By Praveen Gupta
A whale out of water is over-run by ants. – Laozi
“So if a dead whale is worth a million dollars on a fishing boat and a live whale in the ocean is worth nothing, that is a value system codified in a value equation that then incentivises behaviour, but it also incentivises psychopathy, so I have to kind of deaden to be able to do the thing that is incentivised by the system, or somebody else does and I am just not effective in the system,” writes Daniel Schmachtenberger in his article Humanity Won’t Survive Unless We Change This.
It all boils down to how money pipelines (banks, insurers, asset managers, et al.) internalise and reinforce such values. Let me pick a few emerging signals which seem to be moving the needle in the right direction. But not surprisingly, it is not always unidirectional, and that all these have origins in Europe is no coincidence.
A vintage illustration from the Johnson’s Household Book of Nature (1880) by John Karst. Photo: Public domain/John Karst/rawpixel.
We begin in Germany, with the multinational financial services company Allianz SE. “Günther Thallinger, a board member at Allianz SE, concludes that the global climate crisis threatens capitalism, as it causes risks that insurance companies cannot protect against…” That none other than Johan Rockstrom, Director at Potsdam Institute for Climate Impact Research (PIK), chose to highlight this emphasises the gravity. He explains: “We have ZERO evidence that our world can exist at +30C of global warming. It is, in short, a certain path to disaster. And remember, there is no evidence supporting that warming would stop at 30C once it is reached. On the contrary, it is more likely that tipping points will be crossed, which will tip the planet from dampening to amplifying feedbacks, which will increase warming even further. In short, 30C is likely a path to a Hothouse Earth trajectory.”
A recent study published by PIK and WEF, he highlights, “shows a seven per cent reduction in corporate earnings by 2035, owing primarily to extreme heat events across value chains. The most updated climate economic assessment (Kotz et al., 2024), which for the first time includes damage functions for both extreme heat impacts on labour productivity and extreme precipitation events, shows a 19 per cent loss of income by 2050, translating to an annual loss of 38 trillion USD. This is further supported by Timothy Neal et al. (2025), who warn of at least 40 per cent loss of GDP by 2100 when factoring in global weather extremes”. The reason for such large losses, explains Rockstrom, has to do with economic spill-over effects (value chains get ruined in a global economy), and shock impacts of extreme events (droughts, floods, heat waves, fires, reinforced hurricanes, disease outbreaks, etc.). Translated, in short, to Thallinger’s warning of an increasingly uninsurable world. And without insurance, market economies cannot function.
Soon after Thallinger’s crusade, The Bureau of Investigative Journalism (TBIJ) had this to say: “Allianz has done more than most insurance companies in trying to keep emissions out of the atmosphere. It has committed to no longer insuring new oil and gas fields, an effective lever to stop those projects in their tracks. As the pool of insurers willing to provide cover for new oil and gas projects shrinks, the cost of insuring them rises – sometimes to the point where they are no longer viable.
But Allianz has another tool at its disposal: its investments. The group has a number of asset management firms, including the US giant PIMCO. And these are still supporting companies developing new oil and gas fields. In fact, as a group, Allianz held assets worth $26 billion in fossil fuel companies, according to the latest Investing in Climate Chaos report, produced by Urgewald, an environmental and human rights organisation.
In effect, Allianz is taking one measure to tackle the climate crisis and another that fuels it. Reclaim Finance, an environmental campaign group, has urged Allianz to stop investing in new oil and gas projects, while also demanding the same from its asset management firms.”
Another big story has its origins in Norway. The Norwegian Sovereign Wealth Fund is the world’s largest at $1.7 trillion. The fund’s massive size is an outcome of its vast oil and gas resources. Incidentally, the sovereign wealth fund voted against ratifying Tesla CEO Elon Musk’s $56 billion pay package. It controls more than $1 trillion in global equity investments and held a $252.5 million holding in the electric automaker at the end of last year, making it one of the group’s top 20 shareholders.
In a bold move, which missed a front-page news slot, the fund placed 96 per cent of its entire portfolio under natural capital risk assessment. Natural capital is a way of thinking about nature as a stock that provides a flow of benefits to people and the economy, explains PWC. It consists of natural capital assets such as water, forests and clean air, that enable economic activity by providing businesses with materials, inputs for production, protection from natural disasters, and absorption of the pollution they emit.
Any adverse change in a natural capital asset can have a negative effect on the businesses that depend on it; in much the same way as the impairment of a conventional asset might affect the cash flows of the business owning it. The portfolios of money pipelines are exposed to these natural capital risks that affect the businesses that they lend to, insure or invest in.
The world’s largest sovereign wealth fund has quietly acknowledged that nearly every dollar under their management is exposed to the single greatest repricing event in financial history, according to Matthew Ross. This represents a tectonic shift and a wake-up call for boards, accountants, actuaries, auditors, rating agencies, et al.
Having said that, “Norway recently awarded stakes in 53 offshore oil and gas exploration to 20 companies in its annual licensing.” According to its energy ministry, “the next round would focus on the Arctic region, by proposing to expand 76 blocks – of which 68 are in the Barents Sea and the rest in the Norwegian Sea.”
The Norwegian government has also announced that “1,406 whales can be slaughtered this year – an increase from 1,157 individuals in 2024 – despite the demand for whale meat falling in the country. So, how is Norway still getting away with hunting whales for profit, when there’s a global ban on commercial whaling? And what happens to all the surplus meat?” Katie Hunter seeks answers in uk.whales.org.
“At the end of last year, Finnish customs authorities made a shocking discovery – 36 tonnes of whale meat, disguised as dog food, had been illegally imported from Norway and sold as sausages for sled dogs. Determined to keep Norway’s dodgy dealings firmly in the spotlight, and as part of our Norway For Whales campaign.”
Hunter recently attended a meeting of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), as she puts it, “to ensure these violations are not overlooked”.
While Norway permits slaughter of baleen whales, it is important to understand the unique role of whales compared to other keystone species. Ed Goodall, a renowned whale and dolphin conservationist, cites a new paper in Nature Communications that shows new ways in which whales are important for oceanic ecosystems.
This study, according to Goodall, “looked at humpback, grey, and right whales, and how they feed over vast areas close to the poles during the summer months, and then transport nutrients that they have built on their bodies thousands of miles away to specific, much smaller areas in the tropics and subtropics where they breed in the winter. They do this by metabolising their huge blubber stores, shedding skin, giving birth, nursing calves, and also via carcasses when they die. These nutrients help to increase productivity and provide food for life in the tropics and subtropics, which are generally nutrient poor. Thousands of tonnes of nutrients they move nowadays is potentially three times less than before commercial whaling massively reduced populations. This study brings key additional evidence to show that the recovery of whale populations will increase the resilience and adaptive capacity of oceanic ecosystems around the globe. No other animals are moving nutrients around the planet quite like whales are!
Ecosystems need their full range of wild animals at original baseline levels if they are to function at their maximum capacity. Ecosystems functioning at their maximum capacity is one of our best tools to tackle the climate crisis.”
For ecosystems to function at their full potential, they need the complete range of wild animals restored to their original baseline levels. Healthy, fully functioning ecosystems are among our most powerful allies in addressing the climate crisis. Photo: Prince Pravin/Sanctuary Photolibrary.
In a rare show of courage Triodos Bank, according to www.netzeroinvestor.net recently “announced its exit from the Net-Zero Banking Alliance (#NZBA) after the alliance dropped its 1.5 C target, thus settling for less stringent guidelines and lowered ambitions. This is the way to go for all money pipelines – rather than buckle under rogue pressure. Triodos has simultaneously decided to increase its own emissions reduction ambition, targeting a cut in its financed emissions from 32 to 42 per cent by 2030. The lender also intends to continue working with other banks on climate action, focusing on alternative ‘meaningful’ alliances at the European and global level, including the Global Alliance for Banking on Values, the European Banking Federation, and UK Finance, it said.”
According to www.capitalbrief.com “the UK’s largest pension fund, The People’s Pension, has moved £28 billion in assets from State Street to Amundi and Invesco, citing the sustainability and responsible investment credentials of the company.
State Street is among a slew of Wall Street giants that have pulled out of the Climate Action 100+ coalition, as US firms increasingly step back from environmental, social and governance (ESG) programmes that are out of favour with the current administration. State Street will continue to manage the remaining £32 billion in The People’s Pension portfolio, representing a significant exposure to the vital savings of UK pensioners.”
As to why the pension fund chose to derisk only part of the portfolio is the choice of its board. However, no form of insurance will cover the board’s fiduciary risk of asset stranding. Needless to mention, there are also the added risks of a tarnished reputation, and the woes of pensioners potentially facing the erosion of critical life savings.
Institute & Faculty of Actuaries (IFoA), a UK-based pre-eminent actuarial body, recently released the report Planetary Solvency - finding our balance with nature. Sandy Trust, its lead author, says “Nature is our foundation, providing food, water and air, as well as the raw materials and energy that power our economy. Threats to the stability of this foundation are risks to future human prosperity which we must take action to avoid.”
“The global economy could face a 50 per cent loss in domestic product (GDP) between 2070 and 2090 unless immediate policy action is taken to address the risks posed by the climate crisis,” warns the report, adding that, “Populations are already being impacted by food system shocks, water insecurity, heat stress, and the spread of infectious diseases. If left unchecked, the likelihood of mass mortality, large-scale displacement, severe economic contraction, and conflict increases.”
This IFoA report marks a landmark convergence of risk management in financial services and climate science. Will the actuarial profession successfully rub this wisdom on the insurance industry and assert leveraging its power? Or will it be business as usual (BAU) in the pursuit of profit? Having crossed planetary boundaries, will it ignore the steady drift towards planetary insolvency?
Integrating natural capital in risk assessment enables financial institutions to understand and assess their exposure to natural capital risks. It helps institutions to better understand how environmental change such as ocean pollution or deforestation may affect their portfolios.
A ‘Planetary Solvency Risk Dashboard’ – developed by IFoA in collaboration with University of Exeter – makes it possible to visualise and assess the risks of exceeding planetary boundaries. It includes a novel risk commentary on nature, society and the economy.
If our obsession and conduct continues to treat our amazing Earth as an inert entity, we could very well end up with a dead planet. The money pipeline has both vices and virtues. We are seeing manifestations of both. Fence sitting will, however, not get us anywhere. This is an attempt to identify the green shoots of hope within the power of the money pipeline and nurture them before we run out of time. Needless to say, an uninsurable world would be too late to write an elegy on capitalism. Let’s begin valuing a living whale.
Praveen Gupta is a former insurance CEO. He believes insurers have a critical and urgent role to play in nurturing our environment. Europe-based ‘illuminem’, which has emerged as the world’s largest and premier expert network in sustainability, adjudged Praveen as “Most read in Climate Change 2024”.
