DRI’s President Joins All-Star Q&A on Climate Resilience
DRI President and CEO Chloe Demrovsky recently joined several top resilience professionals for a live Twitter chat hosted by risk analytics group RMS. “Climate Change: Turning the Tide” invited them to weigh in on the big themes of climate resilience, and what it takes to build climate-resilient communities, economies and financial systems.
Demrovsky was part of an impressive group of climate resilience experts, including:
You can follow the complete thread via the #RMSClimateChats hashtag. The following is a transcript of Demrovsky’s Q&A (edited from Twitter):
Q: What is climate resilience?
Chloe Demrovsky: For this purpose, I like the United Nations Office for Disaster Risk Reduction (UNDRR) definition of resilience: “The ability of a system, community or society exposed to hazards to resist, absorb, accommodate, adapt to, transform and recover from the effects of a hazard in a timely and efficient manner, including through the preservation and restoration of its essential basic structures and functions through risk management.”
Climate change itself is a chronic stressor that manifests itself as a variety of hazards that can be addressed individually including extreme weather, prolonged drought, rising sea levels, etc.
Resilience is less about prevention or mitigation and more about responding when something occurs.
“Resilient infrastructure systems underpin resilient business and resilient business underpins prosperous cities and countries.”
– United Nations Disaster Risk Reduction Global Assessment Report 2013
Q: Disasters make climate change tangible. Recent examples include: Hurricanes Harvey, Irma & Maria; Typhoons Jebi, Faxai & Hagibis; Wildfires McMurray, Tubbs & Camp. Extreme events have physical, social & economic impacts. How do you build resilience strategies (financial, business, community) to address these impacts?
CD: Effective risk management, emergency response and business continuity programs are essential for responding to disasters that stem from climate change. Predictions indicate an abnormally bad hurricane season this year. If 2017 was any indication, the combination of that with COVID-19 could be truly devastating.
Bushfires in Australia burned some 32,000 square miles, which tops the Amazon fires by about 5,000 square miles and dwarfs the California wildfires. Fire will continue to be a significant threat in 2020, as will damaging heatwaves. Typhoons and torrential rains leading to flooding will remain an issue for disaster-prone Asia. Africa will be affected by both droughts and floods.
With extreme weather brought about by climate change, businesses must get serious about calculating climate risk—factoring it into strategic decision-making about where to locate facilities and how to design supply chains. This threat is also an opportunity to communicate with customers and investors who care about climate issues and show that you are being proactive.
Q: How do you practice social distancing during a community-wide evacuation, at shelters and overwhelmed hospitals?
CD: That’s a challenging situation. On a related topic, I wrote an article for Forbes on of resilience to wildfires that you’re welcome to check out. Organizations need to develop an understanding of their risk landscape, understand how those hazards could affect business, and implement risk reduction and response strategies. Carrying appropriate insurance coverage, while understanding its limitations, is an important component.
However, insurance isn’t the only tool you can use. Practice good fire safety like reducing fire risk by creating defensible zones around facilities with concrete or rock, designing w/ fire-resistant building materials. Even without the resources of a facility like the Getty Center, there are fundamentals that would make a difference.
Landscaping should incorporate fire-retardant plants like aloe over flammable ones like those iconic California palm trees. Properties in fire risk areas should be well-maintained, because we can’t all rely on a friendly herd of goats to clear the area like the Reagan National Library.
Business leaders must communicate that preparedness is a priority both at work and at home. It is essential that everyone knows about your incident response and business continuity plans. Make them comfortable with the fundamentals through company-wide awareness campaigns and involve them in exercises and drills.
During an incident, be on the lookout for effects. If an employee comes in late because of an evacuation or if they are experiencing health complications like worsened asthma symptoms due to wildfire smoke, it is important for employers to be considerate and make accommodations for impacted team members.
You also have to understand how a community-wide #disaster can affect your team outside of work. Encourage all employees to create family preparedness plans and family go bags. Have they talked to their families about what would happen if they are caught on opposite sides of an active fire? Have you talked to your family? Are you modeling responsible behavior for your team? Have you discussed community-wide threats and whether you are all prepared to stay safe?
Disaster preparedness is an opportunity to demonstrate corporate social responsibility while also safeguarding your business, team, and community. That’s a win-win for everyone. I encourage business leaders everywhere to spend a little time with your plans in order to model a culture of preparedness. It will make us all safer and more resilient.
Q: UN Secretary-General Antonio Guterres pointed out that “the climate emergency is a race we are losing, but it is a race we can win.” It’s through collective action, we can turn the tide of climate change. So, what needs to happen win (or lose) Climate Crisis?
CD: Every action and every minute counts right now. The only way we accomplish this is in cross-sectoral collaboration. 90% of all naturally-induced disasters are climate- related, according to UN. The large-scale consequences of a disaster make cooperation between the public and private sectors imperative to success in building resilient communities.
Globalization has led to extraordinary advances, but it also has created a vast network of dependencies in addition to a greater risk profile for all stakeholders. Disasters that happen on one side of the world can directly impact organizations on the other side. How are practitioners around the globe addressing incremental and complex interdependencies between organizations — as well as emerging risks?
After a high-profile event, there is a short window of opportunity in which there is broad public support for change, which must be leveraged to promote preparedness. From international organizations down to communities, building partnerships for preparedness is essential.
Q: Sustainable development is possible, only when it’s risk-informed. And action requires viable funding. What role do resilience finance programs have to play in accelerating climate resilience – and how can they be scaled up?
CD: Out of a study of 11,000 listed global companies, Schroders estimates that properly accounting for climate risk would shave an average 2-3% off their value. 4-4.5% for the oil and gas sector and other utilities. Firms face a value loss of up to 20%.
The ratings agencies could help, but there will have to be a mechanism for pricing risk. There are a few problems regarding pricing in climate risk:
The attitude of “undisclosed risk” doesn’t exist. Short-term accounting logic prevents investment inactively managing climate risk. Insurance premiums and borrowing costs are not increasing. Premiums are priced out for just one year so they ignore long-term risk.
Q: From the Paris Agreement to the Addis Agenda to the Sendai Framework, we know programs exist to address climate change. Where are we now? Are we on course to deliver on Agenda 2030? How should we be measuring resilience?
CD: Gaps, needs and further steps to be addressed in the implementation of the Sendai Framework for Disaster Risk Reduction:
Q: What has the current pandemic taught us about our resilience strategies to climate risk – and are some lessons learned for this experience?
CD: Some governments are moving already. The Dutch National Bank is preparing a report on the systemic risks to the banking sector from biodiversity loss, while a number of governments have expressed interest in a Taskforce on Nature-related Financial Disclosure (TNFD), a nature equivalent of the similar Task Force on Climate-related Financial Disclosure, that would provide a framework for understanding and reporting on dependencies and impacts on nature.
Furthermore, the French government has signaled its intention to incorporate biodiversity into its Article 173 which mandates disclosure from large companies on their strategic response to climate change and ESG risks.
Q: What are you doing in response to climate change?
CD: We at DRI International work on the adaptation side more than on mitigation strategies. We are also active with disaster risk recovery and work with the UNDRR. We were part of the business and industry delegation to the negotiations of the Sendai Framework.