Climate Risk Initiative

CLEE has established  the Climate Risk Initiative to research and develop market based, regulatory and public policy tools  to assist the insurance and financial industry in recognizing, addressing and responding to the risks caused by climate change. The Initiative will harness the expertise of leading law faculty and students, researchers, and public and private sector leaders to develop high-impact market based, regulatory, and public policy approaches to address climate risk facing the insurance sector and the broader financial sector. It will produce policy guidance for key decision-makers, create a space to convene industry and other stakeholders for action-oriented discussion, promote research to the public via events and media outreach, and serve as a resource to policy makers seeking to implement new and innovative tools.

Meet the Director

Former California Insurance Commissioner Dave Jones comes to CLEE after two successful terms as Insurance Commissioner, highlighted by his pioneering efforts to address climate change and the risks it poses to the insurance sector. Under his leadership, the Department of Insurance launched the Climate Risk Carbon Initiative, a first-of-its-kind effort requiring major insurers to disclose their fossil fuel investments and requesting that they divest from thermal coal enterprises. Jones additionally spearheaded groundbreaking climate risk scenario analyses of insurers’ investment portfolios to assess the potential exposure to climate change related risks of trillions of dollars of insurer investments. Jones was also founding Chairperson of the Sustainable Insurance Forum, a working group of insurance regulators from across the globe developing best supervisory practices to address climate risk. As the hub of the top environmental law program in the state, situated within a leading public research university known for its commitment to solving society’s greatest challenges, CLEE is an excellent place for Jones to continue his work. 

Recent Publications & Events

January 2020

New Year’s Resolution for US Financial Regulators: It is well past time to act on climate

Dave Jones urges US financial regulators to incorporate climate risk into their policy in his recent op-ed in Responsible Investor.

August 2019

From Brussels to the Bay: Climate Risk and Sustainable Finance in the EU and California

The global financial system faces structural risks from the worsening impacts of climate change and the various policy responses to it. As jurisdictions like the European Union (EU) and California seek to address these risks, they face significant questions about what actions will be necessary and how financial regulators and industry members across the globe will need to coordinate decision-making and resource-sharing.

To address these concerns, we hosted experts and leaders in sustainable finance from California and the EU in May 2019 for a conference to discuss climate-related financial risks and key regulatory developments in the US and Europe. These include the EU Sustainable Finance Action Plan and Green Taxonomy efforts that seek to drive sustainable investment through innovative regulatory incentives and US industry partnership in implementing new disclosure and accounting standards. Our conference brief highlights the key insights delivered at the conference.

July 2019

California Climate Risk: Insurance-Based Approaches to Mitigation and Resilience

As climate change poses new and evolving risks for California residents and businesses, the insurance industry will play an increasingly important role in managing these risks. California is pursuing policies that mitigate greenhouse gas emissions and build resiliency to climate risks. Insurers have opportunities to address climate-related risks through innovation across their risk management, insurance, and investment activities, and through increased collaborative efforts.

California Climate Risk: Insurance-Based Approaches to Mitigation and Resilience provided a space to discuss these issues. The event was convened by California Insurance Commissioner Ricardo Lara in partnership with UN Environment’s Principles for Sustainable Insurance Initiative, UCLA School of Law’s Emmett Institute on Climate Change and the Environment, and UC Berkeley School of Law’s Center for Law, Energy, and the Environment.

March 2019

Insuring California in a Changing Climate: Adapting the Industry to New Needs, Risks, and Opportunities

Climate change poses significant risks to the insurance industry, even as the industry has the opportunity to help California residents and businesses mitigate their own risks. As disaster events become more common and complex, markets transition away from fossil fuels, and climate litigation accelerates, the industry will need to adapt rapidly while Californians will need continued access to robust protection. Our new symposium brief highlights the key concerns and top policy and market solutions available to protect insurers and consumers alike.



Climate change presents unprecedented risks to the insurance industry, from increased wildfires and storm events to potential litigation and economic transitions. The industry faces these dynamic challenges at the same time that insurance products are becoming more necessary but less available and affordable.

Our report, Trial by Fire, documents the nature and extent of the risks faced by insurers and residents in California and offers a range of recommendations to protect the industry and the entire state in a changing climate.

Climate Change Poses Risks for Financial Sector

Climate change poses significant physical, transition and liability risks to insurers, banks, and other firms in the financial sector and firms in the real economy. Insurers in particular face underwriting risks and losses associated with the physical impacts of climate change, such as more frequent and severe climate-related catastrophes, including wildfires, droughts, tornadoes, hurricanes, and floods. The 2017 and 2018 California wildfires, for example, resulted in record breaking loss of life, destruction of homes and businesses, and record breaking losses for home insurers. In addition, insurers as investors face transition risk — the risk that a transition away from greenhouse gas-emitting industries will reduce the value of investments insurers hold in those industries. Finally, insurers indirectly face liability risk: industries that contribute to climate change may be held liable at some point in the future by courts for damages due to climate change, which in turn could impose costs on insurers who provide liability insurance to those industries.

In general, too many firms in the real economy and the financial sector are not recognizing, evaluating, disclosing, or addressing these climate related risks. At the same time, some insurers are addressing climate change-related risks by ceasing to renew or write insurance for insureds facing those risks, which leaves businesses, homeowners and renters without financial mitigation for losses and creates demand for public policy responses. The financial sector’s delay in recognizing these climate risks and the failure to realign capital accordingly, away from climate change-causing industries and toward those which will reduce, adapt to, or mitigate climate change, poses  significant financial regulatory and public policy challenges. 

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