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Responding to climate change will greatly expand possibilities for the financial industry, said Xiao Yuanqi, deputy chairman of the China Banking and Insurance Regulatory Commission, in a keynote speech at the 2021 Tsinghua People’s Bank of China School of Finance Global Finance Forum on Saturday.

According to the Intergovernmental Panel on Climate Change (IPCC), the United Nations body for assessing the science related to climate change, to reach net zero emissions by 2050, some US$1.6 trillion to US$3.8 trillion should be invested each year, which means a huge "blue ocean" for the financial industry, Xiao said.

“In the future, green credit, green insurance, green bonds, and carbon trading markets will gain huge development opportunities.”

“The current coverage rate of insurance against climate risks is still very low, with only 30 percent of losses caused by global climate disasters covered by insurance in the past decade,” Xiao said, offering many examples to substantiate the great potential for the insurance industry in the face of climate change.

“The remaining insurance gap is about $1.7 trillion, and the actual gap should be even greater,” Xiao said. Compared with other types of financial institutions, “the long-term structure of insurance funds can better meet the long-term financing needs of green development.”

“Climate change will also force adjustments in the energy structure and industrial structure, foster new industries such as information biology, new materials, and new energy, and bring more new growth opportunities,” he added.