Insuring a nature-positive world: An insurers’ guide to hydropower

Authors: Alice Merry and Adriana Morales for WWF

Date: June 2022

This guide from WWF provides insights and guidance to support insurers’ decisions on underwriting and investing in hydropower.

A recent study demonstrated that nearly two thirds of the world’s longest rivers are no longer free-flowing, and that hydropower dams are the primary cause. This loss of river connectivity is one of the major reasons behind the 84 per cent collapse in freshwater species populations since 1970. Plans for an estimated additional 3,700 hydropower dams threaten most of the world’s remaining free-flowing rivers and the diverse benefits they provide societies, economies, and ecosystems.

Whereas previously the financial sector’s focus has been largely on carbon emissions, the topic of biodiversity has recently gained increased visibility and momentum in the sector. The post-2020 global biodiversity framework recognizes that urgent action is required to transform economic, social, and financial models to halt biodiversity loss by 2030 and allow for the recovery of natural ecosystems, with net improvements by 2050. The insurance industry is set to play an important role and is currently rallying around the goal of a nature-positive insurance sector. Although WWF recognizes that hydropower has a role to play, support for high-impact hydropower is incompatible with such commitments and hydropower must be screened very carefully.

Insurance companies act as risk managers, insurers, and investors, and provide support for the development of hydropower projects in all three of these roles. Hydropower projects are complex and costly infrastructure projects. In most cases, private companies will not engage in the construction of new hydropower projects without insurance coverage, and private investors will insist on relevant insurance being in place before committing to invest.

Insurers therefore play a key role in facilitating the hydropower sector and their support is urgently needed to prevent high-impact hydropower projects. This guide outlines actions that insurers can take to protect nature and prevent high-impact hydropower.

 The full guide can be read here.