Laser Focus World is an industry bedrock—first published in 1965 and still going strong. We publish original articles about cutting-edge advances in lasers, optics, photonics, sensors, and quantum technologies, as well as test and measurement, and the shift currently underway to usher in the photonic integrated circuits, optical interconnects, and copackaged electronics and photonics to deliver the speed and efficiency essential for data centers of the future.

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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

The Sustainable Finance Podcast: 3 experts with strategies to spur climate adaptation and resilience

The Sustainable Finance Podcast: 3 experts with strategies to spur climate adaptation and resilience

Three investment experts joined me on the program to discuss what’s happening around climate adaptation, including insurance linked securities, climate insurance and private market opportunities: Irene Lauro, an economist at Schroders focusing on climate; Christophe Etienne, a senior natural catastrophe specialist on the insurance linked securities team at Schroders Capital; and Martin E. Diaz Plata, head of private equity investments at Blue Orchard, an impact investment manager owned by Schroders that runs the only private equity strategy in the world solely dedicated to climate insurance.

Here are a few excepts from the program:

Irene Lauro: Over the past decade, climate disasters have accumulated a total cost of over $1.2 trillion to the U.S. economy. This is a staggering figure as it accounts for around 5% of U.S. GDP. Parts of the world and parts of the U.S. in particular are becoming uninsurable. Last year, only in the U.S., insurers providing policies to homeowners suffered a net underwriting loss of more than $15 billion. 

The insurance industry has a unique role to play in addressing climate change by making society and policy makers aware of the risks and by making the economy more climate resilient. So, for example, insurers can encourage positive action on climate change by influencing the behavior of individuals and businesses and governments and help build climate resilience. 

Christophe Etienne: Basically, ILS stands for insurance linked securities. In short, these are securities or financial instruments which are linked to the world of insurance. And this allows the insurance sector to transfer some of these risks to capital markets investors. This risk transfer can take different forms. The most common one are the catastrophe bonds, or CAT bonds as people refer to them. 

And the risk has three components: It’s the hazard, it’s the vulnerability and it’s obviously the exposure. I think it’s important to put things into context — that we have numerous layers of uncertainty and climate change is actually one of them.

Martin E. Diaz Plata: It is important for us to achieve market returns because . . .  that is the only way in which we can attract private capital. Our strategy is based on scalability and affordability because if we don’t manage to sell affordable insurance products to emerging economies, what is the point?

And therefore, we have now achieved a scale in some of these insurance policies. We’re selling calamity insurance in the Philippines for less than $5.00 of premiums per year and we are attaching insurance to cash flow financing in India for, again, less than $5 per year of premiums. India has more than 20 million retailers, small retailers, 99% of them are not covered by flood insurance, which is what typically destroys their businesses and their livelihoods. And we are attaching in all of their loans, embedded flood insurance.

Watch the full episode:

More of The Sustainable Finance Podcast: ESG opportunities in Latin American markets

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