During the 2026 Lujiazui Forum, CHINA TAIPING General Manager Li Kedong delivered a speech at the plenary session focused on sustainable financial innovation and cooperation within a global governance framework.
Key Drivers for Green Insurance
Li Kedong stated that climate change presents a global challenge, and promoting a green, low-carbon transition has become a worldwide consensus. The financial sector, including the insurance industry, should and can play a significant role in this transition, which brings both new challenges and opportunities.
Addressing the Protection Gap
From a global risk management perspective, climate change is accelerating the innovation and development of green insurance to address coverage gaps. Climate risks have evolved from low-frequency, high-loss events into systemic, global, and normalized threats. This shift significantly impacts global supply chains and socio-economic development. Currently, only about one-third of the annual losses from extreme weather events are covered by insurance, leaving an average annual protection gap of approximately $200 billion, which is a major shortfall in global climate governance.
Expanding Scope and Value
The boundaries and value of green insurance are continually expanding. Products such as catastrophe insurance, carbon sink insurance, and weather index insurance are rapidly evolving, covering areas like clean energy, green buildings, sustainable agriculture, and ecological restoration. The insurance industry holds substantial potential to enhance global climate risk management, for instance, by leveraging cross-border reinsurance and risk-sharing mechanisms to bolster governance capacity and support the global green transition, especially in developing nations.
Financing Sustainable Development
From a sustainable finance viewpoint, insurance capital can help resolve the mismatch between capital supply and demand. Sustainable development requires large-scale, long-term funding. While global investment in clean energy and green finance instruments reached record highs in 2025, structural mismatches persist. These include a surplus of short-term funds versus a scarcity of long-term capital, easier access to finance in developed economies compared to developing ones, and a predominance of pure financing products over those combining financing with insurance or guarantees.
Leveraging Insurance Capital's Strengths
Insurance capital, with its inherent advantages of long duration, large scale, and high stability, is naturally suited for long-cycle projects like green infrastructure and ecological protection. Supporting sustainable development requires the industry to deepen its commitment to responsible investment by integrating environmental, social, and governance factors into decision-making and increasing allocations to green sectors. It also necessitates innovating diversified sustainable financial products using tools like green equity, bond plans, and asset securitization to meet varied financing needs.
Fostering Global Cooperation
Finally, from the dimension of global governance collaboration, there is a need to build a sustainable financial ecosystem with interconnected standards, diverse services, and coordinated action. As climate change is a global challenge, deepening international cooperation is essential.
Insurance Industry's Role in Collaboration
Li Kedong outlined three areas for the insurance industry to contribute: First, promoting shared standards through regulatory innovation by leveraging the industry's strengths in data, actuarial models, and scenario validation to align with global sustainable finance rules and facilitate mutual recognition in risk pricing, disclosure, and asset classification. Second, enhancing service capabilities through product innovation by developing differentiated, sustainable financial products tailored to the needs of various economies and sectors, innovating risk reduction services, and optimizing risk-sharing solutions. Third, consolidating win-win outcomes through open cooperation by utilizing the international nature of insurance markets to strengthen collaboration with global peers in data analysis, product development, and long-term capital deployment, and deepening multi-party linkages with governments, enterprises, and capital markets to inject more momentum into global sustainable financial cooperation.
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