More Related Content Similar to Deloitte_JCAmado_ClimateResilienceReadinessIndex_Aug25_08072014FINAL (20) More from Global Risk Forum GRFDavos (20) Deloitte_JCAmado_ClimateResilienceReadinessIndex_Aug25_08072014FINAL1. Promoting Private
Investments in Climate
Change Resilience –
Readiness Index
August 25, 2014
5th International Disaster and Risk Conference IDRC 2014
‘Integrative Risk Management - The role of science, technology & practice‘ • 24-28 August 2014 • Davos •
Switzerland www.grforum.org
2. © Deloitte LLP and affiliated entities.
Overview
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Challenges
Approach
Indicators and measures
Results
Concluding thoughts
3. Climate trends, coping capacity and value at risk
• Most private sector organisations
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rely on weather
• Existing risk management
measures build resilience against
today’s climate normals & climate
variability
• The climate is changing – historic
climate data no longer a guide for
the future
• Without adaptation, uncertainty
about future business
performance in light of climate
change projections
Challenges
Source: 2 Willows and Connell (2003)
4. Challenges
Resilience deficit
• 90% of S&P Global 100 identify risks but few have invested in resilience (e.g.
improving design standards, hardening infrastructure, purchasing insurance)
• Macro-economic studies (World Bank, UNFCCC) confirm worldwide
© Deloitte LLP and affiliated entities.
resilience investment deficit
• A portion of the global US$100 billion a year pledge in Cancun Agreements
expected to come from the private sector
How will these funds be mobilized without adequate mechanisms in place?
• Major gap in our understanding of private sector resilience
Body of work on tracking, case studies, barriers/incentives exists
But what of readiness of country/local business environments for private sector
resilience?
3
5. Approach
From drivers/barriers to country indicators & measures
DEFINING TYPES OF
PRIVATE SECTOR
RESILIENCE &
PROCESS
ASSESSING DRIVERS
& BARRIERS
DEFINING
INDICATORS &
MEASURES
‒ Private sector
resilience takes
multiple forms
‒ It is context specific
‒ Despite complexity,
private sector
resilience process is
relatively standard
‒ 5 factors found to
influence private
sector decisions
Several factors
enable/incentivize or
constrain private sector
resilience
• Focus on sectors with
opportunities for
inclusive green growth
ensures positive
development
outcomes
A set of drivers and
barriers for resilience
stands out
‒ Key drivers & barriers
are redefined into 16
indicators of country
conditions for private
sector resilience
‒ Each indicator is
evaluated through
specific measures
‒ Only those where
evidence of positive
benefit-to-cost ratios
exist are retained
© Deloitte LLP 4 Source: Stenek, Amado et Greenall (2014) and affiliated entities.
6. Five areas important for private sector resilience
Changing use/activity and/or
changing location
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Indicators and measures
PRIVATE SECTOR
RESILIENCE
Data and
information
Institutional
arrangements
Policies
Economic
incentives
5
Technology and
knowledge
Preventing loss & damage
Spreading or sharing loss &
damage
Taking advantage of emerging
opportunities
ROLE OF GOVERNMENT
Drivers
Barriers
1
2
3
4
5
7. © Deloitte LLP and affiliated entities.
Indicators and measures (cont.)
Focus on data and information
6
• Starts with hydrological, meteorological and climate observations and
projections – but much information and guidance is needed, e.g.:
Impacts and risk (e.g. updated flood risk maps)
Costs of impacts and resilience measures (e.g. increased cooling capacity)
Community and urban vulnerability, risk and resilience priorities
• Underlying economic opportunities of data/information improvements are
underestimated
Hydromet projects in
Central Asia with benefit-to-cost
ratios of 23/1 to 53/1
US$ 8-19M and 240-320M each
year from ENSO forecasts for
Mexico and U.S. agriculture
Source: Adams et al. (2003); Solow et al. (1998); and World Bank
8. Indicators and measures (cont.)
Focus on institutions
Each $1 of government base funding has leveraged $1.6 in
additional project-based funding in Quebec, Canada
Source: Ouranos
• Institutions and forums working on climate resilience serve several
functions:
Improved awareness of risks and use of data/information for resilience;
Improved dialogue and alignment between private sector, government and civil
society; and
Platforms for partnerships on common issues.
• Demonstrated success of collaborative institutional arrangements to
promote climate resilience, e.g.:
UKCIP, CSIRO, Rwanda’s Private Sector Federation
© Deloitte LLP 7 and affiliated entities.
9. Indicators and measures (cont.)
Data & institutions are not enough
Each $1 invested in
adapting infrastructure can
save $4-69 per year from
2030 onward
$17 levied from household
insurance premiums each
year to cover insured losses
in 99.5% of years
Sources: World Bank and Association of British Insurers (2013)
• POLICIES – Several tools known to play key role in private sector resilience:
• Updated building/infrastructure standards and codes
• Local zoning, permitting and impact assessment requirements
• ECONOMIC INCENTIVES – Public sector subsidies, finance and risk transfer solutions
have been effective at promoting private sector resilience
• E.g. Australia’s National Drought Policy reform
• TECHNOLOGY & KNOWLEDGE – ICT, technology transfer and school/professional
training curriculums are key vehicules for capacity building
© Deloitte LLP 8 and affiliated entities.
10. Implications
Lessons learnt from 3 pilots
• Successful promotion of private sector resilience requires integrated set of
© Deloitte LLP and affiliated entities.
favorable country conditions
E.g. Large amounts of quality data/information and technical assistance
capacity does not translate in high private sector uptake
• Levels of country income and development are not good measures of
readiness for private sector resilience
– E.g. Bangladesh has a number of favorable conditions, despite low levels of
income: e.g. well-established government and research institutions, reasonable
amount of data/information and several economic incentives
• Improvements in country readiness can lead to short-term reductions in loss
and damage
• Difficult access to information on policies and low levels of transparency on
economic incentives create challenges for measuring country readiness
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11. What does it mean for the Post-2015 DRR Framework?
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Implications (cont.)
To fully leverage the private sector in climate DRR, improvements in
country readiness are needed – this is an area where the new Hyogo
Framework can play a key role
• RESEARCH & CAPACITY
Better understand country readiness to receive and generate private sector
investments in resilience
Identify opportunities for climate DRR through the private sector
Develop tools to assess and improve joint effectiveness/efficiency of DRR and climate
resilience financing (e.g. maximize private sector leverage factor)
• POLICY
Readiness for private sector resilience should be considered as part of DRR
• IMPLEMENTATION
Vulnerability-based methods and indices need to be complemented by indices looking
at business environments for DRR and climate resilience
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12. © Deloitte LLP and affiliated entities.
Contact for Deloitte ‘Disaster + Climate
Resilience Services’
Valerie Chort
Partner – Americas Leader, Sustainability
T: +1 416.601.6147
E: vchort@deloitte.ca
Jean-Christophe Amado
Manager – Sustainability
T: +1 613-751-5475
E: jamado@deloitte.ca
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