-side pressures; key among these are climate change, urbanisation, globalisation, population increases, disease, as well as a number of other factors that are changing patterns of food consumption. Many of the challenges to equitable food access are concentrated in developing countries where environmental pressures – including climate change, population growth and other socio-economic issues – are concentrated. Together these factors impede people’s access to sufficient, nutritious food; chiefly through affecting livelihoods, income and food prices. Food security and human development go hand in hand, and their outcomes are co-determined to a significant degree. The challenge of food security is multi-scalar and cross-sector in nature. Addressing it will require the work of diverse actors to bring sustained improvements inhuman development and to reduce pressure on the environment. Unless there is investment in future food systems that are similarly cross-level, cross-scale and cross-sector, sustained improvements in human wellbeing together with reduced environmental risks and scarcities will not be achieved. This paper reviews current thinking, and outlines these challenges. It suggests that essential elements in a successfully adaptive and proactive food system include: learning – through connectivity between scales to local experience and technologies – high levels of interaction between diverse actors and sectors ranging from primary producers to retailers and consumers, and use of frontier technologies.

An energy vision: the transformation towards sustainability — interconnected challenges and solutions

DP van Vuuren, N Nakicenovic, K Riahi, A Brew-Hammond, D Kammen, V Modi, M Nilsson, KR Smith

Abstract: The energy system is currently facing a number of challenges, most notably high consumption levels, lack of energy access, environmental concerns like climate change and air pollution, energy security concerns and the need for a long-term focus. Addressing these critical issues simultaneously will require a fundamental transformation of the global energy system. Recent assessments show that such transformational pathways are achievable in technological and economic terms, but constitute formidable governance challenges across scales. In this paper, we discuss a long-term vision for the energy system and elements of the transition towards this vision. This transformation would need to be based on several key components, including taking an integrated approach as basis, the focus on high levels of energy efficiency and the scale up of investments, also in RD&D.

Water security for a planet under pressure: interconnected challenges of a changing world call for sustainable solutions

Janos J Bogardi, David Dudgeon, Richard Lawford, Eva Flinkerbusch, Andrea Meyn, Claudia Pahl-Wostl, Konrad Vielhauer, Charles Vörösmarty

Abstract: Sustainability, equitable allocation and protection of water resources must occur within the framework of integrated management and water governance, but its implementation is problematic. Ongoing global climate change, increasing population, urbanization, and aspirations for better living standards present a challenge to the planetary sustainability. While water use at global scale currently seems to be within its planetary boundary, shortages prevail in several water-scarce and overpopulated regions, and are projected to increase. Furthermore large-scale impoverishment of aquatic biodiversity, ecosystem degradation and reductions in water quality are unaddressed ‘side effects’ in areas where water can be secured for human and economic uses. As the world prepares for Rio+20, challenges to the sustainability of global water security should be scrutinized. Of particular concern is the likelihood that the water-related Millennium Development Goals (MDGs) targets may not be achievable due to lack of funding commitments, and a failure of delivery mechanisms including water governance. Constraints on water availability and reductions in water quality jeopardize secure access to this resource for all legitimate stakeholders, including aquatic and terrestrial ecosystems. Water connects several socio-ecological, economic and geophysical systems at multiple scales and hence constitutes a ‘global water system’. This should be considered both in technical interventions and in governance frameworks. Humans have been changing the global water system in globally significant ways since the industrial revolution, yet without adequate knowledge of the system and its response to change; and without sufficient understanding of how to govern the system at local and global scales. Water security in the 21st century will require better linkage of science and policy, as well as innovative and cross-sectoral initiatives, adaptive management and polycentric governance models that involve all stakeholders. Consensus solutions will need to be achieved by evidence-based mediation, rather than following untested ‘panaceas’, so as to ensure equitable and sustainable global water use.

Global health and environmental change: linking research and policy

RS Kovats, CD Butler

Abstract: Improving the local and global environment will have immediate benefits for health, welfare and income. The scientific evidence that adverse global environmental change will damage health is accumulating, involving both direct and indirect mechanisms, including the effect of lost livelihoods. Environmental changes will undermine some of the scientific, technological and social progress which has led to the large increase in global life expectancy observed since 1950. Whilst local environmental risks still cause significant impacts on human health and welfare, the biggest threat to global health appears to be from a cascade of future adverse environmental effects. Reducing this risk is vital not just for environmental and ecological integrity, but also to protect future health. Much can be done to promote technologies, policies and lifestyles in order to improve both health and environmental conditions.

Transforming governance and institutions for global sustainability: key insights from the Earth System Governance Project

Frank Biermann, Kenneth Abbott, Steinar Andresen, Karin Bäckstrand, Steven Bernstein, Michele M Betsill, Harriet Bulkeley, Benjamin Cashore, Jennifer Clapp, Carl Folke, Aarti Gupta, Joyeeta Gupta, Peter M Haas, Andrew Jordan, Norichika Kanie, Tatiana Kluvánková-Oravská, Louis Lebel, Diana Liverman, James Meadowcroft, Ronald B Mitchell, et al.

Abstract: The current institutional framework for sustainable development is by far not strong enough to bring about the swift transformative progress that is needed. This article contends that incrementalism—the main approach since the 1972 Stockholm Conference—will not suffice to bring about societal change at the level and speed needed to mitigate and adapt to earth system transformation. Instead, the article argues that transformative structural change in global governance is needed, and that the 2012 United Nations Conference on Sustainable Development in Rio de Janeiro must turn into a major stepping stone for a much stronger institutional framework for sustainable development. The article details core areas where urgent action is required. The article is based on an extensive social science assessment conducted by 32 members of the lead faculty, scientific steering committee, and other affiliates of the Earth System Governance Project. This Project is a ten-year research initiative under the auspices of the International Human Dimensions Programme on Global Environmental Change (IHDP), which is sponsored by the International Council for Science (ICSU), the International Social Science Council (ISSC), and the United Nations University (UNU).

A vision for human well-being: transition to social sustainability

Deborah S Rogers, Anantha K Duraiappah, Daniela Christina Antons, Pablo Munoz, Xuemei Bai, Michail Fragkias, Heinz Gutscher

Abstract: The world is experiencing urgent and interconnected problems on many social as well as environmental fronts. Resource shortages, demographic realities, and planetary boundaries prevent us from growing our way out of these problems. A redirection towards sustainability and well-being may be the most viable option for further development. Sustainability must be defined to include meeting human physical, emotional and social needs. Equity considerations are primary in order to have the resources to reduce poverty and increase well-being in developing countries. Well-being is multidimensional and context-specific, and must be approached in a way that preserves cultural diversity and societal autonomy while meeting universal human needs. We must go beyond GDP, measuring the various objective and subjective components of well-being to monitor our progress.

Pillars for a flourishing Earth: planetary boundaries, economic growth delusion and green economy

Nicolas Kosoy, Peter G Brown, Klaus Bosselmann, Anantha Duraiappah, Brendan Mackey, Joan Martinez-Alier, Deborah Rogers, Robert Thomson

Abstract: In the hue and cry about the ‘green economy’ leading up to Rio + 20 a number of simple points have been neglected. First, the purposes of the economy have been too narrowly conceived. Second, the role of demand management is vastly underplayed. Third, the assumptions about the nature of reality are inconsistent with contemporary science. Fourth, it is mired in a complex discourse about measurement, which fails to even recognize that all economies are dependent on living within Earth’s biogeochemical constraints. Fifth, it uses a conceptual framework laid down in the 18th century and tries to apply it to the Anthropocene. The simple, but to many unthinkable, fact is that you cannot get to a flourishing or even sustainable Earth if you start with the assumptions of neo-classical economics. This is not to say that some of the neo-classical tools are not useful, but that they must be deployed in a framework that it does not and cannot supply.

‘Planetary boundaries’ — exploring the challenges for global environmental governance

Victor Galaz, Frank Biermann, Beatrice Crona, Derk Loorbach, Carl Folke, Per Olsson, Måns Nilsson, Jeremy Allouche, Åsa Persson, Gunilla Reischl

Abstract: A range of studies from Earth system scientists argue that human activities drive multiple, interacting effects that cascade through the Earth system. Recent contributions state and quantify nine, interacting ‘planetary boundaries’ with possible threshold effects. This article provides an overview of the global governance challenges that follow from this notion of multiple, interacting and possibly non-linear ‘planetary boundaries’. Here we discuss four interrelated global environmental governance challenges, as well as some possible ways to address them. The four identified challenges are related to, first, the interplay between Earth system science and global policies, and the implications of differences in risk perceptions in defining these boundaries; second, the capacity of international institutions to deal with individual ‘planetary boundaries’, as well as interactions between them; third, the role of international organizations in dealing with ‘planetary boundaries’ interactions; and fourth, the role of global governance in framing social–ecological innovations.

Climate science and services: Providing climate information for adaptation, sustainable development and risk management

Ghassem R Asrar, Vladimir Ryabinin, Valery Detemmerman

Abstract: The World Climate Research Programme (WCRP), sponsored by WMO, Intergovernmental Oceanographic Commission (IOC) of UNESCO and the International Council for Science (ICSU), is focussing its efforts on providing science support to the design and implementation of the Global Framework for Climate Services and addressing the ICSU Grand Challenges for Future Earth initiative. The multitude of international field experiments, analysis and re-analysis of observations, Earth system models, climate prediction and projection projects, and scientific synthesis and assessments need to be coordinated and integrated with other relevant information to enable practical application of fundamental climate science of direct relevance, benefit and value to society. User feedback is essential in driving the climate research towards addressing climate services requirements for adaptation planning, risk management and sustainable development. Providing tailored climate information in a timely and effective manner on global, regional, and national levels, and in response to the needs of different economic sectors such as agriculture and food production, water resources management, disaster risk management, and human health, energy and transport, among others, is key to the success of the Future Earth and GFCS initiatives. We describe in this paper the WCRP strategy and approach for addressing these challenges and opportunities.

Biodiversity and ecosystem services science for a sustainable planet: the DIVERSITAS vision for 2012–20

Anne Larigauderie, Anne-Hélène Prieur-Richard, Georgina M Mace, Mark Lonsdale, Harold A Mooney, Lijbert Brussaard, David Cooper, Wolfgang Cramer, Peter Daszak, Sandra Díaz, Anantha Duraiappah, Thomas Elmqvist, Daniel P Faith, Louise E Jackson, Cornelia Krug, Paul W Leadley, Philippe Le Prestre, Hiroyuki Matsuda, Margaret Palmer, Charles Perrings, et al.

Abstract: DIVERSITAS, the international programme on biodiversity science, is releasing a strategic vision presenting scientific challenges for the next decade of research on biodiversity and ecosystem services: “Biodiversity and Ecosystem Services Science for a Sustainable Planet”. This new vision is a response of the biodiversity and ecosystem services scientific community to the accelerating loss of the components of biodiversity, as well as to changes in the biodiversity science-policy landscape (establishment of a Biodiversity Observing Network — GEO BON, of an Intergovernmental science-policy Platform on Biodiversity and Ecosystem Services — IPBES, of the new Future Earth initiative; and release of the Strategic Plan for Biodiversity 2011–2020). This article presents the vision and its core scientific challenges.

Developing an Integrated History and future of People on Earth (IHOPE)

Robert Costanza, Sander van der Leeuw, Kathy Hibbard, Steve Aulenbach, Simon Brewer, Michael Burek, Sarah Cornell, Carole Crumley, John Dearing, Carl Folke, Lisa Graumlich, Michelle Hegmon, Scott Heckbert, Stephen T Jackson, Ida Kubiszewski, Vernon Scarborough, Paul Sinclair, Sverker Sörlin, Will Steffen

Abstract: The Integrated History and future of People on Earth (IHOPE) initiative is a global network of researchers and research projects with its International Program Office (IPO) now based at the Stockholm Resilience Center (SRC), Uppsala University, Arizona State University, Portland State University, and the Australian National University. Research linked to IHOPE demonstrates that Earth system changes in the past have been strongly associated with changes in the coupled human–environment system. IHOPE supports integrating knowledge and resources from the biophysical and the social sciences and the humanities to address analytical and interpretive issues associated with coupled human–earth system dynamics. This integration of human history and Earth system history is a timely and important task. Until recently, however, there have been few attempts at such integration. IHOPE will create frameworks that can be used to help achieve this integration. The overarching goal is to produce a rich understanding of the relationships between environmental and human processes over the past millennia. IHOPE recognizes that one major challenge for reaching this goal is developing ‘workable’ terminology that can be accepted by scholars of all disciplines.
The specific objectives for IHOPE are to identify slow and rapidly moving features of complex social–ecological systems, on local to continental spatial scales, which induce resilience, stress, or collapse in linked systems of humans in nature. These objectives will be reached by exploring innovative ways of conducting interdisciplinary and transdisciplinary science, including theory, case studies, and integrated modeling. Examples of projects underway to implement this initiative are briefly discussed.

Capacity building to support knowledge systems for resilient development — approaches, actions, and needs

Hassan Virji, Jon Padgham, Clark Seipt

Abstract: Sustained action by society to support timely and effective actions to deal with global environmental changes must be underpinned by systems of knowledge generation and exchange that are capable of engaging a wide range of decision makers. Building more robust knowledge systems to support resilient development requires significant and well-targeted investments in education and training that bolster scientific capacities, and in communication approaches that foster better interaction of scientists with practitioner and policy communities. Reflecting on nearly two decades of capacity building experience of START and its partner institutions, we review the key principles that should underlie long-term capacity building efforts. We note that investments in capacity building are in themselves an effective adaptation response to global change. Strong and well-supported scientific networks are an indispensible component of capacity building, as they are a key source for new knowledge that enables continual and dynamic adaptation practice. We illustrate guiding principles and priority areas for capacity building that promote an integrated and comprehensive approach to capacity building in the context of the emerging Earth System Science Initiative and other programs, such as Integrated Research on Disaster Reduction, Climate Change, Agriculture, and Food Security, People and Ecosystem Services, and the Program of Research on Climate Change Vulnerability, Impacts and Adaptation.

Integrating disaster risk reduction towards sustainable development

Gordon A McBean

Abstract: Our planet is under stress from the impacts of hazards, like earthquakes, floods and storms. These have major impacts on vulnerable, generally less-developed societies and make achieving sustainable development exceedingly difficult. A relatively new international research program, Integrated Research on Disaster Risk is now underway towards meeting its legacy of an enhanced capacity around the world to address hazards and make informed decisions on actions to reduce their impacts leading to societies shifting their focus from response-recovery towards prevention-mitigation, building resilience and reducing risks, learning from experience and avoiding past mistakes.

Climate change, agriculture and food security: a global partnership to link research and action for low-income agricultural producers and consumers

Sonja Vermeulen, Robert Zougmoré, Eva Wollenberg, Philip Thornton, Gerald Nelson, Patricia Kristjanson, James Kinyangi, Andrew Jarvis, James Hansen, Andrew Challinor, Bruce Campbell, Pramod Aggarwal

Abstract: To achieve food security for many in low-income and middle-income countries for whom this is already a challenge, especially with the additional complications of climate change, will require early investment to support smallholder farming systems and the associated food systems that supply poor consumers. We need both local and global policy-linked research to accelerate sharing of lessons on institutions, practices and technologies for adaptation and mitigation. This strategy paper briefly outlines how the Research Program on Climate Change, Agriculture and Food Security (CCAFS) of the Consortium of International Agricultural Research Centres (CGIAR) is working across research disciplines, organisational mandates, and spatial and temporal levels to assist immediate and longer-term policy actions.

Program on ecosystem change and society: an international research strategy for integrated social–ecological systems

Stephen R Carpenter, Carl Folke, Albert Norström, Olof Olsson, Lisen Schultz, Bina Agarwal, Patricia Balvanera, Bruce Campbell, Juan Carlos Castilla, Wolfgang Cramer, Ruth DeFries, Pablo Eyzaguirre, Terry P Hughes, Stephen Polasky, Zainal Sanusi, Robert Scholes, Marja Spierenburg

Abstract: The Program on Ecosystem Change and Society (PECS), a new initiative within the ICSU global change programs, aims to integrate research on the stewardship of social–ecological systems, the services they generate, and the relationships among natural capital, human wellbeing, livelihoods, inequality and poverty. The vision of PECS is a world where human actions have transformed to achieve sustainable stewardship of social–ecological systems. The goal of PECS is to generate the scientific and policy-relevant knowledge of social–ecological dynamics needed to enable such a shift, including mitigation of poverty. PECS is a coordinating body for diverse independently funded research projects, not a funder of research. PECS research employs a range of transdisciplinary approaches and methods, with comparative, place-based research that is international in scope at the core.

Building a global observing system for biodiversity

Robert J Scholes, Michele Walters, Eren Turak, Hannu Saarenmaa, Carlo HR Heip, Éamonn Ó Tuama, Daniel P Faith, Harold A Mooney, Simon Ferrier, Rob HG Jongman, Ian J Harrison, Tetsukazu Yahara, Henrique M Pereira, Anne Larigauderie, Gary Geller

Abstract: The Group on Earth Observations Biodiversity Observation Network (GEO BON) has been in formal existence for three years, following several years of design and discussion. It is the realisation of the biodiversity societal benefit area envisaged in the GEO System of Systems (GEOSS). GEO BON links together existing networks, each covering particular aspects of biodiversity or parts of the world, and takes steps to help fill important gaps in the system. GEO BON focusses on coordination and harmonisation of the existing and emerging systems; advocacy and action to sustain the observing systems and to fill the identified gaps; and understanding and servicing user needs for biodiversity observations, particularly in the policy-making domain.

Responding to complex societal challenges: A decade of Earth System Science Partnership (ESSP) interdisciplinary research

Ada Ignaciuk, Martin Rice, Janos Bogardi, Josep G Canadell, Shobhakar Dhakal, John Ingram, Rik Leemans, Mark Rosenberg

Abstract: The Earth system is an integrated, self-regulating system under increasing pressure from anthropogenic transformation. The Earth System Science Partnership (ESSP), which was established by the international global environmental change research programs (i.e., DIVERSITAS, IGBP, IHDP and WCRP) facilitates the study of this system in order to understand how and why it is changing, and to explore the implications of these changes for global and regional sustainability. Crucial to this scientific enterprise are interdisciplinary Joint Projects on carbon, food, water and health. This paper analyses the scientific and institutional evolution of ESSP as a framework for interdisciplinary and integrative research of societal relevance. Case studies on food systems, carbon budgets, water security and biodiversity conservation illustrate how these projects have advanced integrated Earth system knowledge. At the institutional level, we explain the transformation of the ESSP governance and how this has further enabled interdisciplinary research. The lessons learnt from ESSP research can contribute to the development of the next generation of Earth system science for sustainability.

New Article: ‘Transforming governance and institutions for global sustainability: key insights from the Earth System Governance Project’

Abstract: The current institutional framework for sustainable development is by far not strong enough to bring about the swift transformative progress that is needed. This article contends that incrementalism—the main approach since the 1972 Stockholm Conference—will not suffice to bring about societal change at the level and speed needed to mitigate and adapt to earth system transformation. Instead, the article argues that transformative structural change in global governance is needed, and that the 2012 United Nations Conference on Sustainable Development in Rio de Janeiro must turn into a major stepping stone for a much stronger institutional framework for sustainable development. The article details core areas where urgent action is required. The article is based on an extensive social science assessment conducted by 32 members of the lead faculty, scientific steering committee, and other affiliates of the Earth System Governance Project. This Project is a ten-year research initiative under the auspices of the International Human Dimensions Programme on Global Environmental Change (IHDP), which is sponsored by the International Council for Science (ICSU), the International Social Science Council (ISSC), and the United Nations University (UNU).

Full Citation: Biermann, F. (2012). Transforming governance and institutions for global sustainability: Key insights from the Earth System Governance Project. Current Opinion in Environment Sustainability, 4 (1): 51-60 (Available for download with subscription at http://www.sciencedirect.com/science/article/pii/S1877343512000152). 

New Article – ‘When risk-based regulation aims low: Approaches and challenges’

Abstract: Risk-based regulation is becoming a familiar regulatory strategy in a wide range of areas and countries. Regulatory attention tends to focus, at least initially, on high risks but low-risk regulatees or activities tend to form the bulk of the regulated population. This article asks why regulators need to address low risks and it outlines the potential difficulties that such risks present. It then considers how regulators tend to deal with lower risks in practice. A body of literature and survey-based research is used to develop a taxonomy of intervention strategies that may be useful in relation to low-risk activities, and, indeed, more widely. In an article to be published in the subsequent issue of this journal, we will then develop a strategic framework for regulators to employ when choosing intervention strategies and we will assesses whether, and how, such a framework could be used by regulatory agencies in a manner that is operable, dynamic, transparent, and justifiable.

Full Citation: Black, J. and Baldwin, R. (2012). When risk-based regulation aims low: Approached and challenges. Regulation & Governance, 6 (1): 2-22 (Available for download with subscription at: http://onlinelibrary.wiley.com/doi/10.1111/rego.2012.6.issue-1/issuetoc

New Article: ‘Confronting the Challenge of Energy Governance’

Abstract: There is a compelling argument for developing a low carbon emissions trajectory to mitigate climate change and for doing so urgently. What is needed is a transformation of the energy sector and an ‘energy revolution’. Such a revolution can only be achieved through effective energy governance nationally, regionally, and globally. But frequently such governance is constrained by the tensions between energy security, climate change mitigation and energy poverty. At national level, there is a chasm between what is needed and what governments do ‘on the ground’, while regionally and globally, collective action challenges have often presented insurmountable obstacles. The article examines what forms of energy law, regulation and governance are most needed to overcome these challenges and whether answers are most likely to be found in hierarchy, markets, or networks.

Full Citation: Gunningham, N. (2012). Confronting the challenge of energy governance. Transnational Environmental Law: 1-17. (Available for download with subscription: http://journals.cambridge.org/action/displayJournal?jid=TEL). 

New Report: ‘Resilient People, Resilient Planet: A Future Worth Choosing’

The new UN report, entitled ‘Resilient People, Resilient Planet: A Future Worth Choosing‘  is dubbed to be a major break through for resilience theory. The new report is in many respects the counterpart of the landmark 1987 report by the World Commission on Environment and Development, “Our Common Future”, better known to as the Brundtland report. Just as its predecessor the new report is a significant contribution to the UN’s work on sustainable development, and will be an important contribution to the UN Conference on Sustainable Development (Rio+20) in Rio de Janeiro in June 2012.

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Table of Contents Alert: Business & Society 51 (1)

Special Issue: Climate Change: Challenging Business, Transforming Politics

Climate Change: Challenging Business, Transforming Politics

Chukwumerije Okereke, Bettina Wittneben, and Frances Bowen

Abstract: Climate change challenges contemporary management practices and ways of organizing. While aspects of this challenge have been long recognized, many pertinent dimensions are less effectively articulated. Based on contemporary literature and insights from articles submitted to this special issue, the guest editors of this special issue highlight some of the challenges posed by climate change to government and business, and indicate the range of options and approaches being adopted to address these challenges.

Corporate Perceptions of Climate Science: The Role of Corporate Environmental Scientists

Sandra Rothenberg and David L. Levy

Abstract: Although there has been some growing recognition of the role of private actors in international environmental regimes, little attention has been paid to the role of the private sector at the science–policy interface. Because the automobile industry plays a crucial role in mitigation of greenhouse gases, successful policy requires not just the assent but the active cooperation of this sector. Such cooperation, however, requires some institutional acceptance that climate change is indeed a significant risk. In this article, the authors look at the early stages of the automobile industry’s engagement with the discourse on climate change. The authors focus, in particular, on the role of corporate scientists in two U.S. automobile companies in translating this discourse. Acting as boundary spanners and institutional entrepreneurs, these individuals influenced both corporate perceptions of and responses to climate change science.

Much Ado About Nothing? How Banks Respond to Climate Change

Bettina Furrer, Jens Hamprecht, and Volker H. Hoffmann

Abstract: The effect of the financial sector on climate change remains largely underestimated. Banks can steer investments of their customers in low-emission technologies and adjust the conditions of loans that they provide to greenhouse gas intensive sectors. However, the authors’ research shows that few banks take such substantive action when they implement their climate strategy. The authors analyze 114 listed banks around the world and find evidence for deflective decoupling. This evidence means that banks that implement a climate strategy often decouple it from their main value creating processes such as lending and investment. Those banks that engage in more substantive action still combine it with symbolic activities which may facilitate the strategic change process. This study contributes to the literature on organizations and the natural environment as the authors specify which kind of banks implement substantive climate strategies. This research holds important implications for policy makers and managers who aim to implement a climate strategy in organizations that create value through information and financial flows but not with a physical transfer of goods.

Surprise as a Catalyst for Including Climatic Change in the Strategic Environment

Nardia Haigh and Andrew Griffiths

Abstract: This article examines what prompted electricity supply organizations to include changing climatic conditions as key elements of the strategic environment. Utilizing themes emerging from inductive analysis, the authors explain how and why surprising climatic events drove the organizations to begin including climate trends in their strategy development and planning processes. Results indicate that organizations were surprised climate was becoming more unpredictable, was directly affecting their operations, and was challenging long-held assumptions about climatic patterns. Our findings suggest that adaptation to climate change occurs predominantly as a reaction to climatic surprise, rather than a preemptive response to increasing awareness, and perceived uncertainty and risks as suggested by previous studies. Results also show that organizations are beginning to conceptually link changes in local climatic conditions to the global issue of climate change; though such linkages are not necessarily important to the inclusion of climate in the strategic environment.

The ClimateWise Principles: Self-Regulating Climate Change Risks in the Insurance Sector

Jason Thistlethwaite

Abstract: In recent years, the private insurance sector has started to incorporate climate change issues into its standard business practices and even begun to lobby governments to regulate and reduce global greenhouse gas (GHG) emissions. The establishment of the ClimateWise Principles (ClimateWise) in 2007 embodies this effort. ClimateWise is an example of what scholars studying corporate strategy identify as a self-regulatory institution. To date, however, academic scholarship has failed to explain the emergence and function of ClimateWise, a unique initiative designed to leverage the insurance industry’s technical and political authority in governing climate change risks. This article will make the case that ClimateWise emerged in response to strategic incentives to reduce exposure to climate change risks, but that the form of this unusual self-regulatory institution was driven by institutional conditions.

Influencing Climate Change Policy: The Effect of Shareholder Pressure and Firm Environmental Performance

Cynthia E. Clark and Elise Perrault Crawford

Abstract: Firms face a great deal of pressure to engage in the heightened debate about climate change policies and practices. Building on the corporate political strategy literature, the authors evaluate how firms choose to influence those policies when faced with pressure from shareholders and activists. The authors triangulate firms’ choice of corporate political activity (CPA) with their environmental performance to draw out whether performance affects the firm’s choice of engagement level in CPA. The authors find that firms in the S&P 500 use a form of constituency-building (CB) more often than a financial-incentive (FI) tactic and that environmental performance moderates this choice. To date, there is little research connecting corporate political activity and climate change policies and performance. This research is intended to contribute to this literature gap.

Addressing the Climate Change—Sustainable Development Nexus: The Role of Multistakeholder Partnerships

Jonatan Pinkse and Ans Kolk

Abstract: While calls are being made to deal with the linkages between climate change and sustainable development to arrive at an integrated policy, concrete steps in this direction have been very limited so far. One of the possible instruments through which both issues may be approached simultaneously is a multistakeholder partnership, a form of governance with the potential to address existing regulatory, participation, resource and learning gaps as it harnesses the strengths of private, public, and nonprofit partners. There is some insight into partnerships for climate change, but largely limited to developed countries, and those in developing countries most often do not involve companies. To help fill this gap, this article explores the role of multistakeholder partnerships in addressing climate change and sustainable development in developing-country settings. It elaborates on the governance function of partnerships, on actor involvement, the gaps addressed, as well as synergies and trade-offs in the climate change-sustainable development nexus and how partnerships may help address them. As the number of such partnerships is still limited, we discuss seven illustrative partnerships and draw conclusions as to further conceptualizations and implications for research and practice.

Full text with subscription available for download at: http://bas.sagepub.com/

Table of Contents Alert: The Geneva Papers on Risk and Insurance: Issues and Practice 37 (1)

Editorial 

Moving Insurance
Patrick Liedtke

Original Articles 

Who Responds to Tax Reforms? Evidence from the Life Insurance Market
Carolin Hecht and Katja Hanewald

Abstract: We exploit the natural experiment of the 2005 income tax reform in Germany to study the effects of tax incentives on consumer behaviour in life insurance markets. Our empirical analysis of sociodemographic, economic and psychological household characteristics elicited in the German SAVE study shows that two very different consumer groups buy (endowment) life insurance before and after the tax reform. We find that education plays a central role in reactions to the modified tax environment. Our stylised characterisation of “arbitrageur” and “straggler” buyers will assist both life insurance firms and regulatory authorities in designing effective policies.

Non-Risk Price Discrimination in Insurance: Market Outcomes and Public Policy
R Guy Thomas

Abstract: This paper considers price discrimination in insurance, defined as systematic price variations based on individual customer data but unrelated to those customers’ expected losses or other marginal costs (sometimes characterised as “price optimisation”). An analysis is given of one type of price discrimination, “inertia pricing”, where renewal prices are higher than prices for risk-equivalent new customers. The analysis suggests that the practice intensifies competition, leading to lower aggregate industry profits; customers in aggregate pay lower prices, but not all customers are better off; and the high level of switching between insurers is inefficient for society as a whole. Other forms of price discrimination may be more likely to increase aggregate industry profits. Some public policy issues relating to price discrimination in insurance are outlined, and possible policy responses by regulators are considered. It is suggested that competition will tend to lead to increased price discrimination over time, and that this may undermine public acceptance of traditional justifications for risk-related pricing.

Regulation and Reform of Rating Agencies in the European Union: An Insurance Industry Perspective
Anja Theis and Michael Wolgast

Abstract: This article investigates the current discussion on the regulatory framework for credit rating agencies (CRAs) from the perspective of the insurance industry, focusing on the European Union. It becomes apparent that the new European system of regulation and supervision of CRAs conforms well to general principles of economic theory and can be expected to resolve many issues of concern. In contrast, some of the additional policy options currently discussed in Europe could involve substantial costs and risks for market participants and the financial system without contributing further to the objectives of CRA reform.

Insurability in Microinsurance Markets: An Analysis of Problems and Potential Solutions
Christian Biener and Martin Eling

Abstract: This paper provides a comprehensive analysis of the insurability of risks in microinsurance markets. Our aim is to enhance the understanding of impediments to and facilitators of microinsurance from an economic perspective and outline potential solutions. The motivation for conducting this analysis arises from two important aspects. (1) Despite strong growth of microinsurance markets in recent years, more than 90 per cent of the poor population in developing countries have limited or no access to insurance. (2) Industry practitioners frequently highlight problems in the insurability of risks that hinder the development of microinsurance. We review 131 papers and find that the most severe problems stem from insufficient resources for risk evaluation, small size of insurance groups, information asymmetries and the size of the insurance premium. On the basis of the analysis, we discuss a number of potential solutions such as, for example, a cooperative microinsurance architecture.

Governance and Shareholder Response to Chief Risk Officer Appointments
Manu Gupta, Puneet Prakash and Nanda Rangan

Abstract: This study examines the recent, significant growth in the appointments of Chief Risk Officers (CROs), the role of a CRO, and whether such appointments benefit shareholders. We find that the market is more likely to react positively to a CRO appointment for a firm with weak corporate governance. In particular, the lower the proportion of outside directors the greater is the likelihood of a positive market reaction to CRO appointments, suggesting that CRO appointments are associated with better future governance by firms’ shareholders. Finally, firms with higher tax and product risk also experience increases in stock prices when they appoint CROs.

Globalisation and Convergence of International Life Insurance Markets
Chien-Chiang Lee and Chi-Hung Chang

Abstract: Using panel data of 39 countries over the period 1979–2007, this paper is the first to empirically examine the influence of the KOF index of globalisation (overall and its three main sub-indices) on the development and convergence of international life insurance markets by a panel cointegration technique. We find that globalisation has a significant impact on the development of international life insurance markets and on reducing the deviation between individual countries’ life insurance penetration and the world average. Economic and social dimensions exert a similar effect as well, and the effect of economic globalisation is higher, while the effect of political dimension is not significant. In addition, social globalisation plays a dominant role on the interactive influence of different dimensions of globalisation, implying that socio-cultural factors are a latent factor behind economic or political influence. Finally, most countries’ structural breaks coincide with the fast growth wave of international life insurance markets.

ITS Award-Winning Papers

Structure, Principles and Effectiveness of Insurance Regulation in the 21st Century: Insights from Canada
Mary Kelly, Anne Kleffner and Darrell Leadbetter

Abstract: The 2007–2009 financial crisis resulted in failures of many large financial institutions and among the G8 countries, only Canada did not have to provide financial support to distressed financial institutions. We first examine the existing Canadian regulatory architecture in relationship to underlying principles arising from the public theory of regulation. Elements of the Canadian regulatory framework that contributed to the success of the insurance industry in weathering the crisis include the presence of a federal regulator who monitors system-wide issues also ensures consistent solvency standards; investment guidelines that encourage prudent risk-taking; and a holistic approach to insurer monitoring. A comparison of the Canadian experience with that of other jurisdictions highlights the importance of a holistic risk management approach to firm viability, especially in light of the inherent risks arising from complex group structures. A lesson from the crisis is the need for effective ex ante and ex post cross-border and holistic supervision as most distressed institutions belonged to large complex groups operating in multiple regulatory jurisdictions.

Principles for Insurance Regulation: An Evaluation of Current Practices and Potential Reforms
Robert W Klein

Abstract: The recent financial crisis and its cascading effects on the global economy have drawn increased attention to the regulation of financial institutions including insurance companies. While many observers would argue that insurance companies were not significant contributors to the crisis, the role of insurance companies in the financial economy and their potential vulnerability to systemic risk have become matters of considerable interest to policy-makers and regulators. In this context, this paper examines the basic economic principles that should govern the regulation of insurance and employs these principles in assessing current regulatory practices and potential reforms. Specifically, it articulates the basic rationale for insurance regulation, which is the remediation of market failures where regulation can enhance social welfare. In insurance, the principal market failures that warrant regulatory intervention are severe asymmetric information problems and principal-agent conflicts that could lead some insurance companies to incur excessive financial risk and/or engage in abusive market practices that harm consumers. This provides an economic basis for the regulation of insurers’ financial condition and market conduct. At the same time, the regulatory measures that are employed to correct market failures should be efficient and effective. Judged against these principles, the systems for solvency and market conduct regulation in the United States warrant significant improvement. There appears to be little or no justification for regulating insurance rates in competitive markets and the states should move forward with full deregulation of insurance prices. The EU appears to be much farther ahead in terms of implementing best practices in the regulation of insurers’ financial condition under its Solvency II initiative. It is also much closer to the desirable goal of full price deregulation than the United States.

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