12/08/2010 11:34 am ET Updated May 25, 2011

Climate Change Is Bad for Business

What a difference a year makes in the U.N. climate negotiations, with only 20 heads of state showing up here in Cancun, in contrast to some 120 world leaders attending the 2009 summit in Copenhagen.

In spite of a passionate appeal from Mexico's President Felipe Calderón for government representatives to deliver positive results from this summit, a viable agreement to curb global warming continues to remain elusive. And as I listened to similar rhetoric from Ban Ki-moon who is attending these talks for the fourth time in his capacity as U.N. Secretary General, I could not help but feel that sense impotence on the part of our politicians to achieve anything meaningful.

But the diminished number of political figures is contrasted by the growing participation of the business community which is speaking in stronger terms than ever before about the need to find real solutions to human-induced climate change.

Climatewise, an alliance of leading insurance companies working together to reduce the risks presented by climate change to economies and societies, has been making loud noises here. To minimize the hazards of climate change, this industry group is aggressively calling for a 40 percent emissions reduction by 2020 over 1990 levels for developed countries, with a substantial reduction relative to "business as usual" for major developing countries, and an 85 percent global emissions reduction by 2050.

Insurers are demanding action in no uncertain terms, with this alliance clearly criticizing the level of national emissions reduction pledges submitted under last year's Copenhagen Accord as derisory. These companies say that the commitments do not come close to what is needed to avert irreversible climate damage.

The business case for politicians to deliver a clear way forward is growing stronger. In addition to the management of risk, companies will struggle to develop long-term strategies in the absence of a clear legislative framework. Corporate leaders have come to Cancun to delver the unequivocal message that climate change is bad for business.

More than 250 companies have participate in a Global Business Day staged by the World Business Council for Sustainable Development and the International Chamber of Commerce to encourage increased cooperation between the private sector and governments in addressing the climate challenge.

Stressing that business invests when there is a clear and predictable policy framework, the ICC is urging negotiators "to establish a set of clearly outlined financing goals and objective, transparent governance procedures to help businesses understand the public policy agenda on climate finance."

With such luminary entrepreneurs as Ted Turner and Richard Branson also having flown into this vacation resort to add their weight, the business imperative for combating global warming has surely attracted the attention of this conference.

If nothing else, it's money that talks. According to initial estimates from insurance giant Swiss Re, worldwide economic losses from natural catastrophes and manmade disasters amounted to US$ 222 billion in 2010, which is more than three times the 2009 figure of US$ 63 billion. The cost to the global insurance industry was US$ 36 billion, an increase of 34 percent over the previous year.

In addition to the awful impacts on people -- commonly the most impoverished -- this year's wildfires in Russia, the hottest ever recorded temperatures in Japan and China, and devastating floods in Pakistan are bad for business.

When I attended the Kyoto climate meeting in 1997, I witnessed industry groups trying to scupper the process by suggesting that global warming was a myth. Those were the days when it was quite commonly believed that environmentalism threatened business development. Now, 13 years on, the tide has turned, with industry having both awoken to the opportunities that climate change mitigation presents, and increasing concern about the adverse financial consequences of political inertia.