If there’s one industry that ought to be concerned about the threat of global warming, it’s the insurance industry. OK, the ski industry, too, but I digress.

Dave Jones, California’s insurance commissioner, recently put it this way: “Climate change is an obvious physical threat to us all, but increasingly it also poses a serious financial threat to the insurance industry…” When extreme weather causes damage, insurers pay.

So you’d expect insurance companies to be among the most forceful voices in corporate America calling for the regulation greenhouse gas emissions.

Uh, no. They’ve been eerily quiet.

And, at the least, you’d expect them to be proudly steering some of their massive investments to clean energy or energy efficiency projects aimed at reducing emissions of greenhouse gases.

Wrong again.

“It’s surprising, in a sense, because they have so much to lose from climate change,” says Sharlene Leurig, senior manager of the insurance program at Ceres, a nonprofit coalition of investor and environmental groups. But, she notes, insurance is a conservative business. The industry is all about risk, but it doesn’t want to take the risk of speaking out on climate change.

This is the second of two blogposts about the insurance industry and climate. Yesterday, I blogged about federal and state-backed programs that are insure risky properties from flood and storm damage, creating potential liabilities for all of us. Today, I’ll ask why U.S. insurers–in stark contrast to the big European reinsurance companies–have been missing in action during the Washington climate wars.

Consider: The U.S. Climate Action Partnership, an alliance of big companies and environmental groups calling for a cap on carbon emissions, includes 21 companies–seven utility companies, industrial giants GE and Siemens, chemical firms Dow and DuPont, Alcoa, Shell, Rio Tinto, Johnson & Johnson, PepsiCo and not a single insurer since the departure of AIG (for reasons unrelated to climate).

Business for Innovative Climate and Energy Policy, or BICEP (which is a project of Ceres), another coalition pushing hard for policies to drive a low-carbon economy, includes Nike, Starbucks, Timberland, eBay, Gap, Avon and the Aspen/Snowmass, among others. No insurers.

Now…this isn’t to suggest that insurers have been entirely absent from the climate debate but mostly they’ve focused on their parochial interests. Some companies, for example, have asked the federal government to provide wind as well as water coverage in the event of hurricane damage. Others proposed want the federal government to offer reinsurance — that’s insurance for insurance companies — to protect against a major catastrophe, or “mega-cat” in industry argot. Fireman’s Fund, a unit of the German financial services firm Allianz, has been writing “green insurance” policies for building owners. (See my blogpost, Fireman’s Fund: an insuror that isn’t dull.)

But the industry has been a non-factor on the big issues, unlike the European reinsurance firms which have repeatedly warned of climate risks. Way back in 2007, Andrew Castaldi, head of the catastrophe risk unit for Swiss Re America Corp, told a Senate committee: “We believe unequivocally that climate change presents an increasing risk to the world economy and social welfare.” In a 2009 report, Lloyd’s of London warned of climate change contributing to “resource-driven conflicts; economic damage and risk to coastal cities and infrastructure; loss of territory and resultant border disputes; environmentally induced migration; government fragility; political radicalisation; tensions over energy supplies and pressures on international governance”. Munich Re, the world’s biggest reinsurer, said last year:  “It would seem that the growing number of weather-related catastrophes can only be explained by climate change.”

When I emailed the Property Casualty Insurers Association of America to ask why the industry hasn’t been more vocal, David Kodama, senior director of research and policy analysis for PCI, replied:

Climate change is one among many of important strategic risks for insurers. Broadly speaking, insurance companies assess and monitor developments associated with climate change and, as appropriate for the individual insurer, incorporate the relevant information into their business model and practices.

However, climate change is a particularly complex issue and its causes, effects and the relevant variables that impact it are multifaceted and not well understood.

…It is prudent for the many insurers to continue to study the issue.

Could the association be any more cautious? “Climate change is a heavily politicized issue in the US,” Ceres’ Sharlene Leurig says, when I ask her why the companies have stayed on the sidelines. “Why put your neck out there and start messaging about a topic that many consumers are confused about and, in some instances, downright hostile to?” Of course, that’s exactly what bolder companies like Nike and Starbucks are doing with BICEP.

There may, however, be another reason why insurers have been loathe to speak out: They write liability coverage for corporations, including oil and coal companies, which are being sued over climate-related liability.

An aerial view of Kivalina, Alaska

Claims have been filed against fossil fuel companies that remind some people of  class-action suits against tobacco and the asbestos makers. In Comer v. Murphy Oil, plaintiffs sued corporate defendants claiming personal injury and property damages caused by the allegedly climate change-induced impacts of Hurricane Katrina. In Village of Kivalina v. ExxonMobil, a native Alaska group sued oil and gas companies and US utilities claiming that coastal erosion caused by global warming would force them to relocate their fishing village.

In a fascinating interview with an Australian newspaper, Gerald Maples, the lead attorney in the Comer case, said he’ll go after those fossil fuel companies that misled the public about the dangers of climate change, just as tobacco companies sowed doubt about the danger of smoking: “It’s pretty much accepted history that asbestos and tobacco are the role models for climate change litigation now.”

Miami Beach oceanfront properties

Well-to-do Brazilians are buying up luxury condos on the beach in Miami, The Times reported last week. “They are taking Miami by storm,” one real estate executive declared.

It’s an unfortunate metaphor.

That’s because, sooner or later, storms will likely damage or destroy much of the property on the Florida shoreline. And, while a beachfront real estate revival may be welcomed by developers who, according to the Times, are “starting or restarting ambitious condo projects,” the risks are being borne not by the developers or by the condo buyers or even by private insurance companies but, for the most part, by a state-run, not-for-profit, tax-exempt corporation called the Citizens Property Insurance Company. Citizens has become the biggest insurance company in Florida since it was created in 2002, and many of its policies ($232 billion worth, according to a 2009 story in the Miami Herald, referenced here) are written on riskier, coastal properties. As a government-sponsored entity, Citizens has the implicit backing of Florida taxpayers who, you can be sure, will turn to the rest of us for help if the big one hits.

“Who’s on the hook when a wall of water hits the coast of south Florida? You and me,” says Sharlene Leurig, senior manager of the insurance program at Ceres, a nonprofit alliance of investors and environmental groups. Her  job is to raise awareness of climate risk within the insurance industry, and to prod the industry to respond.

It’s not just a problem in Florida–many states are assuming the risk of natural disasters, despite the rising costs of extreme weather events, which are more frequent and more severe because of climate change, scientists say. So is the federal government: The National Flood Insurance Program (NFIP) has $1 trillion in exposure, according to Ceres, and it’s $20 billion in debt. Although no individual storm can be attributed to climate change, the rising prevalence and intensity of storms, floods, droughts and wildfires are consistent with what scientists say can be expected as global temperatures rise.

Sharlene Leurig

Today, I’m devoting the first of two blogposts to the insurance business and climate change. Have another cup of coffee if you must, but this is important. According to Leurig and a September 2011 report from Ceres, the insurance industry has yet to fully recognize the risks posed by climate change. This isn’t just their problem. It’s ours because what Ceres describes as he industry’s “sluggish and uneven response to the ever-increasing ripples from global climate change” threatens not just the insurance business but the stability of the global economy.

The most pressing worry is the  federal flood insurance program, which insures about 5.5 million homes, and the state-backed insurance pools that are underwriting seashore development. They’re under political pressure to make insurance affordable and available. If this sounds familiar, it should: Fannie Mae and Freddie Mac felt political pressure to make housing affordable and available, and that didn’t turn out so well.

More broadly, we depend upon insurance companies, acting in their own self-interest, to make the world a safer place. To avoid losses, insurers helped bring about fire safety codes for buildings and seat-belt laws.

They could be performing a similar service, by sounding an alarm on climate change, but they’re not, at least not in the U.S. By contrast, big European reinsurance companies like Munich Re and Swiss Re have been among the loudest voices in the corporate world, calling attention to climate risks and urging action.

“The reason that Ceres works with insurance companies is that they have a unique ability to change the way we behave,” Leurig told me.

In the U.S., insurers have responded to climate risk by excluding coverage or exiting markets. The federal flood insurance program was created in 1968 after Hurricane Betsy caused more than $1 billion in damages along the Gulf Coast. Private flood insurance was unavailable.

A 2010 report on the NFIP from the Institute for Policy Integrity at NYU Law School found:

• Because of its below-market insurance rates and the intense, hurricane-related floods in recent years, the NFIP has accrued a substantial deficit: $19 billion. [Now $20B] As currently structured, the program will not be able to repay this debt
• Since the NFIP cannot charge market rates, hold reserve funds, or purchase reinsurance, the program faces a constant financial risk of insolvency. The NFIP also causes environmental damage, by externalizing the risk of building in ecologically-sensitive floodplains.
• Those costs—financial risk and ecological damage—are widely distributed to taxpayers and citizens across the country.
• The benefits of the NFIP, by contrast, are enjoyed largely by wealthy counties and by a significant number of owners of vacation homes.

On the state level, special property insurance plans, known as residual insurance, have been set up by regulators to provide insurance in locations where the risk of severe storm damage is substantial. This is a classic example of moral hazard, where developers or homeowners take the risks but others — the insurance industry as a whole, or taxpayers — will be left with the bill if things go wrong.

A report issued last month by the Insurance Information Institute found that residual property insurance has grown dramatically over the past two decades:

Over the period 1990 and 2010, total exposure to loss in the residual property insurance market (FAIR and Beach and Windstorm Plans) surged from $54.7 billion in 1990 to $757.9 billion in 2010, which means that if all the policyholders insured by the two plans suffered a total loss, property damage claims would total that amount. Over the same period, the number of policies in force in the residual property insurance market went from 931,550 in 1990 to almost 2.8 million in 2010, a record.

It also said:

In July 2010 the Government Accountability Office (GAO) released a study that examined the condition of state natural disaster funds. Of the 10 state programs examined, the GAO found that six of the 10 charged rates that were not actuarially sound in that they did not accurately reflect potential losses.

Some government officials are addressing the problem. Florida Gov. Rick Scott has sought ways to shield taxpayers from the future claims that Citizens may be unable to pay. Louisiana’s Citizens Insurance has been shedding policyholders, returning them to private companies. Alabama and Mississippi offer discounts to owners whose homes are fortified to withstand strong winds. The chart below shows that exposure peaked back in 2007, so the, er, tide may be turning.

Still–the industry’s losses from extreme weather are a big worry, or they should be. Just last week, Bloomberg News reported that “U.S. property and casualty insurers’ profitability fell to the lowest level since 2008 as losses from natural disasters exceeded gains in sales and investment income.”

Until the insurance industry and its regulators recognize climate risks–and prices them into their products– those losses are likely continue.

According to the Financial Times, no less an authority than Lloyd’s of London, the largest reinsurer of US risk, said last fall:

“We don’t believe that the U.S. has the balance between industry and government intervention right, you have government intervention in federal and state level, it demonstrates this is not a sustainable way to proceed,” said Sean McGovern, Lloyds general counsel and the director of North America. He added: “The cost to the U.S. taxpayer is huge and is not sustainable.”

Says Leurig: “People should understand just how risky their behavior is, and price has become a good way of communicating that risk.” If the insurance industry, Florida real estate developers and Brazilian condo-buyers don’t pay a high enough price for the risk they are taking, the rest of us will get stuck with the bill.

Tomorrow: The eerie quiet of the insurance industry, on the climate issue.

Sometimes, history is made quietly.

For decades, shareholder activists have filed dozens, if not hundreds, of resolutions with public companies asking them to improve their environmental policies and practices. Not one passed—until this year.

The breakthrough vote came in May at IdaCorp.,  a $988-million a year utility company and independent power producer based in Boise, Idaho. Despite the usual opposition from management, the owners of 51.2 percent of IdaCorp.’s shares voted to ask the company to adopt greenhouse gas reduction goals.

Hardly anyone noticed at the time because, well, it was Idaho and not even the shareholder activists expected a victory. “I expected a vote of about 25%,” said Michael Passoff of As You Sow, a nonprofit group that organized the investor vote.

Since then, the company responded. Legally, it didn’t have to act because, as you may know, most shareholder votes are “precatory,” a fancy legal term meaning that management can ignore even a majority of the company’s owners. In any event, IdaCorp. agreed to adopt goals for curbing the heat-trapping gases that cause global warming, issued its first request for a proposal for a wind farm and submitted a “smart grid” proposal, hoping to tap into the federal government’s stimulus money to upgrade the grid.

“The company was stuck in its ways,” Passoff said, “and I think the shareholder vote woke them up. To their credit, they’ve been very responsive. We seem to be developing a good working relationship with them.”

The IdaCorp. vote was the highlight of  a very good year of investor engagement with companies, according to a recap from Ceres, a coalition of institutional investors and environmental groups that works to get companies to become more sustainable.

“There’s growing investor concern about climate risk, and there’s a growing corporate response,” said Rob Berridge, manager of investor programs at Ceres, when we spoke by phone. “We’re very pleased with the agreements that investors were able get from companies.”

Among the 2009 highlights:

Chevron agreed to develop and disclose a business plan setting an annual GHG emissions reduction target for its operations, and to track emissions from its products

Citigroup agreed to establish a due diligence process loans related to mountain top removal (MTR) coal mining and to consider shareholder input in the development of that process

Pulte, the nation’s largest homebuilder, agreed to establish quantitative emissions reduction goals for its operations.

Of the 68 climate-related shareholder resolutions filed by investors in 2009, 31 were withdrawn after the companies agreed to take positive steps, according to Ceres.

Why the encouraging news?

Partly because Ceres has clout. It leads an alliance of 80 investors, called the Investor Network on Climate Risk, with assets of more than $7 trillion. Big  funds like CalSTRS, the New York City and state of Connecticut pension fund are active members.

Congressional action on climate regulation also came into play, we can assume. With the government moving to regulate GHG emissions, companies need to pay attention to climate-related risks.

What’s more, as Ceres notes, financial analysts who advise shareholders are taking the climate issue seriously. RiskMetrics Group (parent company of the powerful Institutional Shareholder Services proxy advisor) supported at least 21 resolutions, well over half of those that went to a vote.

Finally, as the climate crisis gets more attention, particularly from smart and influential companies like GE and DuPont, few companies want to be seen as laggards.

In that regard, the most surprising vote of the 2009 shareholder season may have been one at coal company Massey Energy, where a climate-change resolution got 45.6 percent support.

This can’t have been welcome news to Massey’s CEO Don Blankenship. He’s the CEO who said last year that “I don’t believe climate change is real” and that “the greeniacs are taking over the world.” (If only.) Of Al Gore, Nancy Pelosi and Harry Reid, Blankenship said: “They’re totally wrong. What they do is nonsense….They’re all crazy.” (You can watch his amazing You Tube video here.)

It’s safe to assume that Massey, with a CEO like Blankenship, has a conservative investor base. So that 45% vote tells you that times are changing.

For more details on company agreements, see the Highlights from the 2009 Climate Change Proxy Season  at the Ceres website.

So much is going on in the world of business and sustainability that no one can keep up with it all. I’ve decided, as a result, to occasionally feature guest posts  from smart people who follow topics I don’t. Today’s post comes from Mindy Lubber of Ceres, a coalition of institutional investors and environmental groups that works to integrate sustainability into capital markets. Mindy has spoken at FORTUNE’s Brainstorm Green conference, and she’s one of those people who moves easily between the world of advocacy and the realities of corporate America. Her topic today is the folly of financing new coal plants in the developing world.

In Washington, it’s a popular climate conundrum everyone talks about: Even if the U.S. lowers its greenhouse gas emissions, China and India are on track to dwarf the entire Western World’s as they build enormous coal-fired power plants. Politicians regularly say we must get China and India to use less coal, the dirtiest of fossil fuels, to power their emerging economies.

But who do you think is financing all these new coal plants in the developing world?

Try the World Bank, the Asian Development Bank and other international public financial institutions supported by the world’s wealthiest nations.

That’s right. While the industrialized world is struggling to cut emissions, and gearing up to negotiate an international climate treaty in Copenhagen, it is bankrolling the construction of thousands upon thousands of megawatts of new coal-fired power in developing countries.

A new study by Bruce Rich, formerly of Environmental Defense Fund (EDF), shows that international public financial institutions have provided $37 billion to finance the construction of at least 88 new coal plants in the developing world since 1994. What’s more, that $37 billion in direct financing secured another $60 billion or so from private and local sources, bringing total investment in new coal plants in developing nations to over $100 billion.

Even worse, the World Bank classifies these coal plants as “low carbon” financing projects if they are the so-called supercritical type with marginally better CO2 emissions rates.

Collectively those 88 coal plants will pump out 792 million tons of CO2 a year — essentially negating pollution reductions the Waxman-Markey climate bill hopes to achieve over the next decade.

Bear in mind that 88 is a minimum number because most export credit agencies do not release detailed information on transactions and only plants for which the financing could be verified were included in EDF’s study.

If you’re wondering why 1994 is the baseline, it’s the year the United Nations Convention on Climate Change took effect, committing industrialized nations to provide funds and technology to mitigate climate change in poorer nations. Instead, the wealthier nations have been locking into place a carbon-intensive energy infrastructure, one that will endure for decades since coal plants typically operate for 40 to 50 years.

Sure, these public international lenders have committed $6 billion over the past 15 years to help the world’s most vulnerable citizens adapt to a warming planet — but it’s a fraction of the $100 billion spent on new coal plants.

Some would call that shooting yourself in the foot.

And it’s not as though the World Bank is unaware of the dangers of continued reliance on coal. It commissioned a three-year independent study on the future role of the World Bank Group in supporting coal, oil and gas. But when that study recommended decisive action away from fossil fuel lending, the World Bank refused to endorse its findings — even at the urging of six Nobel Peace Laureates and the European Parliament.

The World Bank also knows that the poorest countries will suffer the worst effects of global warming. In 2003 it published Poverty and Climate Change: Reducing the Vulnerability of the Poor through Adaptation, which stated “climate change is a serious risk to poverty reduction and threatens to undo decades of development efforts.”

Why then does it finance coal? Here’s what the World Bank’s Chief Economist has to say: “Because coal is often cheap and abundant, and the need for electricity is so great, coal plants are going to be built with or without our support. Without our support, it is the cheaper, dirtier type of coal plants that will proliferate.”

Not true, says the Center for Global Development. It says most new coal plants that are built without World Bank funds, at least in India, ARE the cleaner, so-called “supercritical” type because the operating and fuel costs of the supercritical coal plants are cheaper.

More to the point, supercritical coal plants are only slightly cleaner, producing about 15 percent less C02 than traditional coal plants, according to EDF. They are still not as clean as even a natural gas-fired plant.

Which leads me to alternatives. Clearly, bringing electricity to the world’s poor is a worthy goal, but there’s a better way to achieve it: Renewables, energy efficiency and grid modernization. International financial institutions should be scaling up their support for these rather than financing coal.

Today the Bank spends twice as much on fossil fuel projects as new renewable energy and energy efficiency projects combined and five times as much as new renewables alone.

That’s a missed opportunity when large-scale renewables are so feasible in the developing world. Take Gujarat State in India, where a monstrous 4,000-megawatt coal-fired plant, the Tata Mundra, is being built with World Bank support. More than 7,000 megawatts of renewable energy are also in the works there — with no help from international development banks. AES, a US based energy company, is constructing a $1.2 billion 1,000 megawatt solar thermal array as part of that plan.

Think how many more renewable energy projects could be built if public international financial institutions changed their lending priorities.

Equally important, international financial institutions must also tighten the definition of “low carbon.” Supercritical coal plants now meet that feeble standard, which gives the World Bank’s claim that 40 percent of its energy lending is “low carbon” a hollow ring.

These reforms are imperative, for if we do not slow the rise of CO2 emissions from coal in the developing world, no amount of emissions cuts in industrialized nations will make a difference.

Not long ago, Big Business and environmental activists were sworn enemies. No more. Today, companies and NGOs come together to work creatively around a variety of issues—from climate change to recycling to protecting the Amazon, from cleaning up dirty businesses like gold mining and to “greening” professional sports. One place they literally come together is at Brainstorm Green, FORTUNE’s conference about business and the environment, which will be back on Earth Day, 2009.

Helping to create Brainstorm Green was a highlight of my 12 years at FORTUNE, and I’m pleased that I’ll be back this year, co-chairing the event with my colleague Brian Dumaine, FORTUNE’s global editor. The program for this year’s Brainstorm Green is still a work in progress, but a group of us got a draft agenda down on paper last week and I’m confident that it will again be a lively, exciting, information-packed event. The theme, once again, will be: How can business help solve the world’s biggest environmental problems?

We’ll discuss and debate climate change regulation, “clean coal,” nuclear power, electric cars, the smart grid, investing in green, renewable energy, sustainable consumption (if there is such a thing), carbon finance and too many other topics to list here.

What makes Brainstorm Green special is the diversity of the crowd. This year, we’ll again hear from many of America’s most important environmental leaders, including Fred Krupp of Environmental Defense, Glenn Prickett of Conservation International, Mark Tercek of The Nature Conservancy (who was there last year on behalf of Goldman Sachs), David Hawkins of the Natural Resources Defense Council, Mindy Lubber of Ceres and Mike Brune of Rainforest Action Network. At least two dozen CEOs of big and medium-sized companies have agreed to speak, including Shai Agassi of Better Place (the electric car company), Ray Anderson of Interface, Carl Bass of Autodesk, David Crane of NRG Energy, Jeff Hollender of Seventh Generation, Fisk Johnson of S.C. Johnson, Donald Knauss of Clorox, Mike Morris of American Electric Power, Ralph Peterson of CH2M Hill, Jim Rogers of Duke Energy and Tom Werner of SunPower.

Other companies sending speakers include Wal-Mart, McDonald’s, Coca-Cola, Goldman Sachs, Mars, Intel, Boeing, McKinsey, the private-equity firm KKR and architectural firm HOK. That list is sure to grow.

We’ll also be joined by speakers whose ideas are shaping the sustainability debate. I’m looking forward to spending time with Paul Hawken, whose books have shaped much of my own thinking about business and the environment. The dynamic Van Jones, who is profiled in the current issue of The New York by Betsy Kolbert,  will talk about green jobs. The always-inspiring Janine Benyus, who spoke last year, will be back to show us how biomimicry works in practice. My friend Joel Makower, the guru of green business and author of Strategies for the Green Economy, will return as well.

Venture capitalists from some of America’s top firms and entrepreneurs touting exciting startups will round out the group. We’re hoping to attract senior officials from the new Obama administration as well.

You can find a full list of speakers on the Brainstorm Green website. That’s also the best place to propose new speakers or to sign up for the event. (FORTUNE screens all participants.) We’ll meet in a beautiful setting—the Ritz Carlton Hotel in Laguna Niguel, CA, and I’m looking forward to seeing many of you blogreaders there.