Collateral Benefits

Hi, Leaders! It’s Adaptation Time!

I treated myself to two days of conferencing last week in my own city at the Chicago Forum on Global Cities, which focused on climate and other global challenges. Co-hosted by the Chicago Council on Global Affairs and the Financial Times, the event featured luminaries from 30 countries.  

The FT’s beautiful salmon-colored newsprint caught my eye both days, first with its special city supplement proclaiming in its cover article: “This would mean that, by the second half of the present century, some big cities could be as much as 10C hotter than their surrounding hinterlands….Many large cities are situated in low-lying coastal areas, leaving them badly exposed to the dangers of flooding that come with rising sea levels and storm surges.” And next with its front page showing an alarming image of central Paris under water. 

Despite the respected business publication’s stark climate prognosis, none of the panelists addressed climate adaptation and none responded to a question posed to the closing full plenary: “Climate Change and Global Cities,” https://www.chicagoforum.org/agenda/closing-lunch-climate-change-and-global-cities: “What role do cities play in increasing adaptive capacity to withstand climate change stresses and shocks?” However, when pressed by the FT moderator, the EU’s former commissioner for climate action only noted, “In Dakha Bangladesh, all they care about is adaptation, not mitigation.”

Tubingen, Germany, Mayor Boris Palmer, an erudite crowd-pleaser, proclaimed:  “It cannot be about adaptation, it must be about mitigation.”  He wisely noted that his success reflects never tiring of explaining the virtue of climate action at a level his audience understands. 

So here goes, an explanation geared to the panelists on the Global Threats to the Global City, https://www.chicagoforum.org/agenda/plenary-global-threats-global-city  (which did not mention climate change once in 75 minutes).

Abu Dhabi: https://www.ead.ae/Documents/RESEARCHERS/Climate%20change%20impacts%20-%20Eng.pdf Environment Agency-Abu Dhabi

The potential exposure of the United Arab Emirates and Abu Dhabi, in particular, to the impact of sea level rises is quite significant, given its current socioeconomic conditions in coastal areas.  In addition to the effects of such rises on social and economic structures, the vulnerability of coastal ecosystems is also of particular concern.

Chicago https://www.whitehouse.gov/sites/default/files/docs/state-reports/climate/Illinois%20Fact%20Sheet.pdf

In the 2011 winter, Chicago incurred over $1.8 billion in losses and 36 deaths when a blizzard dumped two feet of snow on the city. In 2012, Illinois had the second-highest mortality (32 deaths) due to heat nationwide.  

London: http://climatelondon.org.uk/wp-content/uploads/2012/01/CCRA-London.pdf

Twenty-nine percent of bus stations and 26 percent of underground stations are at risk of flooding, along with 14 percent of schools and 27 percent of police stations. The number of days per year when overheating could occur is projected to rise from 18 to between 22-51 days by the 2020s (central estimate is 33 days).

Singapore: https://www.nccs.gov.sg/climate-change-and-singapore/national-circumstances/impact-climate-change-singapore

From 1972 to 2014, the annual mean temperature increased from 26.6°C to 27.7°C. The mean sea level in the Straits of Singapore also has increased at the rate of 1.2mm-to-1.7mm per year in the period 1975 to 2009. 

Rainfall has intensified in recent years. Singapore's Second National Climate Change Study found a general uptrend in annual average rainfall from 2192mm in 1980 to 2727mm in 2014.

Washington, DC https://www.whitehouse.gov/sites/default/files/docs/state-reports/climate/district_of_columbia_fact_sheet.pdf

In 2012, damages from Hurricane Sandy required over $3 million in FEMA public assistance grants to rebuild and recover in the District of Columbia. The previous year, D.C. suffered damages from Hurricane Irene that required over $2.4 million in FEMA public assistance grants to rebuild and recover.

From Abu Dabhi to Washington, cities have shown a sincere desire to address climate change by mitigating greenhouse gas emissions.  That’s more important than ever, and it must be accompanied by a sincere desire to learn about and employ climate adaptation. Why? Because every $1 invested in adaptation avoids $4 in future losses.

Tubingen Mayor Palmer, as a member of the Germany Green Party (which puts climate change at the center of all policy considerations, including environmental policy and safety and social aspects), has the splendid chance to again demonstrate leadership by turning his refusal to embrace climate adaptation into an opportunity to embrace it and all collateral benefits for his constituents.  

Let's Create a Climate Adaptation Opportunity Standard to Catalyze Investors

Three examples illustrate a need  to inspire an adaptation marketplace. 1. the 2015 Paris Climate Agreement, unlike its 20 predecessors, prioritized adaptation & finance. 2. the 2016 Global Risk Perceptions Survey (WEF 2016) ranks failure to adapt to climate change 1st of 28 risks in terms of potential negative impact. 3. UNEP (2015) calculates the adaptation finance gap will be US$140-300B/year by 2030. There is a need for increased funding for adaptation projects, many of which create jobs & stimulate economies as a co-benefit of protecting human & natural communities from the effects of climate change. One barrier is the absence of an adaptation market, a mechanism by which adaptation projects can be traded as commodities, financed by private, government and development investors.

This absence is partly due to a lack of a standard measure for adaptation success that would e.g. create tradable adaptation credit, increase adaptation project bankability, and direct finance to short- and long-term adaptation projects.

What type of measure is needed to evaluate the potential success of adaptation projects? What types of investment decisions will it influence? Is it the same need for development and private sector investors? Addressing these questions will help to benchmark and establish a draft adaptation Standard in collaboration with  the private and development sectors.

A nascent investor-lead Global Adaptation & Resilient Investment (GARI) group is attempting to address this need. ND-GAIN & GARI have identified missing knowledge that will spur the adaptation market: a globally accepted project-level measure of adaptation success that assesses progress thereby quantifying opportunity for investors & inspiring a new marketplace that will improve both lives & economies in the face of climate change. The standard will direct investment flows into projects that have climate adaptation & market benefits, inspire investment for adaptation projects not previously considered, credit existing projects, & shape growth of investor tools, such as debt instruments.

 

This standard will be comprised of a unique & efficient set of indicators that measure the success of adaptation investments. Potential indicators will be evaluated against outcomes including avoided death & damage, avoided cost & collateral job, ecosystem & greenhouse gas mitigation benefits.

 

The creation of an international standard to measure climate risk & opportunity entails:

  1. Establish theoretical baseline standard of adaptation measurement
  2. Improve Standard concept through feedback from users
  3. Support investor community to pilot the Standard on existing & proposed adaptation investments
  4. Draft paper proposing a standards for adaptation project measurement
  5. Share knowledge with marketplace

 

The goal is to reduce barriers and foster growth in a global market for adaptation projects by expanding the number of projects, investors and improved human lives.

The ultimate outcome of this Standard will be to inspire a global market for adaptation projects that save lives & improve livelihoods through private sector & development agency investments that help prevent the avoidable & manage the unpreventable in the new era of droughts, super-storms, flooding, fires & other climate stresses & shocks.

Let ndgain@nd.edu know if you are interested in joining us in this important work!

Adaptation Potential: Africa's Hope and Promise

Adaptation Potential: Africa’s Hope and Promise Hope for building communities resilient to climate change around the world emerges from the unlikeliest of places—Africa. Shortly after release of the ND-GAIN 2014 Index, the Dr. Martin Luther King, Jr. Visiting Professor at the Department of Urban Studies and Planning at MIT, Calestous Juma, maintained that rankings alone fail to account for novel technological opportunities that communities not yet locked into conventional frameworks may readily adopt.

Focusing only on the rankings, Juma added in a CNN opinion editorial, risks sowing “despair among the poor and complacency among the rich.” He believes that developing countries have much cause for hope and that we must not ignore a poor nation’s creativity in the fight against climate change.

As evidence of Africa’s potential for generating responses to issues unique in our time, Juma cited the successful Sahalian drought response borne out of local collaboration as well as the mobile money-transfer initiative in Kenya. Most striking is the work of women engineers in controlling traffic through the use of robot technology in the CRD, a country ranked 5th from rock bottom of 178 countries on the ND-GAIN Index.

This hope and promise are reflected in ND-GAIN’s Readiness Matrix. Nestled in Africa are many of the world’s most vulnerable and least-prepared countries, but they each have made substantial progress in readiness to accept adaptation investment. These countries include Guinea, Laos, Liberia, Sao Tome & Principe, Zimbabwe and, most remarkably, Rwanda, which --has progressed entirely out of the red zone. The message is clear: the time is ripe for adaptation investment. In the coming years, African countries likely will emerge as leaders in the climate adaptation scene as investment continues to grow.

Infographic

In particular, alternative energy holds much promise in Africa. Although many parts of the continent receive abundant insolation – the amount of solar radiation energy received on a given surface area during a given time – and constant winds, alternative energy investment and development still are in their infancy. Limited information access and poor local training further hinder technological leaps, contends Juma.

MozambiqueThe team in Mozambique.

Collaborations between foreign and local agencies can bridge this gap. For instance, ND-GAIN, the Notre Dame Initiative for Global Development (NDIGD) and the Universidade Católica de Moçambique (UCM) teamed up to assess the impacts of early-warning systems for climate-related disasters in Mozambique. They evaluated the impacts of Community-based Disaster Management Committees (CLGRCs) and early-warning systems to show what and how interventions lead to increased climate resilience.

Moving forward, it is crucial that we understand the extent of Africa’s adaptation potential and also facilitate its adaptation efforts.  Africa likely will hold solutions to the 21st century’s most pressing problems.

Blog compiled with help from Sophia Chau, Intern, ND-GAIN 

Climate Adaptation as a Business Opportunity –ND-GAIN as a tool to help

There are some incredibly positive sustainability trends baring themselves out today:

  • Sustainability is becoming more a part of the ethos of the c-suite
  • Non-profit and public/private partnerships are growing in impact
  • Sustainable growth is being fueled by innovation in business/technology

Yet these hopeful trends are paired with a more sobering theme:   climate risk

This year, 4 out of top 10 global risks derived from World Economic Forum’s global risk perception survey, http://www.weforum.org/reports/global-risks-2014-report,  relate to climate disruption

3.Water Crisis

5. Failure of Climate Change Mitigation and Adaptation

6. Greater Incidence of Extreme Weather Events

8.Food Crisis

 

These risks share space with other risks such as high unemployment, fiscal crisis and political and social instability.

More specifically, one statistic from CDP’s supply chain survey, https://www.cdp.net/CDPResults/CDP-Supply-Chain-Report-2012.pdf,  really caught my attention:  more than 70% of corporate respondents saw risks to their supply chain from climate disruption.

And indeed, these risks are baring themselves out. 2011’s unprecedented flooding in Thailand alone resulted in $20B economic losses, Honda’s losses totaled more than $250 million when flood waters inundated an auto assembly plant, and  - to take another climate impact - General Motors calculated that a one-month disruption at one of its production facilities in Mexico hard hit by drought, could result in a loss of $27 million in net income.

But, as with any business risk, known risk can spell opportunity.  Vulnerable sectors crucial to human health and prosperity that also can be greatly improved by innovation – such as food, energy, and water –  are prime for investments that help us adapt to climate risks.

The US Military calls climate change a threat multiplier and instability accelerant, and some suggest that climate change fueled conflicts in Chad, Darfur, Yemen and Syria.

And it is not just civil conflict:  A report from the World Bank, http://climatechange.worldbank.org/sites/default/files/Turn_Down_the_Heat_Executive_Summary_English.pdf, says that many important development advances of the 20th Century, such as food security, global health and poverty reduction, may be undermined by climate change.

Recently, the Notre Dame Global Adaptation Index produced an analysis that showed it will take more than 100 years for lower income countries to reach the resilience of OECD or richer countries.

While I am concerned for all of us that unprecedented climatic variations are making the world more vulnerable, I reflect on the positive business trends and am certain we can apply our innovation, leadership, and partnerships, to building resiliency.

In fact, there are countless examples of corporate-lead climate adaptation around the world that are helping to decrease the impacts of droughts, superstorms, fires and floods caused by climate disruption.

Leading companies are leaning in, showing the importance of adaptation for their value chains by applying themselves to those vulnerable sectors crucial to human health and prosperity.

Increasing resiliency in food:

- Monsanto is developing new drought-tolerant corn varieties through the Water Efficient Maize for Africa, project, in partnership with the African Agricultural Technology Foundation the Bill and Melinda Gates Foundation, the Howard G. Buffett Foundation and the U.S. Agency for International Development.

- The global reinsurance firm Swiss Re is helping farmers in Ethiopia tackle current and future precipitation uncertainty, providing insurance against climate-related losses.

- PepsiCo is rolling out its i-crop precision-farming technology, enabling farmers to monitor, manage and reduce their water use while maximizing potential yield, in collaboration with the Columbia Water Center of the Earth Institute at Columbia University.

Increasing resiliency in infrastructure:

- Engineering firms such as AECOM and CH2MHill are integrating adaptation into coastal and energy infrastructure systems to protect future generations living in urban areas.

- Ushahidi, a small nonprofit software company, uses the power of crowdsourcing software to distribute real-time information including about roadways and transportation, during disasters in lower income countries and around the world.

Increasing resiliency in water

- Unilever, in partnership with the UN Global Compact and the World Food Program, is spearheading local water use reduction, freeing-up water previously used for clothes washing for other applications in India.

- Ecolab is creating water efficient technologies for commercial and industrial infrastructure that are more resistant and resilient to climate change.

But how do we join these proactive companies on finding market value in resiliency?

As companies are starting to realize that their bottom line is intimately connected with climate disruption, the private sector wants to know where do we get relevant information to inform our leadership?

There are many valuable tools out there.

The ND-Global Adaptation Index, http://index.gain.org, ranks the 193 UN countries annually based on how vulnerable they are to droughts, super-storms and other natural disasters and, uniquely, how ready they are to successfully implement adaptation solutions.

We measure the countries’ vulnerability of health, food, water, and infrastructure and the social, governance and economic readiness of the country to take on investment, thus informing many elements of our value chain.

Using 17 years of data, we examine over 50 indicators for each country in the index, and some real winners emerge from these hundreds of thousands of data.

It’s no surprise, European and North American countries are among those most prepared for climate risk.

And many developing countries are making the most and the fastest improvements – as companies invest in these growing markets.

The BRIC countries are doing better than the global resiliency average.  And there are some surprises, like Rwanda, which has moved up  the rankings 40 positions, primarily by improving its economic, governance and social readiness measures, making it a more viable investment opportunity.

Many companies may find the greatest business opportunities in more vulnerable countries with a high demand for adaptation products and services, but also high readiness based on a transparent, safe and fair investment and regulatory environment.

We can use the ND-GAIN matrix to examine countries in our supply chains, consumer markets, capital assets and community engagements to better understand our relative risks and opportunities.

I’ve found that one of the reasons climate adaptation is resonating with the private sector is that it is a very personal issue.  The indicator of climate adaptation success is not an ethereal Metric Ton of CO2e.  Adaptation is about direct impacts to our most important assets - our employees, our customers and our communities and their prosperity yesterday, today and tomorrow.

We have the opportunity to save lives and improve livelihoods for millions around the world while improving our market positions by matching the power of data, with corporate innovation, leadership and partnership.

Adaptation provides collateral benefits to

  • Mitigate greenhouse gas emissions
  • lift more out of poverty,
  • strengthen economies,
  • prevent civil conflict,
  • buttress food security,
  • protect natural resources and
  • ensure a brighter future for generations to come.

I encourage you to ask yourself the climate adaptation question of your work to create business opportunities out of resiliency that offer rewards for humanity.

(This is the One Great Idea presentation I gave at the Greenbiz Forum today).

Bullish on the Resiliency of Emerging Economy Cities

Bullish on the Resiliency of Emerging Cities  

At NYC Climate Week, Rockefeller Foundation President Judith Rodin and SwissRe  Chairman Philip Ryan agreed that cities in lower-income countries had bettered their developed peers in their pluck for climate resiliency.  “I’m bullish on the resiliency of emerging cities, which show no fear in taking on adaptive innovations and collaborations that are making them more resilient to current and future climate changes,” Rodin noted.

 

As Ryan pointed out, while there is “nothing more challenging” to his business than climate change, innovative public/private initiatives are poised to present innovative ways to manage just that.  And growing city populations in lower-income countries stand to gain a great deal from the leadership their cities are displaying in adopting cutting-edge solutions.

 

Many city-related institutions possess an unabashed focus on Adaptation.  The climate leadership group C40 Cities has introduced an adaptation initiative lead by Mandy Ikert, its director of Water and Adaptation. The Urban Sustainability Directors Network emphasizes climate adaptation and resilience. And don’t forget the impressive impact the Rockefeller Foundation has made by raising the adaptation question to thousands of cities, more than 800 of which already have applied to its “100 Resilient Cities Initiative.”

In itsWealthier, Healthier Cities” report, produced in partnership with the Carbon Disclosure Project and C40, AECOM – the global provider of professional technical and management support services – suggests that climate adaptation is a competitive advantage. The report praises the impressive leadership that local governments have taken to spotlight the collateral benefits of climate adaptation for all sectors.

Of course, cities are hotbeds of competition. Management consultancy A.T. Kearney, which produces a resilient cities outlook every year, notes that New York, London, Paris and Tokyo remain today's leading cities. But an analysis of key trends in emerging cities suggests that Beijing and Shanghai may rival them in a decade or two.

Consider what’s happening in Quito, Ecuador.  Its climate-change strategy, formally approved four years ago (Oct. 2009), reflects the number of landslides, floods and droughts the steep-sloped Andean city of 2.1 million residents experience as well as the shrinking of the nearby Antisana glacier.  The push for the strategy actually began in 2007 when Quito hosted that year’s Clima Latino, a regional climate-change conference.

Quito’s strategy includes both mitigation and adaptation initiatives.  Its adaptation program centers on ecosystems and biodiversity; drinking water supplies; public health; infrastructure and power production; and climate risk management. The report draws on global climate models by the Intergovernmental Panel on Climate Change for impacts at similar altitudes and latitudes as Quito. The city has invested nearly $350 million so far in adaptation, using a blend of municipal dollars, international aid and philanthropic funding. In addition, Quito has moved climate adaption into the city’s main development agenda, report outside researchers.

 

While ND-GAIN ranks country level vulnerability and readiness, future plans include a downscaling of the Index, and cities may be our next target.

Like corporations, cities are adapting every day, and it is refreshing to know that cities in the developing world are reaping the rewards of nimble and innovative approaches to climate-change adaptation.  Their residents are fortunate to have the protection that this preparation affords. Why? Because although avoided costs are harder to quantify at a local level, the billions of dollars spent recovering from climate-related events worldwide serve as an important reminder of the need to act.

 

Climate as a Business Opportunity

Navigant Consulting recently published a well-researched blog, “Facing Climate Change and Adapting,” that reminds us of the billions of dollars the UN Green Climate Fund is expected to generate to support climate adaptation in emerging economies. The article also addresses the growing market demand for climate adaptation services, regardless of the $2 billion global multilateral mechanism, that grows at a brisk pace. If this sounds unlikely, just think of the dollars infused when countries have adapted to other mega trends, such as preparing for and recovering from World Wars.  While the blog identifies engineering consulting firms, desalinization technology and construction firms among those that stand to benefit from a changing climate, other sectors already have begun to benefit:

  • The pharmaceutical industry will grow as vector-borne diseases adapt to geography changes.
  • Agricultural innovation in seed and fertilizer already is occurring (see BASF an Monsanto) to accommodate not only different precipitation but also varying temperatures.
  • Networking technologies are becoming hotter commodities, especially those that address the growing challenges of resource scarcity, the land-water-food-energy-climate nexus and the increasing impact and frequency of weather extremes.

While corporations involved in climate-change work often have been on both sides of the proverbial coin – either as mitigation leaders, looking to reduce greenhouse gas emissions, or climate avoiders looking to avoid prohibitive policy changes, a new generation of climate leaders is emerging.  They see the great value in placing adaptation at the forefront of their work, and they’re well positioned to capture real market value from the billions of adaptation dollars out there.

 

The Next Silk Route

Seeing this map of the melting Arctic Sea and subsequent shipping routes in the Economist a few weeks ago startled me.  I was programmed to think of voyages and conquests by the Economist’s cover picture of a ruddy Viking. And this triggered, at least for me, a profound reality: Everything we know about shipping is about to change because of climate change.

Just hearing that certainty alone sends an Arctic chill down my spine.  I’m not ready to give up that icy white at the top of my son’s globe. Or all the mystery, epoch history, science and beauty locked up there simply to buy get cheaper toys, clothes, solar panel parts, fish protein, energy and the list goes on and on.

But ready or not, the draft National Climate Assessment suggests we already are registering a decrease in sea ice, snow cover and glaciers, as well as an increase in ocean temperatures. Indeed, reflecting the physics of glaciers, they are retreating faster than most models originally had predicted.

So the climate has created an opportunity for this era’s Genghis Khan to open up trade routes that were a mere child’s dream of racing boats across a plastic globe only a few years ago.  I’m heartened to see that a multinational collaboration is taking the lead.  The Arctic Council comprises adjacent countries: the United States, Canada, Denmark (representing Greenland and the Faroe Islands), Finland, Iceland, Norway, Russia and Sweden.  Corporations are chomping at the bit for the new shipping, fishing and extractives possibilities and a responsible policy will help to ensure safe handling.

Time has given the Vikings and Genghis Khan a romantic and heroic reputation as adventurers. Let’s hope the heroism of this new era of profound geologic change leads to two developments: the halt of other climate events through employing greenhouse gas mitigation and a careful and considerate approach to the use of our new geographical landscape.

 

 

 

‘No Regrets’ Climate Adaptation: How to Reap Collateral Benefits

Have no doubt: corporate leaders can play a pivotal role in climate adaptation and in improving our collective quality of life.
To do so, however, they must direct their energies and innovation capital into putting a price on carbon, enhancing electricity’s smart grid, innovating renewable energy sources and supporting disruptive technologies like electric vehicles.
For those seeking more immediate action, look no farther than our extreme winters. Local and national governments have addressed this climate adaptation challenge for several years. It’s time for corporate leaders to become more aware of this growing effort to enhance our resilience to changes in climate.
Many companies’ nimble spirits will embody this resiliency.  Others will need to make significant changes – often with hefty collateral benefits – to improve their futures. Here are three climate mitigation actions that also create great climate adaptation:
1. Green roofs not only reduce emissions from (and the costs of) heating and cooling buildings, they also help lower the urban heat island, or localized extreme heat, and absorb excess water runoff from extreme rainfall.
2. Water-conservation planning and execution not only decrease the significant emissions associated with pumping, purifying, transporting and treating water, but they also help decrease the impact of drought and water shortages on your business.
3. Telecommuting and web-conferencing systems not only reduce your company’s travel carbon footprint, they serve as valuable tools when extreme weather events disrupt your office operation.
What’s the biggest collateral benefit your company can gain from adapting to climate change?  And set me straight here: What do you think your company’s biggest climate adaptation costs are going to be?