When walking means talking (and listening!)

Prof. David Bresch holds an ETH PhD in physics and, after a short time at MIT, joined Swiss Re. Parallel to his work, he was involved in sustainability studies around the world and developed open-source risk analysis software. Today, as Professor of Weather and Climate Risks at ETH Zurich, he passes on expertise to students in the lecture “Climate Change: Uncertainty and Risk” together with Reto Knutti. For him, seeking dialogue is the key to a more sustainable world – I have recorded ours below.

To what extent does your physics degree help you today or on the path you have taken?

If you could say it in two words, it would be analytical thinking. If you want to expand a bit, it would be the ability to change perspectives or to think a little further than the system boundaries; does the problem look more solvable if you make it a little bigger? Is reductionism always the way to the solution? What may have been missing when studying physics is the practice of social competence, but that can also be made up for; you don’t have to learn everything at the same time.

You were with Swiss Re for 16 years before you became a professor. How did you decide to go down this path back then?

Before that, I was a research associate at MIT, where I became interested in the Science and Policy of Climate Change. That’s where I realized: we actually know a lot and we’re not acting on it. Then you do a little analysis: who are the big players? They are the political institutions and the business community. Which of the latter moves the big capital? There are two possibilities: Those who manage the capital – that is, more the investment side – or those who use the capital to cover risks – the reinsurers. I opted for the latter.

What would you do differently today, or what would you have liked to have known earlier?

This is really a very difficult question in my case, because I don’t function that way at all. I don’t try to correct things that are in the past on principle. I live life going forwards and one can apologize for mistakes – which doesn’t mean one shouldn’t learn from them of course.

Before the interview, you said that not enough has been done in terms of combating climate change. Have you ever found your job tedious; when, for example, your studies did not attract a lot of attention?

No. You also have to be realistic enough and try to understand the other people’s backgrounds. If, for example, a company manufactures a product, it would then want to sell it and would be happy when the customer is happy and believes that the job is done. Then, new constraints come up: “suddenly” the consumption of resources must be reduced and efficiency must be increased. Taking these additional requirements into account is often challenging. I think when you approach it that way, you’re amazed at how quickly things can change. Yes, of course we are losing far too much time, but I think that is the tragedy of humankind that struggles at collective learning and often does see a critical condition as one that must be overcome.

What would you say was your biggest contribution to a more sustainable world?

Probably, as abstract as that sounds: seeking dialogue. Talking my head off with colleagues from the reinsurance industry to demonstrate the relevance and urgency of climate change was probably more effective than contributing my little bit to the scientific discourse at MIT. Changing perspective once, which takes a lot of energy, lets you understand the other person’s value system. Most people have a consistent narrative and do not act out of ill will, but because they weight things differently in their worldview. At the end of a discussion, excuses like “the others don’t do it either” come up, but then the person is almost out of the woods.

So, seeking dialogue was also most effective at Swiss Re?

Funnily enough, I was always accused of not talking enough with the internal departments. But the company was actually already on track. It was more about moving others as a company and finding out who to convince that the problem affects them as well. How do you move, for example, the Bank of England? Mark Carney’s [former Bank of England governor, September 2015] lingering speech came out of a discussion about how we engage groups, structures and institutions in dialogue. That was probably by far the biggest lever, as that speech sparked an ongoing movement toward climate compatibility in finance.

Globally, how many companies and institutions do you think are on the right track?

A lot is changing, but far too slowly, because tragically – as in the case of the past flood disasters in Germany – a risk is only perceived for many when it manifests itself on their doorstep. Climate simulations alone only work for a small part of society as a convincing argument, I think. Whether a company is on the right track is not always immediately recognizable. Companies want to live up to their brand promise and are afraid to overstretch it. Some major banks are much further along internally than they communicate externally. However, despite their pledges, many players also do not yet know how they will achieve net zero by 2050 in concrete terms – but they are setting the direction and a target value. In the meantime, there has been a change in thinking because society expects companies to contribute beyond their sole business purpose. Five years ago, companies were often ridiculed for announcing sustainable management – now we are seeing progress.

And you see a lot of room for physics graduates?

I don’t think the study program plays the main role. What’s more relevant is the sharpness of the mind and an understanding for people who think differently. Physics can help because you learn many analytical tools to deal with complex systems. The much more important thing, I think, is personality development. Many people mature during their studies and become more confident in solving difficult problems. Just think of the seemingly unsolvable exercise sheets, where you only had a good idea on Sunday evening! You are shaped by these tough demands so that you rather tackle a complex problem – increasingly in dialog with others – instead of burying your head in the sand.

Before the interview, we also briefly talked about insurability. Do you think that a green portfolio can insure extreme events such as the floods in Germany even if climate change progresses?

In the future, sustainable investing will actually become easier because a greater extent of the economic activity will be aligned with net-zero emission targets. Let’s say you invest in a conventional car manufacturer today. Then, you’re not investing that much in decarbonization yet. But if that manufacturer will stop producing gasoline engines by 2035 and only sells climate-compatible vehicles afterwards, that will be an investment opportunity from which you can also pay claims as an insurer. Insurability does not suffer from a lack of capital. If risks occur too frequently and become deterministic, the premium goes up. Assuming a flood occurs every three years at the same location, the insurance premium of a house will be more than one-third of the replacement value, which virtually no one is willing or able to pay. Moreover, if multiple risks such as droughts, floods and bushfires overlap locally, diversification in the portfolio becomes impossible there. The affordability of the premium for the insured will be the limit of insurability, not the affordability of claims.

But if I now invest in wind turbines in the North Sea, it is a green investment, but these can possibly be susceptible to storm damage. Is the investment risk higher for renewables than for fossil investments?

Partly yes, but you have to look at each case individually. I would assume that, in principle, a portfolio of renewable energies is more sustainable than one of coal- and gas-fired power plants. The policy risk with the latter is much greater; if coal-fired power is banned, the plant loses value. Technology risks exist with all investments.

At Swiss Re, you managed a paperless office. How does it work? Has this spilled over to others in your personal environment?

The motivation for this was pure convenience not having to look for or carry around folders. It was initially more difficult to justify the size of one’s office but that has changed. It hasn’t spilled over though; I am not destined to be a prophet and the others are allowed to keep their metre-long shelves.

You have been involved in many climate adaptation studies overseas, where you can hardly avoid a long-haul flight. Do you see an alternative to flying?

I was not on site too often. Often, my presence was not necessary, because strong local partners are essential. They are much more credible. We have to support and train them in such a way that we can achieve the quality standard, which we present, with our local partners. From time to time, it makes sense to fly there – especially for the dialogue; you have to eat and spend time together. However, a large part has been done via video conferencing – also because of time constraints.

Jan Zibell is responsible for the translation of the originally German version of the above interview.

Thanks to Luna Bloin-Wibe and Till Muser.

Interview by Jan Zibell, 2021

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