Corporate Adaptation

The Paris Agreement: A Not Bad Outcome Compels Corporate Action

This post appeared on 9 December 2015 on the RANE Network https://www.ranenetwork.com/rane-blog/the-paris-agreement-a-not-bad-outcome-compels-corporate-action/  

As the Paris Climate Talks enter the final frenzied hours attempting to come to an agreement about mitigation targets for the world’s greenhouse gas emissions, how to finance needed mitigation and adaptation to meet those targets, and what to do with loss and damage from unavoidable climate change, I reflect on three important and timely elements of COP21 related to the corporate sector:

  1. Business does not fit in much to the agreement. In the 28 page draft, the private sector is mentioned 11 times, mostly as it relates to access to capital. And while carbon pricing is mentioned a few times, along with euphemisms for international emissions trading, the document is likely to remain silent on the word “market” through its finalization.
  2. Good progress on both national commitments and an international agreement is being made. Although the most zealous climate mitigators continue to call for a 1.5 degree Celsius target (versus the two degree target that COP21 ostensibly called for), this may not be in climate mitigators best interest. Those in the know suggest that a “not bad” outcome will be less likely to die upon return to each national government. Thus, ironically, those who want to kill the Paris Agreement may also be want this ambitious outcome, which would no doubt die upon return to Washington, New Delhi and other climate-agreement tenuous capitals.
  3. While the lead up to COP21, and the discussions for the last two weeks, have created the foundation of an agreement with national targets and plans, for business, from 2016 onward, the point will be delivering on the low carbon pathways discussed and committed to here. Corporate innovation, influence, political will and finance will move us forward to a climate-abled future.

 

This is why, while the world will debate the merit of the diplomatic outcome of COP21, we are positive about Paris’ conclusions.

UNISDR Launches RISE Initiative for Disaster Risk-Sensitive INVESTMENT

“Economic losses from disasters are out of control and can only be reduced in partnership with the private sector.” ̶ United Nations Secretary-General Ban Ki Moon

 

The United Nation’s Office for Disaster Risk Reduction, or UNISDR, and PwC, the global professional services network, launched their ambitious R!SE Initiative in the United States early this month in Boston, seeking to embed disaster risk management into investment decisions.

R!SE reflects a new way of collaborating on a global scale to unlock the potential for public and private sector entities to take leadership on disaster risk reduction. The one-day event on March 2 focused on whether cities should be transparent and share their resilience gaps. That’s also the key question for ND-GAIN as we embark on our Urban Adaptation Assessment with the Kresge Foundation.

 

The R!SE agenda at its launch encompassed a wide band of issues to define and discuss what R!SE seeks to do and why it matters:

  • A session defined the initiative, its different activity streams and projects already underway.
  • One explained why preparedness is important to the U.S. government and how the Federal Emergency Management Agency’s new strategy supports this approach. (In short, the FEMA strategy involves an expeditionary organization that is survivor-centric and enables disaster risk reduction nationally.)
  • Another highlighted public-private partnerships that already promote resilience across the country. It examined the long-term governance structure needed to increase resilience across cities, states and the nation and the correct balance necessary to engage with the public and private sectors.
  • Afternoon breakout sessions explored two-to-three specific questions centering on how to leverage R!SE across the nation to enhance disaster-sensitive investments and to enhance society’s resilience.

Here are five key takeaways:

  1. Transparency is critical, but it’s not always easy from a political perspective to communicate gaps in resilience.
  2. Increasing trust throughout the communication process – by measuring such issues as economic impact that matter to citizens – proves necessary to demonstrate to citizens and communities that resilience investment will benefit them and help cities win battles over other priorities.
  3. A shift has occurred over the past few years toward increasing transparency, perhaps reflecting the rise in the number of activities to actually help increase resilience, not just assess it. The aim: Base every decision on an understanding of resilience.
  4. Since “city leader” isn’t synonymous with government, arming corporate and nonprofit leaders with information to help them develop capacity to increase resilience allows governments to be more transparent about gaps that exist with their constituents.
  5. A key asset of the R!SE Initiative is the Disaster Resilience Scorecard for Cities, created by AECOM, the professional and technical services firm for infrastructure, and IBM for UNISDR. San Francisco has used the scorecard to inform capital asset decisions, which suggests that in the name of transparency, scorecard results should be made available to the public.

 

Oh, and given the similarities with R!SE, please watch this space as ND-GAIN transitions to a focus on urban adaptation issues in 2015.

Lunar New Year Predictions from the Climate Leadership Conference

At a session this week (2-23) organized by the Center for Climate and Energy Solutions at the Climate Leadership Conference, C2E Staff Scientist Joe Casola facilitated a discussion that asked the 60-plus corporate, nonprofit and government leaders attending to foresee 2035 and predict what business resilience will look like. The absorbing conversation was part of the session “Emerging Best Practices for Identifying Climate Risk and Increasing Resilience.” Other leaders were Rutgers Energy Institute’s Robert Kopp, fourtwentyseven’s Emilie Mazzacurati and Pacific Gas & Electric’s Christopher Benjamin.

Since we are in the midst of the Lunar New Year season, a great time for fortune telling, I thought you would enjoy the group’s top ideas:

Top Six:

  1. Supply-chain risk synonymous with climate risk, making supply-chain, climate-risk mitigation business as usual.
  2. A doubling of interest in small business and Main Street, aided by Chambers of Commerce that help build public/private partnerships to increase local government adaptation.
  3. Climate risk as a shared responsibility across corporate verticals, no longer an exclusive fit with offices of sustainability.
  4. Insurance priced accurately, providing a forcing function on business and land use decisions.
  5. Future cost projections of climate change incorporated into financial and economic estimates for all return-on-investment and strategic decisions.
  6. A generational change in which the leaders in 2035 naturally focus on the question of climate with their work, integrating resilience into their decision making (my favorite).

To these, let me add three of my own:

  • A realization that climate change harms the promise of the growing middle class in lower-income countries, sparking a redoubling of interest in investing in resilience in the global south.
  • A move away from recovery and toward prevention, facilitated in part by mature warning systems, advanced risk prediction and assessment methods that prove the ROI of resilience.
  • A solid pyramid of policies that stack atop each other and form the foundation of good governance. This allows corporations to make resilient business decisions throughout their value chains and to contribute to the good of the commons (worker-protection laws against heat distress, flood plain buffer requirements, landscape water-pricing requirements, etc.)

All of these will be better informed by an agreed-upon measurement of adaptation that rivals the elegant MTCO2E and provides an easy way for everyone to quantify their progress.

What do you think?

 

Building Global Health Resilience: Pursuits in Haiti and Bangladesh

ND-GAIN focuses on building resilience to climate change as a critical component to better prepare humans and their environment for the next 100 years.  Our mission lies in enhancing the world’s understanding of the importance of adaptation and of facilitating private and public investments in vulnerable communities. For the 2014 Annual Corporate Adaptation Prize, we received 20 applicants, either multinational corporations or local enterprises working on a project in a country ranked below 60 on the ND-GAIN index and collaborating with local partners. Applications are judged on their measurable adaptation impact, scalability and market impact. Here is a brief view of two projects our applicants are employing to improve human health in Haiti and Bangladesh:

Abbott, Partners in Health & the Abbott Fund

ABBOTT GIRLS USE

Source Abbott

Abbott has teamed with Partners in Health (PIH) and the Abbott Fund to alleviate malnutrition in Haiti’s Central Plateau—the country’s poorest region, which also is prone to severe and deadly natural disasters. Based on ND-GAIN data, Haiti is the 15th most vulnerable country and the 30th least ready country. The country’s score has trended upward over the past 10 years, from 41 in 2005 to its peak at 46 in 2010, but has dropped slightly to 45 after the 2010 earthquake.

Abbott infographic

Source Abbott 

The partnership has built and opened a new facility operated by Haitians to produce Nourimanba, PIH's free and life-giving treatment for severe malnutrition in children. The partnership's agricultural development program also is helping local farmers supply the facility with high-quality peanuts, while raising farmers’ incomes. Today, the facility concentrates on producing Nourimanba and is assessing options to produce fortified peanut butter that can be sold in Haiti. They seek to create a self-sustaining social enterprise that supports facility operations and helps drive local economic activity.

BASF Grameen Limited 

BASF tent

Source BASF

To date, the facility has produced more than 60,000 kgs of Nourimanba and has treated about 6,000 patients. It has more than 40 Haitians on staff, with additional staff hired as the plant expands. In 2014, the project hopes to increase farmers’ income by 300 percent. The partnership is working with non-profit TechnoServe to provide nearly 300 local farmers with tools such as financing for seeds, supplies, and services to increase quality, and yield by 33 percent. The Abbott Fund has provided more than $6.5 million in funding, and the facility is owned by PIH, which works together with its sister organization, Zanmi Lasante. Visit the Abbott Fund website to learn more, and view this 2012 New York Times article on the PIH website.

BASF Grameen Limited is improving human health by preventing the spread of mosquito-borne diseases in Bangladesh.  It has established a joint venture social business with Grameen Healthcare Trust, a nonprofit organization created by the Nobel Laureate Professor Muhammad Yunus, to help manufacture and distribute sturdy mosquito nets to vulnerable communities. The goal is to help the country achieve its UN Millennium Development Goals. Bangladesh has a gain score of 47.3 and has been steadily improving since 2005. The project hopes to further improve Bangladesh’s mortality index and external health dependency index.

With an initial investment from BASF of €200,000, the joint venture social business employs local community members in Bangladesh and sources from local suppliers where available.

The Interceptor mosquito net was the first product of this venture, which aims to reduce mosquito-borne disease, thus contributing to achieve key U.N Millennium Development Goals related to health. In 2011, BASF Grameen provided Interceptor nets to students from Dhaka University, the largest public institute in Bangladesh. Since then, BASF Grameen has constructed a plant within Bangladesh to make and distribute these nets to communities in need. According to the WHO, the protection provided by these nets against the mainly night-active vector mosquitoes is the most effective means of preventing malaria infections. The decrease in cases of malaria in Bangladesh by 70 percent over the past five years can be attributed, in large part, to the long-lasting insecticidal mosquito nets, which retain their protective properties for up to 20 washes, depending on local conditions.

Despite Bangladesh’s upward trend on the ND index, it maintains a high vulnerability and low readiness and needs investment and innovations to continue to improve. BASF Grameen Limited’s vision for the future is to scale up its operations within Bangladesh and also address similar issues in other vulnerable countries. Visit the Grameen Creative Lab and Yunus Social Business websites for more details and to learn about their other projects. This information was compiled with the help of Sophia Chau, Intern, ND-Global Adaptation

Increasing Water Security: Enlivening Communities in Africa and Asia

More frequent and severe droughts triggered by climate change place significant stress on the regions of the globe already most arid. That’s why South Pole Carbon and HSBC India, in partnership with JBF, are working to empower and bring purified water to locals in Africa and Asia. These two unique projects were entered in our 2014 Corporate Adaptation Prize Contest. South Pole Carbon

South Pole Carbon’s International Water Purification Programme (IWPP) facilitates investments in clean drinking water to boost both climate-change mitigation and adaptation:

  1. South Pole Carbon provides poor families with a reliable source of clean drinking water, thus enabling individuals and communities to become more resilient against climate change.
  2. It reduces CO2 emissions by ensuring people don’t have to boil their drinking water.

South Pole offers companies the opportunity to invest in individual projects under the IWPP and to generate adaptation and mitigation benefits, measured in liters of clean drinking water provided and in tons of CO2 reduced, respectively. Under the IWPP, companies can achieve their Corporate Social Responsibility targets while gaining measurable benefits.

Here are the scores and trends of South Pole’s target countries, according to the 2012 ND-Global Adaptation Index:

  • Mexico: 59 (trend: stable)
  • Cambodia: 133 (trend: improving)
  • Uganda: 137 (trend: stable)
  • Malawi: 136 (trend: improving)
  • Tanzania: 140 (trend: improving)
  • Kenya: 153 (trend: stable)

South Pole Carbon Water

Source: South Pole Carbon 

HSBC India & the Jal Bhagirathi Foundation

In conjunction with Jal Bhagirathi Foundation (JBF) in India, Hongkong and Shanghai Bank Corporation (HSBC) builds community leadership and leverages innovations to contribute to climate-change adaptation success through potable water harvesting projects in India. As a global commercial bank, HSBC has executed three community-based adaptation projects in Rajasthan’s Marwar region—the world’s most densely populated arid zone. JBF is a nongovernment organization that has been working in the Marwar region of the Thar Desert in Western India since 2002.

Since 2009, the partnership has built on traditional local knowledge and contemporary social and technical innovations to develop, test and replicate adaptive strategies through management of natural resources, especially water.

HSBC India

Source: HSBC India

India ranked 120th on the 2012 ND-Global Adaptation Index with a score of 53.4. Its high vulnerability score and low readiness score makes it the 55th most vulnerable country and the 60th least-ready country. Its advancement by 10 points on the relative ranking since 1999 indicates the impact that corporate investment can make on resilience.

HSBC and JBF seek to improve the adaptive capacity and resilience of local communities:

  1. Available potable water year round through localized water harvesting and landscape management enlivens communities.
  2. Women who earlier fetched water from long distances in extreme desert conditions are saved from the physical stress, and they can use the saved time and energy for children’s education and development and economic activities that increase family income.
  3. Accessible toilets and safe sanitation facilities prevent fecal contamination of scarce water and improve public health, hygiene and environmental conditions.

Key variables are being tracked, including the increased availability of drinking water, the extent of sanitation and the impact on women’s time. On average, each village achieves a 30 percent improvement in water availability annually, translating into an additional 4-to-5 months of water availability per year. The extent of sanitation has increased to 50-to-70 percent from 6-to-25 percent since 2009. This adds 2-to-3 hours of productive activities for the average woman.

Consequently, HSBC and JBF generate an array of benefits to its communities in India:

  1. Health improvement through access to safe water and sanitation
  2. Women empowerment
  3. Education and child development
  4. Livelihood security
  5. Environmental sustainability

Because the integrated village-models are replicable and scalable in line with India’s national water policy framework, HSBC plans to expand its project in the Marwar region to other water-stressed regions in India, through collaboration among its NGO partners.

Visit the Jal Bhagirathi Foundation website for more of the partnership’s projects in India.

This information was compiled with the help of Sophia Chau, Intern, ND-Global Adaptation Index.

Global Climate Resilience: Highlight Your Corporate Excellence

 

As corporations continue to leverage the important nexus between their humanitarian and environmental work through climate resilience projects in emerging economies, all should take note of the ND-GAIN Corporate Adaptation Prize. Past winners of the prize include PepsiCo, Ushahidi, Monsanto and Engineers Without Borders.

This year’s winners  – both multinational and local corporations working with nonprofits – will demonstrate meaningful impacts in an emerging economy that decrease vulnerabilities and increase readiness by enhancing food security, water and sanitation access, coastal protection, ecosystem services, human habitatsinfrastructure resiliency, or human health.

Project applications will be judged on their measurable adaptation impact, scalability (relative within their category — multinational or local corporations) and market impact.

The judges for this year’s prize will include retired Brig. Gen. Stephen Cheney, USMC, CEO, American Security Project; Loren Labovitch, director of finance, investment and trade, Millennium Challenge Corporation; Amy Luers, climate change director, Skoll Global Threats Fund; Jesus Madrazo, International Corporate Affairs Lead, Monsanto Company; Danielle Merfeld, global technology director, GE; Raj Rajan, RD&E vice president and global sustainability tech leader, Ecolab Inc.; and Carolyn Woo, chief executive officer and president, Catholic Relief Services.

The simple six question application is due in August and winners will be announced at an award’s event at Climate Week New York and to the media in September.

 

This blog was posted by  iain-patton and originally appeared on http://www.greenawards.com/blog/global-climate-resilience-highlight-your-corporate-excellence

Bridging the Climate Adaptation Gap: Relative Risks of Geographies in Supply Chains

This article originally appeared in Triple Pundit Bridging the Climate Adaptation Gap: Relative Risks of Geographies in Supply Chains

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Editor’s note: This is the second post in an ongoing biweekly series on the climate adaptation gap. Stay tuned for future installments here on TriplePundit! In case you missed it, you can read the first post here.
The ND-GAIN Matrix, which shows the evolution of vulnerability and readiness over the past 15 years. It allows deeper insights into country risk and opportunity. Add your countries to watch their evolution. (Click to enlarge)The ND-GAIN Matrix shows the evolution of vulnerability and readiness over the past 15 years. It allows deeper insights into country risk and opportunity. Add your countries to watch their evolution. (Click to enlarge) 

By Joyce Coffee

Previously, exploring the chasm between the need by corporations to adapt to climate change and the apparent absence of leadership to do so, I addressed a five-part plan for companies to become climate adaptation leaders.  Let’s delve into the first two, offering suggestions to ensure corporate resiliency in a climate-altered world.

Why does this matter? For the past several years, the CDP’s supply-chain survey has revealed that more than 70 percent of corporate respondents envisioned risks to their supply chain from climate disruption.  Indeed, these risks are appearing.  Thailand’s unprecedented 2011 flooding alone caused $20 billion in economic losses. Honda’s losses alone totaled more than $250 million when flood waters inundated an auto assembly plant. In another climate-related disruption in Mexico, General Motors calculated that a one-month disruption at one of its production facilities there hard hit by drought could spark a $27 million loss in profits.

The secret involves knowing first where your supply chain starts. That’s another kind of gap for many corporations–and one that myriad sustainability surveys and shareholder proxy fights face.  But let’s presume that, like a majority of global corporations, you are getting a handle on your supply-chain geography to examine both risks and opportunities for your bottom line.

That’s the first step of addressing your climate adaptation gap:  Examine the relative risks of geographies in your supply chains.

Many tools are available for corporate and development decision makers to help plan and devise their business strategies. Corporate leaders tell me they use the Consumer Confidence IndexCorruption Perceptions Index and Human Development Index, among other well-regarded tools, to help relay complex information quickly to their boards of directors and C-suite peers.

Some global corporations maintain tools themselves. MWH Global, an early employer of mine and a leader in hydropower development worldwide, including in the least-developed countries, developed an internal risk-management schema that helped it consider the hardship to employees working in less-stable countries.

The ND-Global Adaptation Index, or ND-GAIN, is another business barometer that provides quick insights into a country’s climate vulnerability and readiness to adapt.  And since risk experts rank climate change among the principal threats to business, the tool serves as a timely resource for strategic planning.

Free and open-source, ND-GAIN illuminates the countries best prepared to deal with global changes sparked by overcrowding, resource constraints and climate disruption.  This index uses 17 years of data to rank over 175 countries annually against 50 variables, based on how vulnerable they are to droughts, super-storms and other natural disasters and, uniquely, how ready they are to employ adaptation solutions.

Click this photo to check out the vulnerability/readiness matrix and compare countriesClick this photo to check out the vulnerability/readiness matrix and compare countries. 

To generate actionable information about country-level vulnerabilities from climate change and the readiness of countries to absorb and use new investments, you can examine a cross-section of the data most germane to your supply chain by looking at three things:

  • The ND-GAIN ranking (pictured right and above), which orders every country by aggregating all measured factors into a single score. It allows a quick look at combined vulnerability and readiness. View the full rankings to find your countries within the index and compare their ND-GAIN ranking with one another.

Using ND-GAIN’s Matrix, you can draw lessons from existing disruptions to your supply chain due to extreme events or predict future problems.  Assessing the realities of climate change on your supply chain, you can look at the relative vulnerability by country of origin of your major suppliers – Taking, for instance, four countries important for the auto industry: China Japan, Korea and Mexico.  As of 2011, Japan and Korea possessed a similar level of readiness, and Mexico and Japan’s vulnerability matched, but China was the least prepared and most vulnerable of all of them. (Check out the vulnerability/readiness matrix here to compare countries.)

ND-GAIN's assessment of the Philippines. Click to enlarge. ND-GAIN’s assessment of the Philippines. Click to enlarge. 

  • The ND-GAIN Country Profiles (pictured right) provide all of the data and their sources, organized by specific vulnerability and readiness measures such as water availability, food security and education level.  These country profiles for the 175 countries in the index help you to identify relevant vulnerabilities in geographies where you maintain significant human and capital assets.

What’s vital about these country profiles is that they give the private sector the means to gauge adaptation-related opportunities and risks in developing countries. With this ability, the private sector can address the critical needs of vulnerable populations (and identify new markets well-suited to their business model, products or services and investment-risk profiles).

The profiles also help policymakers identify the easiest-to-achieve avenues – that proverbial low-hanging fruit – for improving rapidly a country’s investment attractiveness to the private sector as well as to motivate and create incentives to employ the best public policies.

Graphics courtesy of the ND-Global Adaptation Index

Read more in the Climate Adaptation Gap series:

  1. Bridging the Climate Adaptation Gap: From Recognition to Action
  2. Bridging the Climate Adaptation Gap: Relative Risks of Geographies in Supply Chains
  3. The Climate Adaptation Gap: How to Create a Climate Adaptation Plan

Joyce Coffee is managing director of the Notre Dame Global Adaptation Index (ND-GAIN). Coffee, who is based in Chicago, serves as the executive lead for related resiliency research, outreach and execution. Stay tuned for the next post in “The Climate Adaptation Gap” series on Tuesday, June 3. The series will deep-dive into the complicated look at supply chain risk assessment. Next up: “Relevant Vulnerabilities in Geographies”. Portions of this article first appeared on http://climageadaptationexchange.com.

 

Bridging the Climate Adaptation Gap: From Recognition to Action

This article originally appeared in Triple Pundit http://www.triplepundit.com/2014/05/bridging-climate-adaptation-gap-recognition-action/

Editor’s note: This is the first post in an ongoing biweekly series on the climate adaptation gap. Stay tuned for future installments here on TriplePundit!

Joyce Coffee, Notre Dame Global Adaptation Index Managing Director, opens last year's ND-GAIN Annual Meeting.Joyce Coffee, Notre Dame Global Adaptation Index Managing Director, opens last year’s ND-GAIN Annual Meeting. 

By Joyce Coffee

Recent data indicate that a gap exists between corporations understanding the big-picture risks of climate change and their actions to address those risks to shore up their bottom line.

MIT’s Sloan Management Review published results of the annual sustainability survey they conduct withBCG (aka The Boston Consulting Group). In Harvard Business Review‘s synthesis, they note: “The vast majority of respondents in a new Sloan and BCG survey say climate change isn’t a significant issue … And of the 27 percent that acknowledge climate change is a risk to their businesses, only 9 percent say their companies are prepared for the risk.”

In contrast to this data, another corporate survey—the annual World Economic Forum Global Risk Report–says, this year, four out of the top 10 global risks derived from the World Economic Forum’s global risk perception survey relate to climate disruption:

  • Water Crisis
  • Failure of Climate Change Mitigation and Adaptation
  • Greater Incidence of Extreme Weather Events
  • Food Crisis

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

As the report starts: “To manage global risks effectively and build resilience to their impacts, better efforts are needed to understand, measure and foresee the evolution of interdependencies between risks, supplementing traditional risk-management tools with new concepts designed for uncertain environments.”

The takeaway from WEF’s report: It’s up to all of us to build and refine the proper measurement tools to ensure we are creating business opportunities that offer rewards for humanity in this era of climate risk. A goal will be to pair other notable trends about sustainability progress to lead the way.

So, based on the WEF numbers, if corporations see a risk, but, based on the MIT numbers, they do nothing about it, that gap suggests that businesses are not yet sure how to manage the risk that a changing climate brings to their value chains.

Since climate adaptation relates to the direct impacts on our most important assets—our employees, our customers, our communities and our families–those who advise corporations possess a great opportunity to demonstrate to their clients the significant collateral benefits of a five-step plan of adaptation action. The five steps are outlined briefly here, and will be rolled out in-depth throughout a six-part, biweekly series on Triple Pundit.

  1. Examine the relative risks of geographies in supply chains. Where are your most vulnerable communities and supply chains? What resilience can be built to protect these people and assets?
  2. Identify relevant vulnerabilities in geographies where you maintain significant human and capital assets. Tools like ND Global Adaptation Index can help, plotting countries on a matrix and digging into specific country profiles. When assessing their global risks, corporate leaders can also employ other indices to inform their thinking—from Transparency International’s Corruption Perception Index, to the major credit-rating agencies’ foreign-currency ratings, and the World Economic Forum’s Global Competitiveness Report.
  3. Review your business-continuity plans based upon these vulnerabilities and risks, perhaps including an economic risk analysis for the most likely issues. If you are just beginning this assessment, draft up a list of questions based on research surrounding steps one and two. Use this information to inform your business-continuity plan.
  4. List strategies that could be used to prepare your most vulnerable assets. What investment is available and what processes must be taken to secure these assets?
  5. Create a short and medium-term plan that does three things: 1) Starts with adaptive actions you already are taking as part of your business as usual. 2) Sets priorities of adaptations with collateral benefits; e.g., mitigating greenhouse gas emissions (onsite stormwater management), improving employee morale (work from home options) or buoying your reputation (shoring up public health systems in one of your supplier hubs). 3) And, very importantly, includes financials for avoided risks.

Many cities, including TorontoNew York and London publish their adaptation plans, and they are worth a look for inspiration.

Read more in the Climate Adaptation Gap series:

  1. Bridging the Climate Adaptation Gap: From Recognition to Action
  2. Bridging the Climate Adaptation Gap: Relative Risks of Geographies in Supply Chains
  3. The Climate Adaptation Gap: How to Create a Climate Adaptation Plan

Joyce Coffee is managing director of the Notre Dame Global Adaptation Index (ND-GAIN). Coffee, who is based in Chicago, serves as the executive lead for related resiliency research, outreach and execution. Stay tuned for the next post in “The Climate Adaptation Gap” series on Tuesday, May 20. The series will deep-dive into the complicated look at supply chain risk assessment. Next up: “Relative Risks of Geographies in Supply Chains”

Community supply chains: resilience through insurance innovation

Community supply chains:  resilience through insurance innovation At last week’s World Economic Forum in Manila, every presentation I heard mentioned the devastation of Typhoon Haiyan (aka Yolanda). A special session on decision tools for preparing for climate and natural disaster offered the chance for a panel of insurance brokerage executives, a Philippine Senator, a representative from the world’s most engaged foundation on climate resilience and a senior executive at the International Red Cross to develop an innovation – one salient project – to save the world.

Specifically, we looked at ways to avoid a breakdown in community supply chains when a major disruption occurs. This was of special interest to the Senator since after the typhoon, no goods were available for weeks after the storm at the sari sari store, the grocery store or warehouses.  And when the government and development agencies brought in relief materials, this forced out local sellers with goods to sell at legitimate prices. A black market in relief goods emerged, although in a limited way, it turns out.

With this backdrop, we pondered what sort of mechanism could help solve for these issues in future crisis. Here is what we devised: community-based, parametric-triggered insurance. Talk about jargon. WEF participants roared at that winning title – but we surprised them with functional ideas, which envisioned that starting now, in risk-prone communities:

  1. Create a method for community payment into an insurance fund.
  2. Ensure that all members pay in their portion, and price the payment equitably.
  3. Ensure financial contact information for all participants.
  4. Index levels and types of events that could trigger loss.
  5. Pay out to all insurance holders immediately, regardless of proven loss from a disaster.

This idea isn’t brand new. I am aware of drought-triggered parametric insurance for Ethiopian farmers, for instance. But it is novel enough that most of us needed a guide to its distinction from indemnity insurance, which requires proof of harm before payout (a time-consuming process).

A lot of what ifs and issues aren’t addressed here, such as:

  • How to determine the level of storm event.
  • How to collect the insurance payment in cases where community members aren’t bankable.
  • How to ensure that all or most buy in, particularly in more urban areas where the “street-level bureaucracy” of rural communities is weak or non-existent.

Still, I bet this type of mechanism will grow in popularity and positive impact for natural disasters, and put my vote behind it as a resiliency innovation worth supporting.

And since this idea is going to be around for a while, please help us think of a better title with a catch acronym that translates around the world. Fine, OK and Swift come to mind as acronyms I’d be relieved to see in my community if all of my hopes and dreams were wrapped up in my family and rural sari sari store in Tacloban, Philippines, or in any of millions of communities like it around the world.

 

Climate change a growing concern for companies expanding their footprint

This article originally appeared in The Guardian: http://www.theguardian.com/sustainable-business/hubs-water-climate-change-siting-drought-flood-business Traditionally, the most important factors in choosing a location for a new factory or operation have always been workforce supply and economic incentives. But a new consideration, climate change, is quickly moving up the ranks as a major factor for corporate decision-makers. Recently, as climate-related crises have hit cities across the globe, it's become increasingly clear that companies need to consider the financial impact of a paucity – or an excess – of water.

Operational, strategic and quality-of-life issues factor heavily in the decisions that giant enterprises make about where to locate their much sought after capital projects. As the devastating environmental conditions associated with climate change – including water shortages, severe storms, natural disasters, rising seas and hotter climates – become more pressing, it's clear that these, too, will become key considerations for companies hoping to press their competitive advantages.

As a result, these decisions will begin to dramatically affect both traditional and emerging business, transportation, manufacturing and travel hubs. And as with anything else involving corporations, real estate, jobs and money, there will definitely be winners and losers.

Supply chain links

In the wake of natural disasters, which appear to be getting increasingly severe, a "new normal" has emerged among corporate decision-makers. With some analysts citing the impact of the mutable climate, more companies are adding a climate-change dimension to their strategic supply-chain planning and site selection. Adaptive management of climate risks is playing a growing role in boardrooms and C-suites across the globe, particularly at multinationals.

A report from CDP, the global non-profit that measures vital environmental information, found that 72% of companies surveyed see physical risks from climate change disrupting their supply chain.

For New Orleans-based energy company Entergy, 2005's Hurricane Katrina was a lesson in the potential supply disruptions that could be caused by increasingly extreme weather events. Since then, Entergy has begun incorporating climate risks into its business planning and operating activities; consequently, it has strengthened its power-distribution network, including the sites that are most vulnerable.

Water, water nowhere

Companies often underestimate the importance of water to their business, and few have a comprehensive global process to assess water risk. But this is quickly changing, notably in the west and southwest regions of the US, as drought sinks critical water supplies. Companies in the food and beverage, mining and oil and gas companies sectors especially base their site assessments on high-level projections of water scarcity.

In 2013, the Aqueduct Project, a hydrological mapping initiative at the World Resources Institute, ranked 36 countries based on their water risk. Sixteen, including the UAE, Barbados, Cyprus, Jamaica and Singapore, received a 5.0, the worst possible rating.

But if drought is a consideration, so is flooding, and too much water can also affect site selection. After Thailand's extensive flooding in 2011, losses for badly damaged global parts suppliers alone totaled an estimated $15-20bn, and the flood hurt the bottom line of several multinationals, including Ford, Toyota, Dell, Cisco and Honda. HP, another company that was especially hard-hit, estimated that half of its 7% fourth-quarter 2011 revenue slide was due to the flooding. Not surprisingly, global companies are increasingly assessing the issue of monsoons and other water-related weather events when making decisions about where to locate or enlarge their facilities.

As for the US, it won't be long before severe water-supply problems in states like California and Arizona will begin to affect their popularity as site locations for plants. And look for other states as well as cities with plentiful supplies, such as those surrounding the Great Lakes, to woo businesses with water as their big asset. Already, Milwaukee is leveraging the business potential of its plentiful water supply. It's certainly not alone.

Site selection heats up

Water isn't the only climate issue that is increasingly affecting site selection. Too much heat is also becoming a factor as it becomes clear that fiery temperatures and air pollution can have a major, devastating effect on workplaces and workforces. Air-conditioning alone can't make up for such conditions.

A team of climate-change researchers recently studied 170m hospital admissions and eight million deaths in Germany. After tracking them season by season, day by day, for 10 years, they found that the temperature-and-pollution spikes associated with extreme heat events tended to increase hospital admissions and deaths by 2% to 5% the first day. Adverse health effects and mortality mounted with each day of a heat wave.

Interestingly, the analysis found that extreme cold events typically had a negligible to nonexistent impact on hospitalization and deaths. Distributed across the population of a country such as Germany or the US, the analysis estimates that the cost of a hot day is between 10 cents and 68 cents per resident in terms of health care and lost productivity.

Winners and losers

So, when it comes to site selection and climate, which countries top the list? The Notre Dame Global Adaptation Index (ND-GAIN), where I work, has ranked the climate adaptation performance of 177 countries over the last 17 years, has found that, while the top-ranked countries are often prone to sea level rise, drought and flooding, they are nonetheless able to maintain the security of their water, food, and health systems. They are able to preserve their fundamental ecosystems, and their coastal, energy and transportation infrastructures remain sound, enabling greater social, economic and governmental stability.

The ND-GAIN's highest-ranked country is Denmark, which has an index score of 83.4. Other European countries and Australia round out the top 10, while the US ranks 13th, with a score of 79.

North Korea is the lowest-ranked country, with an index of 34.3, and Afghanistan, Burundi, the Central African Republic and Eritrea fill out the bottom five on the list of countries that aren't likely to draw many foreign industrial and business operations any time soon.

The most surprising low-ranked countries are India, which is number 120, and China, which is number 98. But as two of the hottest spots for global business in the last decade, both demonstrate the impact that corporate investment can have on resiliency. India has moved up 10 points on the relative ranking since 1999, and China has moved between three and six spots during that period.

In real-estate parlance, the desirability of a property is based on location, location, location. And while climate change may still rank below such factors as workforce and incentives, more and more organizations are weighing climate conditions as they determine where they will locate new operations.

Consequently, cities, states and countries that lag on the climate-change index need to launch initiatives, such as public-private partnerships, to strengthen their attractiveness. The private sector, of course, can play an invaluable role in this effort.

This article originally appeared in The Guardian: http://www.theguardian.com/sustainable-business/hubs-water-climate-change-siting-drought-flood-business.

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).

Climate on the Davos Agenda

I’m thrilled that the World Economic Forum has placed climate change squarely on the agenda for next week’s forum at Davos.  It makes sense since its 2013 Risk Report noted climate change, combined with economic upheaval, as a top hazard to the global economy. This emphasis for the Forum is particularly important. The convening of corporate and private sector leaders has played a lesser role in the global climate change efforts, which primarily have been driven  by the United Nations.  Fortunately, it appears the private sector, through the power of the Forum, is going to play a bigger role in this discussion. Perhaps that will turn the UN efforts toward more action.

Next week, all World Economic Forum participants can attend sessions specifically dealing with adaptation and resiliency, including:

  • An ideas lab on adapting to climate change
    • A discussion of the role of business and supply chains in making sustainability a mainstream issue
    • A plenary on the interaction of the climate and development global agendas toward 2015
    • A conversation about building resilience to natural disasters linked to extreme weather events and climate change

I’m eager to see the direct and indirect impact of The Forum’s climate adaptation conversations.

Beyond Davos 2014, World Economic Forum will participate actively in the Climate Summit at the UN in New York on Sept. 23,  the UN Framework Convention on Climate Change Conferences of the Parties in Lima, Peru, in late 2014 and subsequent convening.  This work reflects a set of robust Forum partnerships. The lead is Dominic Waughray, a member of ND-GAIN’s Advisory Board.

 

The Auto Industry's Real Climate Risk

An article caught my attention last week from the Auto Industry Action Group, entitled “How Climate Action May Impact the Auto Industry.”   Initially, I thought it might tell the story of an industry that has seen significant disaster-related setbacks taking charge to prevent future problems. Actually, it proved to be a polemic about how to protect the industry from climate-related regulations.

 

Like the finance industry, which gained important business-continuity planning lessons from 9/11 and more recent disasters for example, Goldman Sachs’ stellar disaster-recovery preparations that enabled it to keep its lights and power on in lower Manhattan after Hurricane Sandy). I presumed that automakers were also familiar with risk mitigation, drawing lessons from disruptions to their supply chain after Japan’s devastating 2011 earthquake, tsunami and nuclear disaster.

 

I bet there are a few leaders in the auto industry who are assessing the realities of the climate-change issue  and are mulling risk evaluations that, for instance, include a look at the relative vulnerability by country of origin of their major suppliers – China Japan, Korea and Mexico.  As of 2011, Japan and Korea possessed a similar level of readiness, and Mexico and Japan’s vulnerability matched, but China was the least prepared and most vulnerable of all of them. (Check out the vulnerability/readiness matrix here to compare countries.)

Others closer to home may be thinking about these risks. The environmental choir, namely The American Sustainable Business Council, published an interesting article about small business risks from climate adaptation.

I can only assume that many car dealerships, which stand at the tail end of the industry’s value chain, consider themselves small businesses. Without climate-adaptation leadership, they could find themselves in trouble.  Among several compelling statistics noted in the article, an estimated 25 percent of small- to-mid-sized businesses don’t reopen after a major disaster, and 57 percent of small businesses have no disaster-recovery plans.

These small businesses represent our American jobs and the backbones of our communities. As climate-related risks grow at home and abroad, we should make it a priority to find the right tools to help all business owners manage for a dramatically changed future.

 

Three Steps to Better Decision-Making

Three Steps to Better Decision-Making Many tools are available for corporate and development decision-makers to help them plan and devise their business strategies.   Corporate leaders I speak with say they use the Consumer Confidence Index, Corruption Perceptions Index, and Human Development Index among other well-regarded tools, to help relay complex information quickly to their boards of directors and C-Suite peers.  The ND-Global Adaptation Index joins these business barometers to provide quick insights into a country’s climate vulnerability and readiness to adapt.  And since risk experts view climate change as ranking among our principal threats to business, the tool proves to be a timely resource for strategic planning.

As you seek to protect your investments and supply chains while identifying fresh market opportunities, it will pay to absorb how the ND-Global Adaptation Index can assist you.  A quick tour offers three steps (each requiring just a minute) that can generate actionable information about country-level vulnerabilities from climate change and the readiness of countries to absorb and use new investments. By taking the tour, you’ll be able to apply climate savvy to the decisions you make this year.

The Index, free and open source, employs a layered structure, starting with the so-called GAIN ranking

3. The GAIN ranking orders every country by aggregating all measured factors into a single score. It allows a quick look at combined vulnerability and readiness. View the full rankings to find your countries within the index and compare their GAIN ranking with one another.

 

2. The GAIN Matrix shows the evolution of vulnerability and readiness over the past 15 years. It allows deeper insights into country risk and opportunity.  Add your countries to watch their evolution.

3. The GAIN Country Profiles provide you with all of the data and their sources, organized by specific vulnerability and readiness measures such as water availability, food security and education level.

So if you want to use the Index to size up your supply chain, you can examine a cross-section of the data most germane to your supply chain with just a few clicks on the rankings page. Here’s a snapshot for water, http://index.gain.org/ranking/vulnerability/water for example. Simple, fast, insightful.

Check it out, then tell me what you learn about your business through using this tool.

 

A Full-Time Focus (and Idea Exchange) on Corporate Climate Adaptation

A Full-Time Focus (and Idea Exchange) on Corporate Climate Adaptation After five years of focusing peripherally on climate change adaptation, I have thrown myself full time into that passion and pursuit. I’ve joined the Global Adaptation Institute, now known as the Notre Dame Global Adaptation Index (more on that shift in a future post).  I’m on a listening tour, of sorts, during my first few months. And I hope we can make the most of the “exchange” part of this blog’s title.  Please send your feedback as I share my beginner’s-mind thinking on our work.

For those of you new to ND-GAIN (see past blogs about it here and here), the following may bring to life the value of this index tool for assisting you in your decision making:

  1. ND-GAIN is the world’s only index that measures the vulnerability of each nation to climate change and its readiness to adapt, making it an important tool for preparing for disasters, developing infrastructure, and managing ecosystems around the world.
  2. ND-GAIN provides the private sector with the means to gauge adaptation-related opportunities in developing countries. With this ability, the private sector can address the critical needs of vulnerable populations while identifying new markets well-suited to their business model, products or services and investment-risk profiles.
  3. ND-GAIN helps policymakers identify the easiest-to-achieve avenues – the low-hanging fruit – for rapidly improving a country’s investment attractiveness to the private sector as well as to motivate and create incentives to employ  the best public policies.
  4. ND-GAIN helps international organizations rank their resources based on need and effectiveness

Our mission is to enhance the world’s understanding of the importance of adaptation and facilitate private and public investments in communities most susceptible to climate change.

We envision building resilience to climate change and other global forces as a vital component of sustainable development and market growth.

To accomplish this work, we need your input.  I look forward to hearing from you.

Joyce E. Coffee, managing director at ND-Global Adaptation Index