5th International Disaster and Risk Conference IDRC 2014 Integrative Risk Management - The role of science, technology & practice 24-28 August 2014 in Davos, Switzerland

1. 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
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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?
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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
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• 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
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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
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10. Implications
Lessons learnt from 3 pilots
• Successful promotion of private sector resilience requires integrated set of
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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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