As countries face the biggest health crisis in living memory and climate risk, the defining challenge of the modern era, world leaders must resist the trap of parking one systemic risk to address the other.
LONDON, Sept. 28, 2020 (GLOBE NEWSWIRE) -- A global coalition of institutional investors, banks, insurers, rating agencies and governments, representing over US$10 trillion in assets, has said the delay of the COP26 UN Climate Change Conference until next year should not be allowed to stall critical progress being made in building greater resilience to climate risk, after holding high-level talks at Climate Week NYC 2020.
The threat of asset damage, operational disruption and human suffering from physical climate risks and disasters has continued to rise in 2020, leaving economies, societies and communities exposed to the accelerating phenomena of ‘cascading’ risk. The latest wildfires in the US illustrate this ripple effect, turbocharged by an extreme summer heatwave and compounded by the pandemic, impacting the power grid, water supplies and air quality.
According to the Coalition for Climate Resilient Investment (CCRI), with modern societies now highly dependent on networks, critical infrastructure assets and supply chains are more likely to trigger multiple risks and increase exposure. In response to the rising frequency of cascading events, the urgent integration of physical climate resilience into the mainstream infrastructure investment is the core CCRI goal.
Emma Howard Boyd, Chair of England’s Environment Agency and CCRI Co-Chair, said: “The pandemic continues to hold the world’s focus, but it hasn’t stopped any other pre-existing health risks and economic shocks. Risks like storms and droughts will only get worse with climate change. Countries and businesses that prioritise short-term considerations ahead of long-term resilience will inevitably sow the seeds of future major crises.”
The Rt Hon Alok Sharma MP, UK Secretary of State for Business, Energy and Industrial Strategy, said: “As COP26 President, I am committed to making sure the world can adapt to the worst effects of climate change. This is why I am encouraging businesses and financial institutions to join the Coalition for Climate Resilient Investment. I am pleased to see the progress that CCRI has made and I look forward to seeing them continue to drive forward resilient investment in the run up to Glasgow next year."
John Haley, Willis Towers Watson CEO and CCRI Co-Chair, said: “COVID-19 has shown with chilling clarity that the widespread costs of extreme events far exceed the upfront costs of prudent preparatory measures. Just like climate risk, the pandemic has been a systemic tidal wave, ripping through countries at speed, leaving behind profound socio-economic destruction. We cannot afford to put on hold the more efficient, risk-informed investment decision-making to help save lives and economies from the foreseeable shocks in the years and decades ahead.”
The absence of effective physical climate resilience into infrastructure investment decisions is a systemic failure of markets around the world that cost lives and livelihoods. Yet investors, lenders and insurers and ratings agencies all need this vital climate impacts information if they are to make informed financial decisions. Providing a methodology to quantify the economic and financial risks and benefits will give financial markets a substantial incentive to embed resilience upfront and is a central CCRI objective.
The Coalition feels that:
Adapt now or pay more later – Companies who fail to integrate risks early could end up locking-in quickly outdated infrastructure, facing revenue disruptions, hefty price tags to retrofit projects or retiring assets early.
Resilient assets predicted to outperform – Properly integrating physical climate risks in investment decision making is a major opportunity. Resilience-smart assets are expected to financially outperform non-resilient assets, providing a reliable source of long-term secure cash flows to investors.
Since launching last year with 35 institutions and US$5 trillion in assets under management, CCRI has grown to include 57 members and over US$10 trillion in assets. During this period, CCRI members have been working collaboratively to develop risk-informed cash flow modelling practices for investors and infrastructure prioritisation tools for governments to help focus resources where they are most needed.
Cross-industry climate initiatives have primarily focused on climate change mitigation. CCRI is the first coalition of its kind in bringing together different industries to complement these efforts and develop practical solutions to advance climate change adaptation and resilience.
About the Coalition for Climate Resilient Investment
A United Nations Climate Action Summit (UNCAS) and COP26 flagship initiative, The Coalition for Climate Resilient Investment (CCRI) represents the commitment of the global private financial industry, in partnership with key private and public institutions, to foster the more efficient integration of physical climate risks (PCRs) in investment decision-making.
CCRI aims to create a more resilient global financial industry in which key incentive structures foster an accurate pricing of physical climate risks (PCRs) in investment decision-making, resulting in more resilient economies and communities across the world.
The Coalition brings together private companies, governments and inter-governmental bodies, including many of the world’s leading financial businesses and asset managers that collectively manage more than US$10 trillion in assets.
For more information on the Coalition, visit www.resilientinvestment.org
Andrew Collis: +44 7932 725 267 | email@example.com