There are US$7 trillion ($9.43 trillion) worth of benefits on the table if private sectors invest in climate resilience by 2030, but at this moment, only 7% of investments are channelled into adaptation and resilience, says Lauren Sorkin, executive director of the Resilient Cities Network.
“Climate resilience and adaptation is not [only] a government’s problem, and governments will not be able to solve this alone,” she adds.
Sorkin, who moderated a panel discussion titled “Rising to the Challenge: Building Climate-Resilient Cities” at Temasek’s Ecosperity Week on June 7, laid out the goal of the discussion, including de-mystifying top issues around climate resilience to prioritise investments, how to de-risk said investments to turn them into opportunities and learning from successful solutions to eventually scale.
She was joined by panellists Ahmad Wani, co-founder and CEO of One Concern; Avrom Salsberg, global lead for sustainability partnerships and north APAC head, geo product partnerships at Google; William McGoldrick, co-chair of Southeast Asia climate and nature-based solutions coalition; and Zoe Knight, group head of centre of sustainable finance at HSBC.
The panellists attribute the lack of investment in climate adaptation and resilience from the financial sector to several factors.
For one, there is no consistent comparable metric to link physical climate risk with financial risk, says Wani.
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While there have been successful examples of using nature-based solutions to solve climate issues in cities, the industry as a whole lacks concrete data points to prove a solid business case for investing.
“You can’t manage what you can’t measure,” says Salsberg of Google, who notes that data points collected by the tech giant have been used in some nature-based climate solutions in cities like Australia.
Likewise, HSBC’s Knight says the financial sector typically prioritises straightforward risks and opportunities, while climate adaptation and resilience has traditionally been a public sector focal point.
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“What the finance sector is trying to do now is translate the science of climate into day-to-day financial decision-making,” says Knight. However, she notes that there are still difficulties in ironing out frameworks without more transparency from policymakers on how they might want to implement resiliency and adaptation through nature-based solutions and ecosystem services.
However, Wani notes that there are some disadvantages of simply relying on data sets as a means to attract investment. He notes that part of the job of organisations is to find the right business model that can prove to be an incentive to investors.
Drawing on the example of weather power outages in US cities like California, Wani says companies need to demonstrate how their infrastructure system can benefit and avoid disruption from environmental risks in order to attract financing to upgrade.
In addition, McGoldrick points out that beyond the financial services sector, some governments and city planners themselves might not be willing to embrace nature-based solutions, noting that there is a “bias, or some sort of psychological barrier to even begin thinking [of] or taking it seriously”.
Knight notes that the financial pathway to more nature-based solutions for cities need not only come purely from one sector, such as governments or private capital. A blended mix of public, private and philanthropic engagements that have already been set out could be a method to go about achieving a net-zero commitment.
