UN Sustainable Development Goal 13: Lucky for Investors
In January, the World Economic Forum’s Global Risks Report ranked extreme weather events first, and the failure of climate change mitigation and adaptation second, on its table of global risks by likelihood.
Discussions at Davos were dominated by environmental risks this year, and given the delegates you would expect that to mean more investment towards Goal 13 of the UN Sustainable Development Goals - Take Urgent Action to Combat Climate Change and Its Impacts. But businesses are hungrier for opportunity than risk.
Last year, the Intergovernmental Panel on Climate Change said we have 12 years to limit global temperature rise to 1.5°C above pre-industrial levels, otherwise adapting to the impacts (hotter days, fiercer fires, storms and rising seas) is going to get exponentially more challenging and expensive.
The world needs to up its efforts to decarbonise. By 2017, the Climate Change Act had helped to reduce the UK’s greenhouse gas emissions to 43% below 1990 levels (the UK economy grew by two thirds during the same period), but there’s still a long way to go. Alongside that work, because of the amount of climate change already “locked-in” we need to understand and invest in resilience.
Even in England’s relatively hospitable climate, events like the floods of 2013/14 and 2015/16, and 2018’s record dry summer, are set to happen more often.
Boards should put aside capital expenditure to ensure business continuity in severe weather. If there’s only one shop in town that people can get to in a blizzard, then you don’t need a Harvard degree to know where everyone’s gone to buy milk.
According to the Institution of Civil Engineers, over 45% of National Infrastructure and Construction to 2020/21 will be financed through the private sector. Globally, climate resilience measures are predominantly provided by the public sector, but cross-sector collaboration is crucial. As people’s routines are disrupted by climate change, shareholders, workers, and customers will increasingly demand that brands help their lives run smoothly.
This isn’t only about new technology, it’s about planning through uncertainty and having a flexible approach. Don’t prepare for the previous record storm, build back better for the next one.
Whether it’s a global temperature rise of 1.5°C or 4°C, adaptation pathways enable us to respond to the latest science, economic drivers and environmental changes as our understanding improves. The Thames Estuary 2100 project – which looks beyond the life of the current Thames Barrier - is an example.
Finance can help. For instance, can you show a CEO how much certain property protections are worth to their business in hard numbers before a future storm? Insurance companies do afterwards, but afterwards is too late. Insurance-linked loan packages and resilience impact bonds could be ways of monetising resilience up front.
The global scale of climate change is intellectually daunting, but if we boil it down to physical things individual businesses can do, we can see there’s much to gain. UN Sustainable Development Goal 13 presents a world of long-term opportunities for investors. Shareholders should demand they take advantage.
Creating this action plan for change will be the focus of the final session of the ecobuild conference on 07 March 2019. Join us as we tackle the Commitment Challenge for the Industry.