Climate risks have evolved from infrequent, high-loss incidents into a systemic, global, and normalized form of risk, yet the risk mitigation role of insurance in this process remains to be fully realized. This statement was made by Li Kedong, General Manager of CHINA TAIPING, during the "Sustainable Finance Innovation and Cooperation under the Global Governance Framework" conference at the 2026 Lujiazui Forum. He emphasized that sustainable development relies on large-scale, long-term capital support. Insurance capital, with its inherent advantages of long duration, large scale, and high stability, is naturally well-suited for long-cycle projects such as green infrastructure, low-carbon transition, and ecological protection.
Since 2020, losses from global extreme weather events and the risk coverage provided for these losses have constituted a significant shortfall in global climate governance. Among these, the structural mismatch in funding is particularly pronounced. For instance, there is an abundance of short-term capital but a scarcity of long-term capital; financing is relatively smooth in developed economies but faces many difficulties in developing economies; while there are numerous financing products, composite products combining "financing + insurance" or "financing + guarantee" are relatively scarce.
Insurance capital is beneficial for addressing the challenge of funding supply-demand mismatches. Li Kedong expressed that, on one hand, the industry needs to deepen the concept of responsible investment and increase the proportion and scale of asset allocation in areas like the green industry. On the other hand, there is a need to innovate with diversified sustainable financial products, utilizing tools such as green equity, bond plans, and asset securitization to meet the financing needs of different economies and industries.
Climate change is a global challenge that necessitates deepened international cooperation. Li Kedong believes it is essential to build a sustainable financial ecosystem characterized by interconnected standards, diverse services, and collaborative synergy. Specifically for the insurance sector, this involves three key areas. First, promoting standard co-development through regulatory innovation, leveraging the insurance industry's advantages in underlying data, actuarial models, and scenario validation to actively align with global sustainable finance rules, promote mutual recognition of standards for risk pricing, information disclosure, and asset identification, and reduce the costs of cross-border green cooperation. Second, enhancing service capabilities through product innovation, focusing on the needs of green and low-carbon transition, enriching the supply of differentiated, sustainable financial products tailored to the pain points of different economies and industries, innovating risk reduction services, optimizing risk-sharing schemes, and improving the resilience of global green development. Third, consolidating win-win synergy through open cooperation, utilizing the advantages of the internationalized insurance market to strengthen global peer collaboration in areas such as risk data analysis, insurance product development, and long-term capital utilization, deepening multi-party linkages with governments, enterprises, and capital markets to inject more momentum into global sustainable financial cooperation.
Comments