January 15, 2019 – 427 REPORT. Building resilient communities and financial systems requires an understanding of climate risk exposure, but also of how prepared communities are to manage that risk. Understanding the adaptive capacity, or ability to prepare for change and leverage opportunities, of the surrounding area can help businesses and investors determine how exposure to climate risk is likely to impact their assets and what the most strategic responses may be. This report outlines Four Twenty Seven’s framework for creating location-specific actionable assessments of adaptive capacity to inform business and investment decisions and catalyze resilience-building.
Every investment, from real assets to corporate initiatives, is inextricably connected to its surrounding community. From flooded or damaged public infrastructure hindering employee and customer commutes to competition for water resources threatening business operations and urban heat reducing public health, the impacts of climate change on a community will impact the businesses and real estate investors based in that community. Thus, evaluating how acute and chronic physical climate hazards will affect local communities and communities’ responses enables investors and corporations to assess the full extent of the risks they face.
This report, Assessing Local Adaptive Capacity to Understand Corporate and Financial Climate Risks, outlines Four Twenty Seven’s framework for capturing a city’s adaptive capacity in a way that’s actionable for corporations seeking to understand the risk and resilience of their own facilities and for investors assessing risk in their portfolios or screening potential investments. The framework focuses on three main pillars: 1) awareness, 2) economic and financial characteristics, and 3) the quality of adaptation planning and implementation. It is informed by social sciences research, recent work by credit rating agencies, and our experience working directly with cities and investors.
While a city’s adaptive capacity plays a key role in determining whether or not exposure to climate hazards will lead to damage and loss, cities are also likely to find that their resilience to climate impacts is an increasingly important factor in attracting business and financing, as adaptive capacity is more frequently integrated into credit ratings and screening processes. It is valuable for both cities to understand how investors are interpreting adaptive capacity and for investors to understand which factors of local adaptive capacity translate into increased resilience and reduced financial loss for their assets.
The Resilience Shift has announced that Four Twenty Seven will develop a primer on best-practices and opportunities for building climate resilience in the shipping sector. The Resilience Shift fosters global infrastructure resilience through projects, investments and events. Four Twenty Seven will support this effort by engaging with key stakeholders in the shipping sector to create industry-specific guidance on resilience strategies. Read the press release from the Resilience Shift:
The Resilience Shift today announces the appointment of a new grantee, Four Twenty Seven, for its programme to improve the resilience of critical infrastructure.
The team at Four Twenty Seven, led by Dr. Yoon Kim, has been commissioned to develop an industry-specific primer focused on the Shipping Sector that will help key players understand actionable ways to improve their resilience to climate change.
The shipping of material goods is critical to industries and livelihoods around the world. With stakeholders including shipping companies, terminal operators, and ports, this sector is exposed to extreme shocks or stresses in every country and disruptions have a direct impact on the safety and well-being of millions of people.
In developing this practical, industry specific primer, Four Twenty Seven and the Resilience Shift will identify 1) current best practices by leading organisations that embed resilience into their decision-making, 2) incentives that are available for driving resilience, but are not capitalised upon, and 3) approaches to scale and augment the menu of incentives over time.
Ultimately, the vision of the Resilience Shift is a more resilient world which understands the interconnected nature of modern life and the services on which we all depend.
The Resilience Shift believes that greater resilience across the shipping sector is an achievable goal and that knowledge sharing around key incentives and levers can shift major stakeholders towards adopting more resilient practices and technologies.
The Resilience Shift will be supporting the team at Four Twenty Seven in this effort and will be sharing their findings by publishing a resilience primer in 2019.
Other grantees announced today include Wood, TRL, and Resilient Organizations.
The initial expression of interest closed at the end of August 2018, but the Resilience Shift anticipates continuing this work into 2019. They will welcome future submissions from interested grantees at any time.
Yoon Kim, Director of Advisory Services, Four Twenty Seven, said:
“The Shipping Sector plays a critical role in connecting global economies and shipping companies face complex exposure to climate impacts based on both their commodities and countries of business. Leaders in the sector have the opportunity to build their own resilience and mitigate their losses while supporting resilient economies around the world.”
Ibrahim Almufti, Project Leader, Resilience Shift, said:
“Our aim is to shift the needle on resilience practice so that all organisations embed it into their decision-making. To achieve this, we must clearly articulate the value that resilience can bring.”
Jo da Silva, Acting Programme Director, Resilience Shift, said:
“We are engaging directly with industry stakeholders and with those responsible for incentivizing resilience for critical infrastructure. The Resilience Shift is a global initiative, we want to develop a common understanding across infrastructure systems globally, and our new grantees are diverse both geographically and in their target sector.”
Read more about resilient infrastructure in this Lenders’ Guide for Considering Climate Risk in Infrastructure Investments and explore Four Twenty Seven’s solutions for assessing physical climate risk and developing resilience strategies.
As California’s climate warms, residents increasingly endure extreme heat events that adversely impact public health. This exacerbates existing risks and will bring new challenges for different regions in the state, threatening the efficacy of traditional intervention strategies. Current thresholds for heat alerts are based on temperatures that exceed historical statistical thresholds, rather than temperatures that cause public health impacts. These ‘health-neutral’ thresholds may underestimate the health risks for the most sensitive populations. The new California Heat Assessment Tool (CHAT) is based on research that establishes local, health-based thresholds for extreme heat that help public officials, health professionals and residents understand what changing conditions mean for them. CHAT is part of California’s Fourth Climate Change Assessment, a state-mandated research program to assess climate change impacts in California, and was developed by Four Twenty Seven, Argos Analytics, the Public Health Institute and Habitat 7 with technical support from the California Department of Public Health.
Explore CHAT at cal-heat.org. This online tool advances the understanding of what types of heat waves pose public health risks and examines how the frequency and severity of local heat waves are expected to change over time due to climate change.
Read a brief report, The California Heat Assessment Tool: Planning for the Health Impacts of Extreme Heat, that shares key findings from the research and summarizes the data analysis visualized in the tool.
Access the technical report detailing technical methodology and view other projects funded by the California Fourth Climate Change Assessment.
Access the users needs assessment for a detailed explanation of the literature review and interview process that defines the data gap the research team addressed.
Director of Analytics, Nik Steinberg, discusses wildfire risk, impacts and prevention efforts, on the Midday Briefing. Nik explains implications of increasingly frequent and severe wildfires for the insurance industry and homeowners and shares several ideas for adapting to these risks. While fires have always occurred, climate change is changing the landscape of the wildland-urban interface and residents and policy-makers must understand their wildfire risks and implement preventative strategies. The economic implications are huge for utilities, shareholders and communities, but with intentional planning businesses, governments and residents have the opportunity to mitigate loss.
Climate change will continue to adversely affect public health by threatening sanitation, altering the distribution of vector-borne disease, increasing the need for effective heat wave responses, introducing new mental health challenges and more. To help cities understand their vulnerability to these impacts and build resilience, the United Nations Office for Disaster Risk Reduction (UNISDR) developed a Public Health System Resilience Addendum for its Disaster Resilience Scorecard for cities.
The addendum includes 24 questions, defining a 0-5 scale for practitioners to quantify their responses (see example below). The questions cover the integration of public health with each of UNISDR’s Ten Essentials for Making Cities Resilient: disaster governance, disaster scenarios, finances, land use and building codes, ecosystem services, institutional capacity, societal capacity, infrastructure resilience, disaster response, and disaster recovery.
By capturing all of the possible weak spots in the broader health system, the addendum is meant to be a tool for mainstreaming public health considerations into disaster risk reduction plans, rather than just serving as a one-time assessment. Using this integrated approach can help city officials build resilience over time. Recent events like the power outage that led to eight deaths in a Florida nursing home after Hurricane Irma demonstrate the preventable nature of many public health disasters. Ensuring that critical facilities have backup power supplies and that potential hazards are effectively communicated are ways in which effective planning can mitigate loss. By understanding existing vulnerabilities and how these will worsen with climate change, officials can implement essential adaptation measures that will save lives.
Four Twenty Seven contributed to this addendum and has developed a methodology to assess climate risk exposure in U.S. cities and counties. We are continuing research on quantifying local resilience to climate impacts and supporting public health responses to climate change. The forthcoming California Heat Assessment Tool will provide public health officials with an interactive platform to understand the projected increase in extreme heat events in each California census tract, based on the sensitivity of the local populations. It will also show the distribution of frontline individuals, such as the elderly, to inform effective local heat responses. This free, user-friendly tool will be live in mid-August.
June 25, 2018 – 427 REPORT. Regulatory pressure and financial damage are necessitating an increase in physical climate risk disclosure in Australia. In exercising their own due diligence and assessing the exposure to physical climate risks in their portfolios, investors arm themselves with valuable information on corporate risk exposure which they can leverage to engage with companies around resilience. This report explores the connection between climate hazards and financial risks and shares examples of corporate adaptation and investor engagement to build resilience.
The global tide of interest in the Task Force on Climate-related Financial Disclosures (TCFD) has hit the shores of Australian financial markets, steered by regulators concerned about the systemic risk climate change poses to the economy. In 2017 Australian Prudential Regulation Authority’s Geoff Summerhayes was the first Australian regulator to formally endorse the TCFD. “Some climate risks are distinctly ‘financial’ in nature. Many of these risks are foreseeable, material and actionable now,” he said. This sentiment was echoed by John Price of the Australian Securities and Investments Commission in 2018 and reflects growing regulatory concern over climate risk disclosure internationally, as shown by Article 173 of France’s Law on Energy Transition and Green Growth and the 2018 European Commission Action Plan.
This Four Twenty Seven Report, Responding to Economic Climate Risk in Australia, explores the drivers of financial risk in Australia and discusses approaches to addressing this risk. The nation’s dominant industries are particularly threatened by the prevalent climate hazards. For investors, understanding a company’s risk to climate change is an essential first step to mitigating portfolio risk, but must be followed by corporate engagement to build resilience. Institutional investors are increasingly leveraging shareholder resolutions and direct engagement to prompt companies to disclose their climate risks and adapt.
This Four Twenty Seven webinar on emerging metrics and best practices for physical climate risks and opportunities disclosures covers recent developments in TCFD and Article 173 reporting, challenges to assessing climate risk exposure, strategies for investors to incorporate this information into decision-making and approaches to build corporate resilience.