Lessons in Resilience: Learning from Extreme Weather Events
- Carrie Grassi, Senior Policy Advisor, NYC Mayor's Office, Recovery & Resiliency
- Francis Bouchard, Group Head of Government and Industry Affairs, Zurich Insurance Group
- Jackie Roberts, Chief Sustainability Officer, The Carlyle Group
- Eric Olson, Senior Vice President, Advisory Services, BSR (Moderator)
In the wake of Superstorm Sandy, New York City is making significant investments in climate resilience measures and seeks to serve as an example for other municipalities and foster cross-sector action to build greater adaptation and mitigation efforts.
The insurance industry has a strong role to play in building awareness of climate risk, pricing that risk, and acting outside of a strictly commercial role to help build resilience in the communities it serves.
Cross-sector collaboration is needed to create technology that clearly and effectively illustrates climate risk and to develop better incentive structures for significant investments in resilience efforts globally.
Private equity firms should invest in resilience efforts for the companies they purchase, including retrofitting and ecosystem services, to mitigate risk from climate-related weather disasters and to increase the long-term value of their portfolios.
“It takes a multilayered approach, forward thinking, and engagement across sectors to protect ourselves and create a climate-resilient city.” —Carrie Grassi, New York City Mayor’s Office
“Leveraging our expertise, our goal is to transform the cost-benefit analysis around flood risk globally so that even the most underdeveloped communities can have access to basic resilience measures.” —Francis Bouchard, Zurich Insurance Group
“The private sector is often motivated by risk—it is crucial that businesses understand their exposure to climate risk and the true cost of inaction.” —Jackie Roberts, The Carlyle Group
Eric Olson from BSR kicked off the session by introducing the topic and speakers. He briefly discussed BSR’s climate work and described climate resilience as an integral part of BSR’s strategy on climate. He then outlined the session’s format and its purpose: To define resilience and give examples of what businesses can do to cultivate it.
Carrie Grassi then launched into an overview of New York City’s efforts on resiliency planning, programs, and learnings after Superstorm Sandy. She noted that, while the city has been a leader in mitigating vulnerability to climate for some time, Sandy’s disastrous effects prompted the development of a refreshed agenda. She defined a resilient city as one that is, first, protected against climate impacts, and second, can bounce back quickly if its defenses are breached.
Grassi discussed several new New York City initiatives, including working with the City Panel on Climate Change and a body of climate scientists to produce local projections of flood risk through 2100. She noted that New York City could experience 2.5 feet of sea level rise by the 2050s, doubling the city’s floodplain. With this possibility in mind, the city has decided to invest in more than 250 initiatives to build resilience that include US$3.7 billion allocated to improving coastline infrastructure, updating building codes, bolstering the transportation system, and investing in particularly vulnerable neighborhoods. She emphasized the strong cost of inaction and shared the projection that a Sandylike storm in 2050 could cause more than US$90 billion in damages. She then shared that the city is simultaneously prioritizing mitigation, with Mayor Bill de Blasio recently announcing a goal of reducing carbon emissions by 80 percent from 2005 levels by 2050.
After congratulating Grassi on her efforts, Francis Bouchard then described his work with Zurich and shared a compelling narrative of his experience in the days following Hurricane Katrina. He recalls meeting the general manager of a large store that was completely devastated and witnessing him hugging and weeping with the CEO of Zurich. Following this experience, he noted that the CEO (who had come from a non-insurance background) internalized the crucial role that insurance companies can play in restoring hope and rebuilding physical infrastructure.
In the wake of Katrina, Zurich established a renewed stakeholder commitment that included the responsibility to invest in the broader communities. Following this mandate, the company leveraged internal expertise and partnered with NGOs and academics to develop a global flood-resilience initiative with the goal of assisting at-risk communities by helping them develop more resilient infrastructure. In addition, the company has committed US$2 billion of their portfolio to green bond funds that prioritize climate resilience and mitigation. He stated that Zurich has taken an emotional stake in their clients’ success and tried to transcend their commercial role to become a greater actor in driving climate resilience.
Next, Jackie Roberts discussed her background with Environmental Defense Fund and Carlyle’s focus on climate resilience. She described resilience as a key risk that deserves more attention from both the business and advocacy communities. She said that due to the longer-term investment horizon of five to seven years, as opposed to quarterly profits, private equity firms have an opportunity to build in basic resilience measures for the companies in their portfolios. She gave two examples of Carlyle’s work building resilience: strengthening the storm defenses for a refinery in Pennsylvania and working with small-scale farmers in Africa to improve their farming techniques and become more resilient to drought.
She also noted that the challenge of tackling climate risk cannot be monetized for an individual company and argued that one solution is to spark an active dialogue between the private sector and government to create drivers and better incentives for companies who do invest in resilience measures.
Next, Olson asked about the best role the private sector can play in improving resilience measures. Bouchard noted that the private sector needs to be a source of analytics and data and also be as transparent as possible about the risks of inaction—both he and Roberts spoke about the need to advance resilience throughout the value chain. Grassi described Superstorm Sandy as an example of the interconnectedness of the public and private sectors, their mutual exposure to risk, and the need to collaborate to identify solutions.
Finally, Eric turned to the audience for an active Q&A session. One engaging question involved making the current business case and how to frame resilience in a way that generates more responses. Bouchard argued that better data is a strong emerging tool and stated that Sandy illustrated the human misery that results from extreme weather events—we should not discount the reputational risk that results from inaction.
The three speakers gave brief closing remarks, and Olson brought the session to a close.
November 5, 2014