The Natural Capital Finance Alliance (NCFA) is a collaboration between financial institutions, convened by the UN Environment Finance Initiative and the Global Canopy Programme, that is working to advance the integration of natural capital considerations into financial products, services, and decision-making. The NCFA recognizes that natural capital underpins economic prosperity but is often not adequately valued, and it is developing tools and methodologies to help the financial sector better understand and manage dependencies and impacts related to natural capital and the risks of its decline. Projects include water risk management tools, forest risk assessment tools, and tools to quantify environmental risks across lending and investment portfolios.
Cities around the world are facing challenges brought about by rapid increases in population and geographic spread, which places greater pressure on infrastructure and services. Climate change impacts, including rising sea level, more frequent and severe storms, coastal erosion and declining freshwater sources will likely exacerbate these urban issues, in particular in poor and vulnerable communities that lack adequate infrastructure and services.
Globally, the impacts of climate change on urban areas have received less attention than on rural areas where poverty levels are higher and populations depend directly on climate-sensitive livelihoods. However, more than 50% of the world’s population currently lives in cities. By 2050, this figure is expected to increase to 70%, or 6.4 billion people, and Asian cities are likely to account for more than 60% of this increase. Urban areas are the economic powerhouses that support both the aspirations of the poor and most national economies. Furthermore, urban residents and the economic activity they generate depend on systems that are fragile and often subject to failure under the combination of climate and development pressures. If urban systems fail, the potential direct and indirect impacts of climate change on urban residents in general, on poor and vulnerable populations, and on the wider economy is massive. As a result, work on urban climate resilience is of critical importance in overall global initiatives to address the impacts of climate change.
The Asian Cities Climate Change Resilience Network (ACCCRN) works at the intersection of climate change, urban systems and social vulnerability to consider both direct and indirect impacts of climate change in urban areas.
The City Resilience Framework is a unique framework developed by Arup with support from the Rockefeller Foundation, based on extensive research in cities. It provides a lens to understand the complexity of cities and the drivers that contribute to their resilience. Looking at these drivers can help cities to assess the extent of their resilience, to identify critical areas of weakness, and to identify actions and programs to improve the city’s resilience.
As the recent National Climate Assessment made clear, extreme weather events—including heat waves, drought, tropical storms, high winds, storm surges, and heavy downpours—are becoming more severe. In many places these risks are projected to increase substantially due to rising sea levels and evolving development patterns, affecting the safety, health, and economy of entire communities. Extreme weather events like Hurricane Sandy have made it clear that we remain vulnerable to such events in spite of advances in disaster preparedness. American communities cannot effectively reduce their risks and vulnerabilities without including future extreme events and other impacts of climate change in their planning both before and after a disaster, and in everyday decision-making.
Paths to Fisheries Subsidies Reform: Creating sustainable fisheries through t...The Rockefeller Foundation
The world depends on the oceans for food and livelihood. More than a billion people worldwide depend on fish as a source of protein, including some of the poorest populations on earth. According to the United Nations Food and Agriculture Organization (FAO), the world must produce 70 percent more food to meet coming hunger needs.
Fishing activities support coastal communities and hundreds of millions of people who depend on fishing for all or part of their income. Of the world’s fishers, more than 95 percent engage in small-scale and artisanal activity and catch nearly the same amount of fish for human consumption as the highly capitalized industrial sector. Small-scale and artisanal fishing produces a greater return than industrial operations by unit of input, investment in catch, and number of people employed.
Today, overfishing and other destructive fishing practices have severely decreased the world’s fish populations. The FAO estimates that 90 percent of marine fisheries worldwide are now overexploited, fully exploited, significantly depleted, or recovering from overexploitation.
Cities around the world are facing challenges brought about by rapid increases in population and geographic spread, which places greater pressure on infrastructure and services. Climate change impacts, including rising sea level, more frequent and severe storms, coastal erosion and declining freshwater sources will likely exacerbate these urban issues, in particular in poor and vulnerable communities that lack adequate infrastructure and services.
Globally, the impacts of climate change on urban areas have received less attention than on rural areas where poverty levels are higher and populations depend directly on climate-sensitive livelihoods. However, more than 50% of the world’s population currently lives in cities. By 2050, this figure is expected to increase to 70%, or 6.4 billion people, and Asian cities are likely to account for more than 60% of this increase. Urban areas are the economic powerhouses that support both the aspirations of the poor and most national economies. Furthermore, urban residents and the economic activity they generate depend on systems that are fragile and often subject to failure under the combination of climate and development pressures. If urban systems fail, the potential direct and indirect impacts of climate change on urban residents in general, on poor and vulnerable populations, and on the wider economy is massive. As a result, work on urban climate resilience is of critical importance in overall global initiatives to address the impacts of climate change.
The Asian Cities Climate Change Resilience Network (ACCCRN) works at the intersection of climate change, urban systems and social vulnerability to consider both direct and indirect impacts of climate change in urban areas.
The City Resilience Framework is a unique framework developed by Arup with support from the Rockefeller Foundation, based on extensive research in cities. It provides a lens to understand the complexity of cities and the drivers that contribute to their resilience. Looking at these drivers can help cities to assess the extent of their resilience, to identify critical areas of weakness, and to identify actions and programs to improve the city’s resilience.
As the recent National Climate Assessment made clear, extreme weather events—including heat waves, drought, tropical storms, high winds, storm surges, and heavy downpours—are becoming more severe. In many places these risks are projected to increase substantially due to rising sea levels and evolving development patterns, affecting the safety, health, and economy of entire communities. Extreme weather events like Hurricane Sandy have made it clear that we remain vulnerable to such events in spite of advances in disaster preparedness. American communities cannot effectively reduce their risks and vulnerabilities without including future extreme events and other impacts of climate change in their planning both before and after a disaster, and in everyday decision-making.
Paths to Fisheries Subsidies Reform: Creating sustainable fisheries through t...The Rockefeller Foundation
The world depends on the oceans for food and livelihood. More than a billion people worldwide depend on fish as a source of protein, including some of the poorest populations on earth. According to the United Nations Food and Agriculture Organization (FAO), the world must produce 70 percent more food to meet coming hunger needs.
Fishing activities support coastal communities and hundreds of millions of people who depend on fishing for all or part of their income. Of the world’s fishers, more than 95 percent engage in small-scale and artisanal activity and catch nearly the same amount of fish for human consumption as the highly capitalized industrial sector. Small-scale and artisanal fishing produces a greater return than industrial operations by unit of input, investment in catch, and number of people employed.
Today, overfishing and other destructive fishing practices have severely decreased the world’s fish populations. The FAO estimates that 90 percent of marine fisheries worldwide are now overexploited, fully exploited, significantly depleted, or recovering from overexploitation.
Urban populations are facing increasing challenges from numerous natural and manmade pressures such as rapid urbanisation, climate change, terrorism and increased risks from natural hazards. Cities must learn to adapt and thrive in the face of these diverse challenges - they must learn how to build resilience in an uncertain world. Armed with this knowledge and understanding, governments, donors, investors, policy makers, and the private sector will be able to develop effective strategies to foster more resilient cities.
Supported by the Rockefeller Foundation, the City Resilience Index (CRI) is being developed by Arup. It builds on extensive research undertaken by Arup to establish an accessible, evidence-based definition of urban resilience, which culminated in the publication of the City Resilience Framework (CRF) in April 2014 (www.arup.com/cri). This provides a holistic articulation of city resilience, structured around four dimensions and 12 goals that are critical for the resilience of our cities. This structure also forms the foundations of the CRI.
Who is the CRI for?
The CRI will measure relative performance over time rather than comparison between cities. It will not deliver an overall single score for comparing performance between cities, neither will it provide a world ranking of the most resilient cities. However, it will provide a common basis of measurement and assessment to better facilitate dialogue and knowledge-sharing between cities.
It is envisaged that the CRI will primarily be used by city governments who are in the best position to gather administrative data, but it can also be used by other interested organisations and individuals (for example, universities, non-governmental organisations, community groups). It is intended that the CRI process will also provide the means for cities to capture the views of the poor and vulnerable groups as they normally suffer more severely the impacts of disruptions and failures.
Social & Environmental Due Diligence: From the Impact Case to the Business CaseThe Rockefeller Foundation
Root Capital is a nonprofit social investment fund that grows rural prosperity in poor, environmentally vulnerable places in Africa and Latin America by lending capital, delivering financial training, and strengthening market connections for small and growing agricultural businesses. This issue brief examines the increasingly convincing business case for financial institutions to conduct due diligence on the social and environmental practices of their borrowers.
PRI-COORDINATED ENGAGEMENT ON WATER RISKS IN AGRICULTURE SUPPLY CHAINAgustin del Castillo
This report focuses on supporting signatories implement Principles 2, 3 and 5 of the Principles for Responsible Investment (PRI). The Principles for Responsible Investment (PRI) Initiative was launched by the United Nations in 2006 after former UN Secretary-General Kofi Annan brought together a group of the world’s largest institutional investors, academics and other advisors to draft a set of sustainable investment principles. At the heart of the six Principles for Responsible Investment is the premise that investors have a duty to act in the best long-term interests of their beneficiaries; this means taking into account environmental, social and governance factors.
Urban Climate Change Resilience in Action: Lessons from Projects in 10 ACCCRN...The Rockefeller Foundation
This paper presents key insights emerging from an analysis of the 36 intervention projects,totaling approximately $15.5 million, which have been funded and are beingimplemented under the Rockefeller Foundation Asian Cities Climate Change ResilienceNetwork (ACCCRN) in ten initial cities1. As a pioneering effort to advance on-the-groundactions aimed at building urban climate change resilience (UCCR), this portfolio ofprojects2 provides a ‘first generation’ view of how a set of cities have interpreted UCCRchallenges and translated their understanding into targeted priorities and actions. Oneof the intentions of the ACCCRN initiative was to advance the still young field of UCCRwith practical actions that substantiate the growing number of theoretical frameworks.
Taking Stock of International Contributions to Low-Carbon, Climate Resilient ...Climate Policy Initiative
Indonesia has a key role to play in meeting climate stabilization targets, with its high contribution to global land use, forestry, peatland, and agriculture emissions. The Indonesian government has set emissions reduction targets of 26% below business as usual by 2020, scaling up to 29% by 2030, and increasing their overall ambition to 41% with international support.
The international community therefore has the opportunity to have a large impact. The international community is already supporting changes in Indonesia’s land use sector, contributing USD 323 million climate finance in 2011, with 17.7% of that going to land use (Ampri et al. 2014). However questions remain around the effectiveness of these efforts.
Climate Policy Initiative discusses the role of international development partners* in financing mitigation and adaptation actions in the land use sectors in Indonesia. We evaluate what progress has been made to date, what challenges have been met, and what opportunities lie ahead to effectively support Indonesia, reflecting on the value add that development partners bring to the domestic picture. We provide an in-depth sectoral analysis based on international development partner data collected for the Indonesian Landscape (Ampri et al. 2014), supplemented by a literature review, and expert interviews.
Full report: http://climatepolicyinitiative.org/publication/taking-stock-of-international-contributions-to-low-carbon-climate-resilient-land-use-in-indonesia/
There is a need to better understand how investments are currently being delivered on the ground to support the land use sector, and to support the most appropriate interventions to shape investments towards more sustainable and less destructive land use activities.
To explore these opportunities, CPI partnered with the Climate and Land Use Alliance (CLUA) to identify entry points for philanthropic funders to unlock capital in support of more sustainable land use practices. CPI analysis shows that there are distinct, powerful, and accessible finance-related levers that philanthropy can use to unlock investment in and reorient capital towards more sustainable land use practices. Philanthropy can often act in more nimble and strategic ways compared with public donors who may be constrained by slow bureaucratic processes and competing political priorities.
The unprecedented damage Hurricane Sandy caused along the East Coast of the US, especially to the densely populated New York and New Jersey coastlines, was a wake-up call to the threat that weather events pose to our communities. The world has always been plagued by severe and seemingly intractable problems, including storms, but today, we live with an unprecedented level of disruption.
Things go wrong with more frequency and severity, greater complexity, and with more inter-related effects. No longer can we afford to simply rebuild what existed before. We must begin to rethink our recovery efforts, making sure the damaged region is resilient enough to rebound from future storms.
In order to better protect Sandy-area residents from future climate events the U.S. Department of Housing and Urban Development and President Obama’s Hurricane Sandy Rebuilding Task Force
initiated Rebuild by Design (RBD) to develop fundable solutions that address structural and environmental vulnerabilities throughout the East Coast region. Recognizing the enormity of this challenge, the RBD process has looked beyond traditional solutions, supporting new approaches in architectural design, regional planning and environmental engineering, all of which are set within an innovative process that combines public, philanthropic and private sector resources and knowledge with community participation in a design competition.
How to unlock finance in support of developing countries’ low-carbon and climate-resilient growth is a central issue of concern for policymakers around the globe. As evidence grows regarding the negative impacts of climate change on human health, economic activity, natural resources and physical infrastructure, finance in support of climate change adaptation has been attracting more attention, especially for countries that are the most immediately vulnerable to these adverse impacts.
The OECD-hosted Research Collaborative on Tracking Private Climate Finance, under which this Climate Policy Initiative-led research was conducted, aims to develop more comprehensive methodologies for estimating private finance flows mobilized by developed countries’ public interventions for climate action in developing countries. This study advances our understanding of private finance for climate change adaptation mobilized by public finance interventions.
UNDP Sub-Regional Facility (SRF) organized a workshop for UNCT in Jordan on Resilience-Based Development Approach (RBDA) in June 2014, with the purpose of introducing RBDA that contributes to long-term development with an eye on potential threatening shocks and crises, current and future and discuss how to operationalize it in the context of Jordan to improve UNCT’s responses collectively.
With attendance of various UN agencies from both humanitarian and development fields, the workshop started with the presentation to understand and share the concept of RBDA and its guiding principles, followed by introduction of examples of operationalizing RBD. Several exercises were conducted to demonstrate possible responses using RBDA using Gender-Based Violence, and to analyze planned activities under National Response Plan against RBDA. And come up with outcomes these activities would bring and how it can be scaled up in the future, in ‘cope/ recover/sustain and transform’ categories.
At the heart of the RBDA is that we do not just respond to humanitarian crises with an eye to the long term, but we also pursue long-term development with an eye of potential threatening shocks and crises, current and future. It is suitable to respond to protracted Syrian crisis and for host countries in particular, and now there is a strong and urgent need for UNCT to ensure bridging between humanitarian and development effort in a holistic and collective. In the workshop, agencies shared their responses that applies RBDA, difficulties they found in implementation and different tools to measure vulnerabilities and resilience. It was agreed among participants that ‘resilience’ building cannot be done by single agency or single project and that we need to bring about innovative partnerships. UNDP SRF will be taking lead in gathering existing tools, analyze and create collective tool for UNCT, and in coordinating such workshops at country level and regional level and create new knowledge.
Presentation by A Shee, International Livestock Research Institute, at the CCAFS Workshop on Institutions and Policies to Scale out Climate Smart Agriculture held between 2-5 December 2013, in Colombo, Sri Lanka.
Guide to empower banks to assess natural capital riskWE-SECO
SECO is pleased to support today’s launch of a ground-breaking guide to empower banks to assess natural capital risk. The guide builds on the earlier launched ENCORE tool (Exploring Natural Capital Opportunities, Risks and Exposure), which enables financial institutions to understand and assess their exposure to natural capital risks. The guide is provided in collaboration with Swiss Sustainable Finance and the Natural Capital Finance Alliance NCFA. It is part of SECO’s collaboration with the NCFA to build wider ecosystem resilience and sustainable finance practices.
Urban populations are facing increasing challenges from numerous natural and manmade pressures such as rapid urbanisation, climate change, terrorism and increased risks from natural hazards. Cities must learn to adapt and thrive in the face of these diverse challenges - they must learn how to build resilience in an uncertain world. Armed with this knowledge and understanding, governments, donors, investors, policy makers, and the private sector will be able to develop effective strategies to foster more resilient cities.
Supported by the Rockefeller Foundation, the City Resilience Index (CRI) is being developed by Arup. It builds on extensive research undertaken by Arup to establish an accessible, evidence-based definition of urban resilience, which culminated in the publication of the City Resilience Framework (CRF) in April 2014 (www.arup.com/cri). This provides a holistic articulation of city resilience, structured around four dimensions and 12 goals that are critical for the resilience of our cities. This structure also forms the foundations of the CRI.
Who is the CRI for?
The CRI will measure relative performance over time rather than comparison between cities. It will not deliver an overall single score for comparing performance between cities, neither will it provide a world ranking of the most resilient cities. However, it will provide a common basis of measurement and assessment to better facilitate dialogue and knowledge-sharing between cities.
It is envisaged that the CRI will primarily be used by city governments who are in the best position to gather administrative data, but it can also be used by other interested organisations and individuals (for example, universities, non-governmental organisations, community groups). It is intended that the CRI process will also provide the means for cities to capture the views of the poor and vulnerable groups as they normally suffer more severely the impacts of disruptions and failures.
Social & Environmental Due Diligence: From the Impact Case to the Business CaseThe Rockefeller Foundation
Root Capital is a nonprofit social investment fund that grows rural prosperity in poor, environmentally vulnerable places in Africa and Latin America by lending capital, delivering financial training, and strengthening market connections for small and growing agricultural businesses. This issue brief examines the increasingly convincing business case for financial institutions to conduct due diligence on the social and environmental practices of their borrowers.
PRI-COORDINATED ENGAGEMENT ON WATER RISKS IN AGRICULTURE SUPPLY CHAINAgustin del Castillo
This report focuses on supporting signatories implement Principles 2, 3 and 5 of the Principles for Responsible Investment (PRI). The Principles for Responsible Investment (PRI) Initiative was launched by the United Nations in 2006 after former UN Secretary-General Kofi Annan brought together a group of the world’s largest institutional investors, academics and other advisors to draft a set of sustainable investment principles. At the heart of the six Principles for Responsible Investment is the premise that investors have a duty to act in the best long-term interests of their beneficiaries; this means taking into account environmental, social and governance factors.
Urban Climate Change Resilience in Action: Lessons from Projects in 10 ACCCRN...The Rockefeller Foundation
This paper presents key insights emerging from an analysis of the 36 intervention projects,totaling approximately $15.5 million, which have been funded and are beingimplemented under the Rockefeller Foundation Asian Cities Climate Change ResilienceNetwork (ACCCRN) in ten initial cities1. As a pioneering effort to advance on-the-groundactions aimed at building urban climate change resilience (UCCR), this portfolio ofprojects2 provides a ‘first generation’ view of how a set of cities have interpreted UCCRchallenges and translated their understanding into targeted priorities and actions. Oneof the intentions of the ACCCRN initiative was to advance the still young field of UCCRwith practical actions that substantiate the growing number of theoretical frameworks.
Taking Stock of International Contributions to Low-Carbon, Climate Resilient ...Climate Policy Initiative
Indonesia has a key role to play in meeting climate stabilization targets, with its high contribution to global land use, forestry, peatland, and agriculture emissions. The Indonesian government has set emissions reduction targets of 26% below business as usual by 2020, scaling up to 29% by 2030, and increasing their overall ambition to 41% with international support.
The international community therefore has the opportunity to have a large impact. The international community is already supporting changes in Indonesia’s land use sector, contributing USD 323 million climate finance in 2011, with 17.7% of that going to land use (Ampri et al. 2014). However questions remain around the effectiveness of these efforts.
Climate Policy Initiative discusses the role of international development partners* in financing mitigation and adaptation actions in the land use sectors in Indonesia. We evaluate what progress has been made to date, what challenges have been met, and what opportunities lie ahead to effectively support Indonesia, reflecting on the value add that development partners bring to the domestic picture. We provide an in-depth sectoral analysis based on international development partner data collected for the Indonesian Landscape (Ampri et al. 2014), supplemented by a literature review, and expert interviews.
Full report: http://climatepolicyinitiative.org/publication/taking-stock-of-international-contributions-to-low-carbon-climate-resilient-land-use-in-indonesia/
There is a need to better understand how investments are currently being delivered on the ground to support the land use sector, and to support the most appropriate interventions to shape investments towards more sustainable and less destructive land use activities.
To explore these opportunities, CPI partnered with the Climate and Land Use Alliance (CLUA) to identify entry points for philanthropic funders to unlock capital in support of more sustainable land use practices. CPI analysis shows that there are distinct, powerful, and accessible finance-related levers that philanthropy can use to unlock investment in and reorient capital towards more sustainable land use practices. Philanthropy can often act in more nimble and strategic ways compared with public donors who may be constrained by slow bureaucratic processes and competing political priorities.
The unprecedented damage Hurricane Sandy caused along the East Coast of the US, especially to the densely populated New York and New Jersey coastlines, was a wake-up call to the threat that weather events pose to our communities. The world has always been plagued by severe and seemingly intractable problems, including storms, but today, we live with an unprecedented level of disruption.
Things go wrong with more frequency and severity, greater complexity, and with more inter-related effects. No longer can we afford to simply rebuild what existed before. We must begin to rethink our recovery efforts, making sure the damaged region is resilient enough to rebound from future storms.
In order to better protect Sandy-area residents from future climate events the U.S. Department of Housing and Urban Development and President Obama’s Hurricane Sandy Rebuilding Task Force
initiated Rebuild by Design (RBD) to develop fundable solutions that address structural and environmental vulnerabilities throughout the East Coast region. Recognizing the enormity of this challenge, the RBD process has looked beyond traditional solutions, supporting new approaches in architectural design, regional planning and environmental engineering, all of which are set within an innovative process that combines public, philanthropic and private sector resources and knowledge with community participation in a design competition.
How to unlock finance in support of developing countries’ low-carbon and climate-resilient growth is a central issue of concern for policymakers around the globe. As evidence grows regarding the negative impacts of climate change on human health, economic activity, natural resources and physical infrastructure, finance in support of climate change adaptation has been attracting more attention, especially for countries that are the most immediately vulnerable to these adverse impacts.
The OECD-hosted Research Collaborative on Tracking Private Climate Finance, under which this Climate Policy Initiative-led research was conducted, aims to develop more comprehensive methodologies for estimating private finance flows mobilized by developed countries’ public interventions for climate action in developing countries. This study advances our understanding of private finance for climate change adaptation mobilized by public finance interventions.
UNDP Sub-Regional Facility (SRF) organized a workshop for UNCT in Jordan on Resilience-Based Development Approach (RBDA) in June 2014, with the purpose of introducing RBDA that contributes to long-term development with an eye on potential threatening shocks and crises, current and future and discuss how to operationalize it in the context of Jordan to improve UNCT’s responses collectively.
With attendance of various UN agencies from both humanitarian and development fields, the workshop started with the presentation to understand and share the concept of RBDA and its guiding principles, followed by introduction of examples of operationalizing RBD. Several exercises were conducted to demonstrate possible responses using RBDA using Gender-Based Violence, and to analyze planned activities under National Response Plan against RBDA. And come up with outcomes these activities would bring and how it can be scaled up in the future, in ‘cope/ recover/sustain and transform’ categories.
At the heart of the RBDA is that we do not just respond to humanitarian crises with an eye to the long term, but we also pursue long-term development with an eye of potential threatening shocks and crises, current and future. It is suitable to respond to protracted Syrian crisis and for host countries in particular, and now there is a strong and urgent need for UNCT to ensure bridging between humanitarian and development effort in a holistic and collective. In the workshop, agencies shared their responses that applies RBDA, difficulties they found in implementation and different tools to measure vulnerabilities and resilience. It was agreed among participants that ‘resilience’ building cannot be done by single agency or single project and that we need to bring about innovative partnerships. UNDP SRF will be taking lead in gathering existing tools, analyze and create collective tool for UNCT, and in coordinating such workshops at country level and regional level and create new knowledge.
Presentation by A Shee, International Livestock Research Institute, at the CCAFS Workshop on Institutions and Policies to Scale out Climate Smart Agriculture held between 2-5 December 2013, in Colombo, Sri Lanka.
Guide to empower banks to assess natural capital riskWE-SECO
SECO is pleased to support today’s launch of a ground-breaking guide to empower banks to assess natural capital risk. The guide builds on the earlier launched ENCORE tool (Exploring Natural Capital Opportunities, Risks and Exposure), which enables financial institutions to understand and assess their exposure to natural capital risks. The guide is provided in collaboration with Swiss Sustainable Finance and the Natural Capital Finance Alliance NCFA. It is part of SECO’s collaboration with the NCFA to build wider ecosystem resilience and sustainable finance practices.
Scoping study on the State of the Art of Natural Capital Incorporation in Investment and Lending Decision Making
Report can be found here: http://www.unepfi.org/fileadmin/documents/NCD-NaturalResourceRisksScopingStudy.pdf
Key Messages and Outcomes from the Good Governance discussions at the 6th Wor...OECD Governance
This report summarises key messages and outcomes from the Good Governance discussions at the 6th World Water Forum, Marseille 2012. It provides brief overviews of each sessions as well as recommendations and commitments formulated during the Closing session of the “Good Governance” Group to support the implementation of the agreed targets up to the 7th World Water Forum, to be held in 2015 in Korea.
For more information see www.oecd.org/gov/water
Conservation Finance. From Niche to Mainstream: The Building of an Institutio...The Rockefeller Foundation
Sustainable farmland, healthy forests, clean water, and abundant habitat stand to become more valuable as the global population climbs to nine billion by 2050. Already, pioneering investors have put together financial solutions that combine real assets, such as tropical forests, with cash flows from operations in fields such as sustainable timber, agriculture, and ecotourism. Conservation finance, as this field is known, represents an undeveloped, but emerging private sector investment opportunity of major proportion.
Filling this gap to finance the preservation of the world’s precious ecosystems will require USD 200 - 300 billion in additional capital, and private investment capital may be the only source. Attracting that level of private capital will require attractive risk-adjusted rates of return, in addition to clear and measurable conservation impacts.
In this report, Credit Suisse—together with the McKinsey Center for Business and Environment—there is a toolkit for substantially growing the investment that flows into the conservation sector, illustrated by a few concrete ideas that we deem to be scalable, repeatable, and investable. Implementing these ideas will require strong collaboration between the financial and environmental communities to find new and creative ways of solving the financial structuring and conservation challenges at hand.
Driving Finance Today for the Climate Resilient Society of TomorrowNAP Global Network
Presentation by Alan Miller and Andrew Eil, Climate Finance Advisors, as part of the Peer Learning Summit (PLS) in Rotterdam, Netherlands, from July 9-11.
3. 3
The business case for valuing natural capital
Natural capital is defined as the world’s stocks of
natural assets, which include geology, soil, air, water
and all living things, that yield a renewable flow of
goods and services and provide a range of direct
and indirect benefits to businesses and society.
Although natural capital underpins economic
prosperity and human life, it is often not adequately
valued by society.
Academic studies have estimated the total value of
global ecosystem services at over US$125 trillion
per year.1
But there has been a marked decline in
natural capital in 116 out of 140 countries, with
projections suggesting that a further 10% of global
natural capital will be eroded by 2030.2
Financial institutions, businesses, and policy-makers
are becoming increasingly cognizant of natural
capital’s role in the economy and society, and the
risks of neglecting its value. We see this in the 2015
Paris Climate Accord to limit global temperatures to
2°C above pre-industrial levels, the UN Sustainable
Development Goals, and the New York Declaration
on Forests.
The business case for understanding the
implications of this trend is two-fold:
1. Recognising, measuring, and understanding
the dependencies and impacts of natural capital
as an integral part of the economy, rather than
as a separate function, thus providing a better
foundation to manage risks;
2. Meeting growing demand for environmentally
sustainable products and services, both from
consumers and in response to new government
regulations, which provide opportunities.
There are currently no uniform global approaches
financial institutions can use to systematically
consider natural capital in the provision of
investment, lending and insurance products and
services. Led by financial institutions, the NCFA is
addressing this gap by developing models, tools
and approaches that enable the sector to better
understand – at the asset and portfolio levels—their
dependence and impact on natural capital.
1. UNEP Inquiry, The Financial System We Need, Aligning the Financial System with Sustainable Development, October 2015
2. Ibid.
3. 2030 Water Resources Group, Charting our Water Future, 2009
4. http://wwf.panda.org/wwf_news/?244770/Ocean-wealth-valued-at-US24-trillion-but-sinking-fast
5. http://www.fao.org/sustainable-development-goals/en/;
In numbers...
• The economic value of freshwater is
valued at $73.5 trillion annually3
• Fish stocks are estimated to contribute
$2.5 trillion annually to the global
economy4
• Forests provide more than $1.5 trillion
directly through forestry and indirectly
by providing energy, food, shelter,
medicine, soil and water conservation,
desertification control and carbon
storage5
4. 4
Our mission
The Natural Capital Finance Alliance (NCFA), co-
convened by the UN Environment Finance Initiative
(UNEP FI) and the Global Canopy Programme (GCP),
is a growing alliance of financial institutions that
are collaborating to understand the importance of
integrating natural capital-related considerations
into their activities as described by the Natural
Capital Declaration (NCD).6
It is our mission to advance the financial sector in
integrating natural capital considerations within
financial products and services, to better understand
risks, pursue opportunities, and establish the
foundation for resilient long-term economic growth
that protects nature and societies.
Our models do not aim to put a price on nature.
Instead by quantifying the risks that clients or
investee companies face from their impact and
dependency on nature, we enable financial
institutions to better understand the value nature
provides. Depletion and degradation of nature
constitute risks to growth and resilience, while
protection of nature offers opportunities for
prosperity and innovation.
- Julie Gorte
Senior Vice President, Sustainable Investing
Pax World
- Simon Connell
Senior Manager, Risk Framework and Engagement
Standard Chartered
The NCFA is working on standardised
methodologies to quantify the natural capital-
related inputs to the economy in order to improve
decision-making in the finance sector, by addressing
four core questions:
1. How is natural capital relevant to the
financial sector?
2. What should be taken into consideration
and what are the emerging and potential
capacities to monitor and manage natural
capital risks and opportunities?
3. How can natural capital-related dependencies
and impacts be integrated into financial
products, services, accounting and reporting
while safeguarding the benefits of natural
capital assets?
4. How can the financial sector facilitate an
orderly capital shift to support the transition
needed to achieve the SDGs and UNFCCC
COP21 climate commitments?
6. The Natural Capital Declaration was launched at the UN Conference on Sustainable Development (Rio+20) in 2012. It has been signed by the CEOs of
more than 40 financial institutions, and demonstrates their commitment to the integration of natural capital considerations into private sector reporting,
accounting and decision-making by 2020.
The NCFA is developing the tools and methodologies that financial
institutions will all be using in 10 years’ time.“
”
Quantifying natural resource and environmental risk factors can
provide the financial sector with an opportunity to make a significant
breakthrough in risk management practices.
“
”
5. 5
Projects
With financial institutions’ expertise and with
the support of donors, the NCFA has developed
practical applications to manage risk and identify
opportunities across natural capital assets such as
water and forests.
Water risk management tools
Increasingly, companies are finding it challenging
to access sufficient quantities of water for critical
business operations. The costs of securing
water inputs are already rising for water-
intensive companies in locations vulnerable to
water shortages. Since 2011 companies have
spent more than $84 billion7
worldwide on
conserving, managing and obtaining water – a
number projected to rise as climate change and
demographic pressures affect water supply and
demand. There are also business opportunities, for
example, 55 different solutions have been identified
to help address water availability in China that
would also result in $US 21 billion in savings8
.
It is therefore critical for financial institutions
to manage the risks associated with companies
exposed to water scarcity and to identify the
opportunities.
Bloomberg water risk valuation tool
In September 2015 Bloomberg and NCFA launched
the Water Risk Valuation Tool (WRVT), enabling users
to incorporate water risks into company valuations
across copper and gold mining companies.
The tool provides a quantitative approach to
evaluate how water risk factors can be incorporated
into company valuations using a discounted
cashflow model. The scenario directly links water
risk to revenue, while an optional social cost of
water (shadow price) can be accounted for in
operating expenses.
The tool builds on Bloomberg’s Carbon Risk
Valuation Tool and maps specific mine asset
locations and production volumes against water
stress indicators provided by the World Resources
Institute (WRI) Aqueduct water database.
- Su Gao
WRVT project manager and Senior ESG Analyst
Bloomberg
Corporate bonds water credit risk tool
The Corporate Bonds Water Credit Risk Tool
provides investors with a systematic and practical
approach to assess water risk in corporate bonds
and benchmark companies against sector peers,
taking account of projected changes in water
availability to 2040.
7. Global Water Intelligence
8. Charting Our Water Future: Economic Frameworks to Inform Decision-Making, McKinsey 2016
The tool is powerful in that it
does not require the user to
have any specific expertise
or additional datasets – it
is ‘plug and play’ with the
Bloomberg terminal to help
users conduct research in an
easy, cost effective way while
retaining a detailed profile of
the valuation impacts due to
water risk factors.
“
”
6. 6
Projects
Developed through a partnership between the
NCFA, the Deutsche Gesellschaft für Internationale
Zusammenarbeit (GIZ) and the German Association
for Environment and Sustainability in Financial
Institutions (VfU), the Corporate Bonds Water Credit
Risk Tool enables users to integrate financial risk
exposure to water scarcity into standard financial
models used to assess the credit strengths of
corporations across water-intensive sectors.
The tool currently covers 24 companies and provides
a model to allow users to add their own companies
and analyses in order to address the information
gap in traditional financial analysis. It enables
analysts to identify companies that depend heavily
on access to water in locations that are exposed to
water stress and to quantify the potential impact of
water scarcity on the company’s creditworthiness.
Forest risk management tools
Financial institutions are exposed to risks from
deforestation by financing companies whose
activities contribute to deforestation and forest
degradation through their operations or soft
commodity supply chains.
The NCFA has developed the Soft Commodity Forest-
risk Assessment (SCFA) tool with Sustainalytics
to reduce the deforestation risk caused by the
unsustainable production, trade, processing and
retail of soft commodities, especially soy, palm oil
and beef. The production of these commodities
drives deforestation and forest degradation in
tropical forests.
Financial institutions are encouraged to identify how
they can improve their own lending and investment
risk policies to systematically consider natural
capital in the credit policies of specific sectors,
including commodities, that may have a major
impact on natural capital either directly or through
the supply chain.
Environmental risk management
tools
In October 2015, the NCFA launched its project on
environmental risk management with support from
the Swiss State Secretariat for Economic Affairs
(SECO) and the MAVA foundation.
The Advancing Environmental Risk Management
(AERM) project aims to catalyse sustainable
investment and lending globally by reducing risks
from environmental and natural resource pressures.
The objective is to develop methodologies and tools
to map natural capital risks across lending and
investment portfolios with the aim of embedding
them in credit risk assessments.
The project supports the development of global
methodologies to quantify risk, with additional
focus on emerging markets such as South Africa,
Indonesia, Colombia and Peru.
7. 7
- Courtney Lowrance
Director, Environmental and Social Risk Management
Citi
Join us
Join us to help establish the foundation for
resilient long-term economic growth.
The NCFA provides a forum for financial institutions
to work together and develop standardised
methodologies and structured approaches to
quantify natural capital inputs and externalities.
Supporters of the NCFA share emerging knowledge
in order to inform better decision-making and to
strengthen the capacity to embed natural capital
considerations.
• Contribute expertise or provide practical
feedback on NCFA projects and tools
• Join our network and work with supporters and
aligned organisations to drive awareness
• Sign the Natural Capital Declaration (financial
institutions)
• Partner with us to encourage wider integration
of natural capital in the finance sector
• Become a donor and support the work of the
NCFA
Demonstrate leadership Ways to get involved
We are proud to join the Natural Capital Declaration to deepen this
work of integrating natural capital considerations into our work.“
”
8. 8
For more information visit
www.naturalcapitalfinancealliance.org
or contact us at
info@naturalcapitalfinancealliance.org