Lenders’ Guide for Considering Climate Risk in Infrastructure Investments

Climate change poses multifaceted physical risks for infrastructure investors, affecting revenue, maintenance costs, asset value and liability. According to the New Climate Economy report, global demand for new infrastructure investment could be  over US$90 trillion between 2015 and 2017. It is becoming increasingly clear that climate change must be considered in all infrastructure investment and construction.

Four Twenty Seven, in collaboration with our partners Acclimatise and Climate Finance Advisers, published a “Lenders’ Guide for Considering Climate Risk in Infrastructure Investments” to explain the ways in which physical climate risks might affect key financial aspects of prospective infrastructure investments.

Climate Change and Infrastructure

The guide begins with a discussion of climate risk, acknowledging that climate change can also open opportunities such as improving resource efficiency, building resilience and developing new products. It provides a framework for questioning how revenues, costs, and assets can be linked to potential project vulnerability arising from climate hazards.

Revenues: Climate change can cause operational disruptions that lead to a decrease in business activities and thus decreased revenue. For example, higher temperatures alter airplanes’ aerodynamic performance and lead to a need for longer runways. In the face of consistently higher temperatures, airlines may seek airports with longer runways, shifting revenue from those that cannot provide the necessary facilities.

Costs/Expenditures: Extreme weather events can cause service disruptions, but can also damage infrastructure, requiring additional unplanned repair costs. For example, storms often lead to downed power lines which disrupts services but also necessitates that companies spend time and money to return the power lines to operating conditions.

Assets: Physical climate impacts can decrease value of tangible assets by damaging infrastructure and potentially shortening its lifetime. Intangible assets can be negatively impacted by damages to brand image and reputation through repeated service disruptions.

Liabilities: Climate change is likely to pose increasing liability risk as disclosure and preparation requirements become more widespread. As infrastructure is damaged and regulations evolve, companies may face increased insurance premiums and costs associated with retrofitting infrastructure and ensuring compliance.

Capital and Financing: As expenditures increase in the face of extreme weather events, debt is also likely to increase. Likewise, as operations and revenues are impacted and asset values decrease, capital raising may become more difficult.

The guide also draws attention to the potential opportunities emerging from resilience-oriented investments in infrastructure. There are both physical and financial strategies that can be leveraged to manage climate-related risks, such as replacing copper cables with more resilient fiber-optic ones and creating larger debt service and maintenance reserves.

Climate Risks and Opportunities: Sub-Sector Snapshots

The guide includes ten illustrative “snapshots” describing climate change considerations in the example sub-industries of Gas and Oil Transport and Storage; Power Transmission and Distribution; Wind-Based Power Distribution; Telecommunications; Data Centers; Commercial Real Estate; Healthcare; and Sport and Entertainment. Each snapshot includes a description of the sub-sector, an estimation of its global potential market, examples of observed impacts on specific assets, and potential financial impacts from six climate-related hazards: temperature, sea-level rise, precipitation & flood, storms, drought and water stress.

Commercial real-estate, for example, refers to properties used only for business purposes and includes office spaces, restaurants, hotels, stores, gas stations and others. By 2030 this market is expected to exceed US $1 trillion per annum compared to $450 billion per annum in 2012. Climate impacts for this sub-sector include hazard-specific risks and also include the general risk factor of climate-driven migration which drives shifts in supply and demand in the real estate market.

As heat waves increase in frequency, people will likely seek refuge in cool public buildings, leading to increasing property values for those places such as shopping malls that provide air-conditioned spaces for community members. Increasing frequency and intensity of storms may damage commercial infrastructure, leading to recovery costs and increased insurance costs. Real estate managers may have to make additional investments in water treatment facilities to ensure the viability of their assets in regions faced with decreased water availability. An example of the financial impacts of climate change on this sub-sector can be seen in Houston after Hurricane Harvey. After the hurricane hit Texas in August 2017, approximately 27% of Houston commercial real estate was impacted by flooding and these 12,000 properties were worth about US$55 billion.

Download the Lenders’ Guide. 

For more guidance on investing for resilience, read the Planning and Investing for a Resilient California guidance document and the GARI Investor Guide to Physical Climate Risk and Resilience.

Newsletter: Climate Risk in Financial Portfolios, COP23 and Workforce Adaptation

Four Twenty Seven’s monthly newsletter highlights recent developments in climate adaptation and resilience. This month, don’t miss our white paper on physical climate risk in equity portfolios, French President Macron’s op-ed on climate finance, and our policy recommendations on protecting workers from climate health impacts. Also, be sure to check out our new website!

In Focus: Physical Risk in Financial Portfolios

Figure 4. Extreme Precipitation Risk for Facilities from France’s Benchmark Index CAC40

Four Twenty Seven and Deutsche Asset Management jointly released today at COP23 a white paper featuring a new approach to climate risk management in equity portfolios. The white paper, Measuring Physical Climate Risk in Equity Portfolios, showcases Four Twenty Seven’s Equity Risk Scoring methodology, which identifies hotspots in investment portfolios by assessing the geographic exposure of publicly-traded companies to climate change. Our methodology tackles physical risk head on by identifying the locations of corporate sites around the world and then the vulnerability of these corporate production and retail sites to climate change, such as sea level rise, droughts, flooding and tropical storms, which pose an immediate threat to investment portfolios.

Deutsche Asset Management is leveraging Four Twenty Seven’s Equity Risk Scores to satisfy institutional investors’ growing desire for more climate resilient portfolios and design new investment strategies. “This report is a major step forward to addressing a serious and growing risk that investors face. To keep advancing our efforts, we believe the investment industry needs to champion the disclosure of once-in-a-lifetime climate risks by companies so we can assess these risks even more accurately going forward,” said Nicolas Moreau, Head of Deutsche Asset Management.

Read the white paper

France on the Forefront of Climate Finance

French President Emmanuel Macron emphasizes his support for the Taskforce on Climate Related Financial Disclosure’s (TCFD) recommendations in an op-ed published on Global Markets. Macron also highlighted the importance of climate finance mechanisms, such as green bonds, and the need for private participation in financing climate action.

 

France has been heralded as a global leader on climate risk disclosure with the passage of the Energy Transition Law, including Article 173, which includes a requirement for financial institutions to disclose their exposure to physical climate risk. Four Twenty Seven is working with French public pension funds and screening equity portfolios to support reporting efforts in compliance with Art. 173.

Adaptation: Safeguarding Worker Health & Safety

Four Twenty Seven co-authored an article titled “Safeguarding Worker Health and Safety from a Changing Climate: Delaware’s Climate-Ready Workforce Pilot Project,” with the Delaware Department of Natural Resources and Environmental Control. Through interviews, surveys, and policy analysis assessing the climate resilience of existing worker health and safety policies, the authors examine the preparedness of five state agencies for climate impacts. The article highlights particular risks faced by vulnerable workers and offers policy recommendations for enhancing resilience to ensure the safety and well-being of agency staff.

Visit our website for a detailed presentation on the Delaware Climate-Ready Workforce Pilot Project, the summary report, and more information about our adaptation planning and policy consulting.

International Climate Policy in the Spotlight

Four Twenty Seven’s Director of Analytics, Nik Steinberg’s panels at COP23

Measuring Progress on Climate Adaptation and Resilience: From Concepts to Practical Applications
Nov. 7, 3:00 – 4:30pm, Meeting Room 7 (150)Director of Analytics, Nik Steinberg will join a panel of experts discussing adaptation measurement, focusing on indicators and metrics to inform and assess resilience efforts. This side event will be hosted by the International Development Research Centre (IDRC), Asian Institute of Technology (AIT), McGill University and the University of Notre Dame.

Resilience as a Business: How the Private Sector Can Turn Climate Risk into Business and Investment  Nov. 10, 5:30 – 8:00pm, Hilton Bonn

Bringing together corporate stakeholders and private investors, this event will explore the private sector’s pivotal role in mainstreaming adaptation and driving the resilience agenda.

Speakers include: Representative from Ministry of Economy, Trade, and Industry of Japan; Mari Yoshitaka from Mitsubishi UFJ Morgan Stanley Securities Co. Ltd.; Jay Koh from Lightsmith Group and GARI;  Nik Steinberg from Four Twenty Seven; and Amal-Lee Amin from Inter-American Development Bank. For more information contact proadapt@fomin.org.

Tool: Monitoring Progress on the Paris Agreement


This interactive new platform developed by the The World Resources Institute combines climate policy data with interactive graphics to help analysts and policy makers stay up to date on nationally determined contributions (NDCs), greenhouse gas emissions by sector and more. Climate Watch allows users to sort data based on various indicators, examine connections between NDCs and Sustainable Development Goals, and dive into data on specific nations.

Inside the Office: What’s New at Four Twenty Seven

We Have a New Website!

With streamlined navigation and updated visuals, our new website brings our story alive and allows for a more engaging user experience.
Visit the Solutions page to explore our advisory services and subscription products, including Equity Risk Scores, Portfolio Analytics and Real Asset Screening.
Check out the Insights section for our perspectives on climate resilience, climate risk reporting, adaptation finance, climate science and recent events.

Meet Pete Dickson, Director of Business Development

Four Twenty Seven is proud to announce the addition of Pete Dickson to our team. As the Director of Business Development, Pete is responsible for driving growth for our subscription products, with a focus on financial institutions.
Pete brings more than 20 years of experience in institutional sales, trading, and business development. He’s worked with both the buy-side and sell-side to develop and execute business plans and build revenue, products, and services. Pete has worked with some of the largest financial services and asset management firms in the US and abroad.

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:

  • November 7-17  COP23, Bonn, Germany: Join Director of Analytics Nik Steinberg at side events at the UNFCCC’s 23rd Conference of Parties (See above for details).
  • November 12-15  Airports Going Green, Dallas, TX: Director of Advisory Services Yoon Hui Kim will present on corporate climate resilience planning for airports and transportation infrastructure.
  • November 16-17 Berkeley Sustainable Business and Investment Forum, Berkeley, CA: COO Colin Shaw will attend this event sponsored by the Berkeley-Haas Center for Responsible Business and the Berkeley Law School
  • November 30 Roundtable: Investing with Impact, San Francisco, CA: CEO Emilie Mazzacurati will speak at a roundtable organized by Deutsche Asset Management about the use of ESG data in portfolio investing (by invitation).
  • December 6-7  RI Americas 2017, New York, NY: CEO Emilie Mazzacurati will present on Physical Climate Risk in Equity Portfolios (Wednesday Dec 6 at 2pm) and meet with Colin Shaw, Pete Dickson and Katy Maher at the Four Twenty Seven booth.
  • December 11  Climate Finance Day, Paris, France: CEO Emilie Mazzacurati will join this high profile event sponsored by the French Ministry for the Economy and Finance.
  • December 11-15  AGU Fall Meeting, New Orleans, LA: Climate Data Analyst Colin Gannon will join the Earth and Space Science community to present a poster on climate modeling.

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Physical Climate Risk in Equity Portfolios

November 8, 2017 – 427 REPORT.  Four Twenty Seven’s Equity Risk Scores help investors identify climate risk exposure in their portfolios and design new investment strategies.  Our methodology tackles physical risk head on by identifying the locations of corporate production and retail sites around the world and their vulnerability to climate change hazards, such as sea level rise, droughts, floods and tropical storms, which pose an immediate threat to investment portfolios. This jointly published report explains our equity risk scoring methodology, features a relative risk ranking of CAC40 companies and discusses particular vulnerabilities in Asia. 

At COP23 Four Twenty Seven and Deutsche Asset Management jointly released a report featuring a new approach to climate risk management in equity portfolios. Measuring Physical Climate Risk in Equity Portfolios showcases Four Twenty Seven’s Equity Risk Scoring methodology, which identifies hotspots in investment portfolios by assessing the geographic exposure of publicly-traded companies to climate change.

This comprehensive, data-driven scoring effort culminates in a composite physical risk score that allows for comparison and benchmarking of equities and indices.  This integrated measure provides a point of entry to understand and address climate risk, engage with corporations and identify risk mitigation strategies. “This report is a major step forward to addressing a serious and growing risk that investors face. To keep advancing our efforts, we believe the investment industry needs to champion the disclosure of once-in-a-lifetime climate risks by companies so we can assess these risks even more accurately going forward,” said Nicolas Moreau, Head of Deutsche Asset Management.

Key Takeways

  • Four Twenty Seven’s equity scoring methodology includes Operations Risk, Supply Chain Risk and Market Risk, accounting for differential vulnerability to climate hazards between industries, asset types and locations.
  • Four Twenty Seven screens each corporate site for its exposure and sensitivity to a set of climate hazards including extreme precipitation, sea level rise, hurricanes, heat stress, water stress and wildfires.
  • To calculate Supply Chain Risk and  Market Risk, Four Twenty Seven uses companies’ financial data, such as revenues and production.
  • China leads the world in terms of coastal risk, with 145 million people and economic assets located on land threatened by rising seas, and countries throughout Asia are particularly vulnerable to climate risk.
  • The Thailand floods of 2011 led to vast repercussions across industries, including car manufacturers, Thailand’s rice industry and even tourism.

Read the report and contact us for more information about our products for financial institutions and corporations.

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Four Twenty Seven’s ever-growing database now includes close to one million corporate sites and covers over 1800 publicly-traded companies. We offer subscription products and advisory services to access this unique dataset. Options include data feeds, an interactive analytics platform and company scorecards, as well as custom portfolio analysis and benchmarking.

Newsletter: COP23 Preview – Climate Risk Disclosure and Adaptation Finance

Four Twenty Seven’s monthly newsletter highlights recent developments in climate adaptation and resilience. This month, don’t miss the highlights from the UN Principles for Responsible Investment conference and our preview of COP 23 in Bonn next month!

In Focus: A New Way to Fund Resilience


Re:focus Partners’ new report, A Guide to Public-Sector Resilience Bond Sponsorship, highlights the potential of resilience bonds to decrease both financial and physical disaster risks. By partnering with insurance agencies and issuing bonds to fund projects that are targeted at reducing specific vulnerabilities, such as flooding, city and state governments can make their communities more resilient while saving money. The report explains hazard-specific projects applicable for resilience bonds and outlines potential strategies for partnerships. Watch Four Twenty Seven CEO Emilie Mazzacurati speak on resilience finance at a Proadapt Symposium on Climate Risk and Investment.

Mainstreaming Climate Risk Disclosures

 

Climate risk reporting was at the heart of the Principles for Responsible Investment (PRI) in Person conference in Berlin. Nicolas Moreau, head of Deutsche Asset Management, encouraged investors to emphasize physical risk assessment in their portfolios in a keynote presentation featured above. Four Twenty Seven is proud to partner with Deutsche Asset Management to power new investment strategies focused on physical risk mitigation. Read about Four Twenty Seven’s work evaluating physical risk and supporting resilience in the financial sector. At the conference, PRI also announced the Climate Action 100+ initiative in collaboration with Asia Investor Group on Climate Change (AIGCC), Ceres, Investor Group on Climate Change and Institutional Investors Group on Climate Change (IIGCC).The five-year initiative will engage investors to urge top greenhouse gas emitters to decrease emissions, commit to climate risk disclosure and improve corporate governance related to climate change.

Looking Over the Horizon


The new C2ES report, Beyond the Horizon: Corporate Reporting on Climate Change, offers insight into the Task Force on Climate-related Financial Disclosure’s (TCFD) final recommendations. The report praises the recommendations’ balance, noting their appeal to investors needing more information and to companies needing flexibility. Read our analysis of the TCFD Recommendations and applicable regulation in Europe.

Early Movers


The Climate Disclosure Standards Board’s announced ten companies committed to implementing the TCFD’s recommendations within three years. This emphasis on climate risk disclosure allows for the best use of capital and supports the transition to a resilient, low-carbon world. This commitment also sets companies apart in the eyes of investors, improves their own resilience and guarantees them support from CDSB.

The Costs of Climate Change

Billion-dollar Weather Events


Recent storms join a landscape that’s increasingly dotted with widespread costly disasters. National Geographic’s Billion-dollar Weather Chart displays these events as semi-circles, color-coded by event type and sized according to the economic damage caused, and serves as a comprehensive calendar of decades of extreme weather events.

Thought Leadership: Economic Impacts of Extreme Weather Events

Four Twenty Seven advisor, Kate Gordon urges leaders to plan for climate change and build for resilience in her commentary on CNBC: Evacuating millions is not an ‘effective or sustainable’ response to hurricane threats.

Solomon Hsiang from UC Berkeley and Trevor Houser from Rhodium Group emphasize the importance of giving financial support to Puerto Rico in their New York Times op-ed, Don’t Let Puerto Rico Fall Into an Economic Abyss.

In his opinion piece in the Washington Post, What’s behind today’s job report? Hurricanes, low unemployment, wage growth and climate change, Jared Bernstein discusses the connections between storms and a low job report.

Four Twenty Seven at COP 23

Join Nik Steinberg, Four Twenty Seven’s Director of Analytics, at these events in Bonn, Germany for COP23.

Resilience as a Business: How the Private Sector Can Turn Climate Risk into Business and Investment  Nov. 10, 5:30 – 8:00pm, Hilton Bonn

Bringing together corporate stakeholders and private investors this event will explore the private sector’s pivotal role in mainstreaming adaptation and driving the resilience agenda.

Speakers include: Representative from Ministry of Economy, Trade, and Industry of Japan; Mari Yoshitaka from Mitsubishi UFJ Morgan Stanley Securities Co. Ltd.; Jay Koh from Lightsmith Group and GARI;  Nik Steinberg from Four Twenty Seven; and Amal-Lee Amin from Inter-American Development Bank. For more information contact proadapt@fomin.org

Measuring Progress on Climate Adaptation and Resilience: From Concepts to Practical Applications Nov. 7, 3:00-4:30pm, Meeting Room 7 (150)

Director of Analytics, Nik Steinberg will join a panel of experts discussing adaptation measurement, focusing on indicators and metrics to inform and assess resilience efforts.  This side event will be hosted by the International Development Research Centre (IDRC), Asian Institute of Technology (AIT), McGill University and the University of Notre Dame.

The costs of extreme climatic events for the financial sector: how to manage exposure? November 10, French Pavilion

Director of Analytics, Nik Steinberg will speak on a panel hosted by the Institute for Climate Economics (I4CE), discussing the financial impacts of extreme weather events and strategies to build resilience.

Finance and Resilience Side Events

Climate Action in Financial Institutions: Mainstreaming the Paris Agreement in the Financial Sector Thursday Nov 9, 3:00-4:30pm, Meeting Room 7 (150)
Hosted by the Institute for Climate Economics (I4CE), Corporacion Andina de Fomenta (CAF) and European Investment Bank (EIB).

Excellence in Climate Adaptation Nov 9, 3:00-4:30pm, Meeting Room 10 (200)
United by their vision to unite global adaptation projects, the Netherlands, Japan and UN Environment created The Global Center of Excellence on Climate Adaptation (GCECA), which will co-host this event with the Red Cross Red Crescent Climate Centre.

Innovative Climate Finance Strategies and Instruments by and for Climate-Vulnerable Countries Monday Nov 13, 4:45-6:15pm, Meeting Room 9 (100)
Hosted by the Institute for Climate and Sustainable Cities (ICSC), Bangladesh Centre for Advanced Studies (BCAS) and the Philippines.

Role of Standards and Accreditation to Support Non-state Actors in Light of Paris Agreement and SDGs Friday Nov 17, 1:15-2:45pm, Meeting Room 1 (150)
Hosted by the International Organization for Standardization (ISO) and International Accreditation Forum Inc. (IAF).

Four Twenty Seven: Meet the Team!

Katy Maher, Manager

Four Twenty Seven is proud to announce the addition of Katy Maher to the team. From our new location in Washington, D.C., Katy works closely with Four Twenty Seven’s public and private sector clients to conduct vulnerability assessments, develop resilience strategies and facilitate stakeholder workshops.

Katy brings more than ten years of experience supporting climate change impacts and resilience projects at international, federal, state and local levels. Her expertise also includes convening public and private sector organizations to facilitate discussion and planning on climate resilience. Prior to joining Four Twenty Seven, Katy coordinated resilience projects at the Center for Climate and Energy Solutions (C2ES) and ICF International.

Read more of Katy’s experience

Career Opportunities

Four Twenty Seven continues to grow! We are hiring for the following positions:

* Senior Analyst, Financial Climate Risk
* Business Development Manager (Paris)
* Business Data Analyst

See the position descriptions.

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:

  • October 10-13  SOCAP 2017, San Francisco, California: Meet with Senior Analyst Kendall Starkmann and Director of Advisory Yoon Kim to discuss impact investments and adaptation finance.
  • November 4-8  APHA 2017, Atlanta, Georgia: Director of Analytics Nik Steinberg will discuss how climate change affects health and how climate science can support decision-making in the public health sector at the APHA’s annual meeting and expo.
  • November 7-17  COP23, Bonn, Germany: Join Director of Analytics Nik Steinberg at side events at the UNFCCC’s 23rd Conference of Parties (See above for details).
  • December 6-7  RI Americas 2017, New York, New York: CEO Emilie Mazzacurati and COO Colin Shaw will attend the annual conference where Four Twenty Seven will have a booth and Emilie will present on Physical Climate Risk in Equity Portfolios.
  • December 11-15  AGU Fall Meeting, New Orleans, Louisiana: Director of Analytics Nik Steinberg will be joining the Earth and Space Science community to discuss recent research trends and participate in a mix of presentations, lectures and networking opportunities.

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Newsletter: How will we pay for climate adaptation?

 

 

Extreme Storms Highlight Need for Disaster Preparation and Recovery Financing

The need for climate resilience financing could not be more visible than it has been in recent weeks. While Hurricane Harvey has weakened after dumping unprecedented amounts of rain on southeast Texas, residents in Houston and along the Gulf Coast are looking at a long recovery from widespread flooding. Around the world, monsoons in Bangladesh, India, and Nepal have affected over 41 million people, killing at least 1,000. These examples highlight the rising costs of intensifying extreme weather events.
Yet, funding and policies to aid preparation for and recovery from disasters are not keeping up. At the U.S. federal level, the National Flood Insurance Program is in debt (in part from payouts following Hurricane Katrina and Superstorm Sandy), and is facing a deadline for reauthorization. As it stands, the Program’s current access to funds is unlikely to be enough to cover the impending claims from Harvey’s damage. One proposal for restructuring the program would make repeatedly-flooded homes ineligible for federal coverage, even though 1.3 million households in the U.S have made multiple claims since 1998, and Houston specifically has seen a 500-year flood in each of the last three years. The storms have created a new urgency for lawmakers to address how cities are rebuilt for climate resilience.

DC Water’s Environmental Impact Bond to Finance Green Infrastructure

With calls from the federal government for states and cities to take on a greater portion of disaster relief costs, Washington, DC’s Water and Sewer Authority (DC Water) issued the country’s first Environmental Impact Bond in September 2016 to construct green infrastructure to manage stormwater runoff and improve water quality. Under the $25 million bond, payments are tied to performance: if the green infrastructure reduces stormwater runoff by more than 41.3% during its first 12 months, DC Water will pay investors Goldman Sachs and Calvert Foundation a one-time additional payment of $3.3 million. However, if runoff reductions are less than 18.6%, investors will make a one-time Risk Share Payment of $3.3 million. Read the US Environmental Protection Agency’s summary of DC Water’s Environmental Impact Bond.

San Francisco’s Innovative Tax for Flood Protection and Wetlands Restoration

In the San Francisco Bay Area, voters approved the San Francisco Bay Clean Water, Pollution Prevents, and Habitat Restoration Measure (Measure AA) in June 2016, levying a $12 parcel tax to support programs protecting the wetlands and shoreline around the Bay. This is the first parcel tax in California history to apply throughout a multi-county region, and serves as a useful example of how such a tax can be used to address sea level rise issues through nature-based solutions. Measure AA will raise approximately $500 million over 20 years for the San Francisco Bay Restoration Authority to grant in support of projects that will implement wetlands restoration efforts that provide multiple benefits including flood protection. Potential projects for the Restoration Authority to fund include the creation of sea level rise resilient tidal marshes, shorelines, and sea walls around the Bay. The first round of grants will be announced in early 2018, with the hope that these funds can be leveraged for additional state and federal funding. Read more about the San Francisco Bay Restoration Authority.

Promoting Investments in Adaptation Through Technology Transfer

To demonstrate to market and financial institutions the viability of climate resilience investments in Tajikistan, the European Bank for Reconstruction and Development has partnered with the Climate Investment Funds’ Pilot Program for Climate Resilience to implement the Tajikistan Climate Resilience Financing Facility (CLIMADAPT). CLIMADAPT offers loans through local partner financial institutions to businesses, farmers and households to develop and use technologies to improve water and energy efficiency and land management practices. Projects under CLIMADAPT promote building of climate-resilient supply chains, and include modernization of technologies designed to address Tajikistan’s main climate change-related challenges of water and energy shortage, and increased soil erosion. Learn more about CLIMADAPT.

The Role of Blended Finance in Promoting Climate Resilience

 

At the PROADAPT Symposium in April 2017, Emilie Mazzacurati moderated the panel “The Role of Blended Finance in Promoting Climate Resilience,” focused on methods to create new funding mechanisms to leverage public and philanthropic funding to raise private capital for environmentally-beneficial projects. Virginie Fayolle from Acclimatise kicked off the discussion by highlighting how blended finance can be an important way to direct money towards specific projects, locations, and sectors that might not otherwise see private sector interest.Stephen Morel from OPIC noted, however, that blended finance brings certain challenges, thus requiring mechanisms to support private investor engagement in three broad categories: technical assistance, risk underwriting, and market incentives. Stacy Swann from Climate Finance Advisors drew attention to the facts that the more climate resilient a project is the more finance opportunities it is likely to present and that a project that does not take climate risks into consideration probably is not bankable.

 

Joan Larrea from Convergence closed by speaking about externalities and how transactions can have a public good element as well as a financial return. One example was a grant awarded to The Nature Conservancy to help the government of Seychelles, which was extremely indebted but also had a strong interest in protecting its coral reefs and fisheries. By helping to reshape the government’s debt profile and getting returns for their investors, they were also able to extract commitments from the Seychelles to implement certain activities that over time would protect their reefs and designate new protected fishery zones.

Watch the full panel video

Meet The Team: Daniela Vargas Mallard

Yvonne BurgessFour Twenty Seven is proud to welcome Daniela Vargas Mallard as a Senior Analyst. Daniela leverages her dual background in business strategy and environmental sustainability to collaborate in the development of Four Twenty Seven’s products integrating financial, climate and socioeconomic data for investors and corporate users. Her work supports ongoing research, product development, and business strategy, as well as other special projects. Prior to joining Four Twenty Seven, Daniela spent two years as a Business Analyst at McKinsey & Company, where she worked in projects across multiple sectors, ranging from public health to oil and gas, and across geographies, from South Africa to Brazil, with a particular focus on corporate and government strategy.

Learn more about Daniela’s experience.

Join the Team!

Four Twenty Seven is hiring! We are looking for Business Data Analysts and Business Development Managers for Europe and the US: see the position descriptions.

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:

  • September 11-13: EcoAdapt’s Resilience Ecosystem Workshop (by invitation only), Silver Spring, MD: Nik Steinberg, Director of Analytics, will present on Four Twenty Seven’s work on climate and health.
  • September 12-13: AgriFin 2017 Forum, London, United Kingdom: Yoon Kim, Director of Advisory Services,will speak about integrating climate risk into financial decisions at the Financing Low-Carbon Resilience Agriculture global forum hosted by the World Bank.
  • September 18-24: Climate Week NYC 2017, New York, NY: Four Twenty Seven CEO Emilie Mazzacurati will participate to the Global Adaptation and Resilience Investors Working Group (9/18) and the Sustainable Investment Forum (9/19).
  • September 25-27: PRI in Person 2017, Berlin, Germany: Meet with Emilie Mazzacurati to discuss the integration of climate risk in financial markets.
  • September 27-28: Deutsche Asset Management Client Conference (by invitation only), Berlin, Germany: Emilie Mazzacurati will present on Four Twenty Seven’s groundbreaking work on modeling climate risk for public equities.
  • October 10-13: SOCAP 2017, San Francisco, California: Meet with Four Twenty Seven team members to discuss impact investments and adaptation finance.
  • November 7-17: COP23, Bonn, Germany: Join members of the Four Twenty Seven team at side events at the UNFCCC’s 23rd Conference of Parties.

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Delaware’s Climate-Ready Workforce Pilot Project

Changing climate conditions threaten the health and safety of the State of Delaware’s most important assets: its workforce. Building on momentum at the state level to assess climate risks and implement relevant adaptation actions, Four Twenty Seven worked with five state agencies to identify and protect at-risk workers from the impacts of extreme events such as storms, floods, and high temperatures. Based on an evaluation of existing policies, key informant interviews, and surveys, Four Twenty Seven provided recommendations to more explicitly incorporate climate considerations, share agency good practices, and strengthen the fundamentals of current policies and procedures by improving processes for policy development, implementation, and enforcement. The findings from this project will be used to inform state agencies’ consideration of next steps with regard to health, safety and climate change.

Download the summary report

View the Delaware Climate-Ready Workforce Presentation

 

Audio Blog: Climate Data & Public Health, Mobilizing Adaptation Action

Director of Advisory Services Yoon Kim moderated a panel at the 2017 National Conference and Global Forum for Science, Policy, and the Environment. The session, titled “Climate Data and Public Health: Mobilizing Adaptation Action”, explored the role of interactive data tools in the adaptation continuum – from diagnosis to planning to solutions – through concrete case studies. Presenters brought local public health and private sector hospital perspectives from across the United States. You can listen to a full recording of the panel here, and follow along with the presentation slides.



Panelists:

  • Cyndy Comerford, Manager of Policy and Planning, San Francisco Department of Public Health
  • Michele Shimomura, Public Health Manager, Denver Department of Environmental Health
  • James Evans, Sustainability Analyst, Cleveland Clinic
  • Deborah Weinstock, Director of the National Clearinghouse for Worker Safety and Health Training, Michael D. Baker, Inc.
  • Jennifer de Mooy, Climate Adaptation Project Manager, Delaware Division of Energy and Climate

Newsletter: The Forgotten Victims of Hurricane Matthew

 

 

News and analysis on climate change adaptation.


Four Twenty Seven Climate Solutions

From the Desk of Emilie Mazzacurati

It would be easy to overlook the devastating impacts of Hurricane Matthews. With media and political leaders almost entirely focused on the presidential election, it can be hard to even get basic facts on the extent of the damages along the storm track.

Yet Haiti is going through its worth humanitarian crisis since the 2010 earthquake. Entire villages have been wiped out and many are left with nothing. As is so often the case, the most vulnerable countries are also the most exposed, reminding us that climate change remains a significant obstacle to the eradication of poverty and sustainable economic growth.

Even in the United States, the impacts have been much worse than anticipated, with over a dozen dead in North Carolina and crippling floods, in pattern of extremes becoming increasingly the norm.

Our responsibility in the wake of these events is to keep raising awareness of the need to prepare and adapt to climate impacts, and channel greater funding towards improving infrastructure and social resilience. Hurricanes will come back, and so will floods and heat waves and wildfires. It’s time to invest in resilience.


Emilie Mazzacurati, Founder and CEO

Impacts of Hurricane Matthew on Haiti

For a nation like Haiti, economic and social development is difficult enough without being in the path of a Category 5 storm. Hurricane Matthew crossed over the southern peninsula, near the coastal city of Jérémie, where a new highway and cell service had recently spurred business growth. Now they have to begin again. The country must also deal with multiple threats to recovery, ranging from a resurgence of cholera to chronic poverty.

Video: Michael Mann on the Link Between Hurricane Matthew and Climate Change

 

Dr Michael Mann on Democracy Now (Part I)

Dr. Michael Mann discusses the link between Hurricane Matthew and climate change

Hurricane Matthew and the trail of destruction left in its wake has rightfully received heavy news coverage, but a critical aspect of the storm has been underreported. Dr. Michael Mann speaks on Democracy Now to explain the unique nature of Matthew and its rapid intensification is due to the warming waters, both on the ocean surface and below, in the Caribbean. The Washington Post also wrote on: What We Can and Can’t Say About Climate Change and Hurricane Matthew.

Flooding From Hurricanes on the Rise, Regular Impact on U.S. Economy Likely

While the wind speeds of Hurricane Matthew slowed as it reached the Carolinas, its impact grew in the form of heavy rains and subsequent flooding. Analyses of historical data and climate models show that flooding from storms has become more frequent, and will continue to intensify as sea levels rise and a warmer atmosphere holds more moisture. By the end of the 21st century, New York could see repeats of Hurricane Sandy-level flooding, and the billions of dollars in damage that comes with it “as frequently as once every 23 years.”

Infographic: Climate Signals

This infographic from Climate Signals maps the pathways through which the increase in greenhouse gas in the atmosphere contributed to increased wind damages, increased flood risk for a hurricane like Hurricane Matthew.
http://www.climatesignals.org/headlines/events/hurricane-matthew-2016 

Financing Resilience Must be Local

“Chronic under-investment in infrastructure also affects a community’s ability to recover from disaster. Building back better should be a matter of “building in” resilience to future conditions. The first place to start is infrastructure,” write Stacy Swann of Climate Finance Advisors and Andrea Colnes of Vermont Energy Action Network, arguing for greater development of local or regional financing options. Climate-smart, resilient infrastructure will be crucial for communities to survive extreme weather events, and local financing options could be better suited to the specific and contextual local resilience needs.

Meet the Team: Josh Turner

Four Twenty Seven welcomes Josh Turner to the research team as a Climate Data Analyst, putting his expertise to use in working with data to assess specific climate risk assessments for clients. Josh is also tasked with curating datasets, applied data analysis, and developing written and visual materials for clients and stakeholders.

Before joining Four Twenty Seven, Josh worked with the Red Cross/Red Crescent Climate Centre at establishing a preliminary climate risk assessment for anticipatory humanitarian action in Lomé, Togo. Josh has extensive prior research experience on a variety of atmospheric phenomena including the hydrological cycle, the Urban Heat Island effect, aerosols, and the Great Plains Low Level Jet.

Learn more about Josh’s experience.

Upcoming Events

Join the Four Twenty Seven team in the field at these upcoming events:
  • October 19-21: Climate Strategies Forum, San Diego, CA – CEO Emilie Mazzacurati will be teaching a CCO bootcamp, Climate 202: Leveraging Climate Data & Tools
  • October 29 – November 2: American Public Health Association Annual Meeting, Denver, CO: Meet with Director of Advisory Services Yoon Kim.
  • November 7-18: COP 22, Marrakesh, Morocco: Meet CEO Emilie Mazzacurati and CSO Camille LeBlanc at the Sustainable Investment Forum and other events focused on private sector and climate finance.
  • December 12-15: AGU 2016 Fall Meeting, San Francisco, CA: Director of Analytics Nik Steinberg, Director of Finance Colin Shaw, and Climate Data Analyst Colin Gannon each will be presenting.

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The “Tragedy of The Horizon:” the Economic Risk of Global Warming

On September 29th, Mark Carney, recently appointed Governor of the Bank of England, gave a speech on the risks of climate change to financial stability at a Lloyd’s insurance event. Carney referred to climate change as the “tragedy of the horizon,” citing outcomes like the impact of rising seas on the world’s coastlines and infrastructure as one of the largest risks to financial stability around the world. Carney cited three major risks to financial stability from climate change.

1.    Climate change presents physical risks

First risk: “The impacts today on insurance liabilities and the value of financial assets that arise from climate- and weather-related events, such as floods and storms that damage property or disrupt trade.”

In the context of sea level rise, the impacts of climate change on infrastructure and property along the world’s coastlines are readily apparent. Carney referenced a Lloyd’s study that “estimated that the 20 cm rise in sea-level at the tip of Manhattan since the 1950’s, when all other factors are held constant, increased insured losses from Superstorm Sandy by 30 percent in New York alone.”

Rising seas already compounded the impact of hurricane Sandy, knocking out power grids, flooding subways and causing financial damages estimated to be between $30 billion to $50 Billion. Under current projections of sea level rise up to a 6.6 foot increase is possible by 2100; and as oceans rise so will the physical impact of superstorms.

A U.S Army Corp of engineers and the National Weather service map of storm surge inundation if it hit with sea level rise projections for 2100, illustrating economic risk of global warming
A U.S Army Corp of engineers and the National Weather service map of storm surge inundation if it hit with sea level rise projections for 2100.

2.    A changing climate creates liability risk

Second risk: “The impacts that could arise tomorrow if parties who have suffered loss or damage from the effects of climate change seek compensation from those they hold responsible.  Such claims could come decades in the future, but have the potential to hit carbon extractors and emitters – and, if they have liability cover, their insurers – the hardest”

Carney suggests that those who suffer the majority of asset loss from climate change could look to hold polluters, governments or private firms accountable for risk exposure.

Nestle is now being sued for the use of water in Southern California and their impact on the California drought. Lawsuits against corporations, governments or private land owners who have shifted the true costs of their behavior onto the commons have the potential to be held accountable for their behavior as extreme weather events become more common and impactful.

Liability for the loss of property and adverse health affects due to climate change are not only held by private firms, but also my American taxpayers. In Alaska, the town of Kivalina is already being displaced by sea level rise and melting sea ice. In response the Obama administration has proposed $50.4 Million in federal aid for relocation costs.

3.    Climate change will create more stranded assets

Third risk: “The financial risks which could result from the process of adjustment towards a lower-carbon economy.  Changes in policy, technology and physical risks could prompt a reassessment of the value of a large range of assets as costs and opportunities become apparent.”

What Carney is getting at here is the fact that an assessment of liability will change the valuation of an asset. This includes what is commonly referred to as “stranded assets”, in particular fossil fuel reserves — and the plants that process and burn them — will become useless is a world focused on carbon-free energy.  But it also includes a much greater class of assets that could become stranded, for example real estate on properties that experience frequent and increasing flooding. After the world has seen enough primary property loss and secondary liability loss due to impacts like rising seas our markets will compensate by devaluing at risk assets.

Conclusion

Climate science has been warning us for decades that the impacts of unbridled emissions are on the horizon, but what Carney adds to the conversation is the translation of the risks into financial terms. As acceptance and information about climate change increase so too does the desire to find innovative solutions that build resilience into how we do business and navigate the risks.  Being informed about the potential impact of sea level rise and extreme weather events can help industry and government adapt and keep out of the deep waters of rising seas.

 

By Sam Irvine

Can we prepare better? Managing risk in a context of uncertainty

On October 3rd, the Obama administration declared a state of emergency in South Carolina in the wake of Hurricane Joaquin, which dumped a foot and a half of rain in approximately 24 hours on the Carolinas, caused floods from New Jersey to Georgia and sunk cargo ship El Faro and its crew. While the Charleston and many other cities were battling the floods, with a cost estimated at over $1 billion, France was also experiencing unexpected flash floods near Nice, which caused 17 death.  Landslides in Guatemala also claimed the lives of 186 people and were catalyzed by a strengthened El Nino. When considering each event in isolation, it may be possible to overlook the connection between the storms intensity and climate change. Together these extreme weather events are indicative of a larger trend; while we can’t predict where the next big storms will hit, we do know they are becoming more frequent and stronger.

Floods in South Carolina
Flooding in South Carolina. Photo by Sean Rayford/Getty Images

These serve as yet another wakeup call to remind us that we are already experiencing the impacts of climate change, and that our communities, cities and business need to be prepared for the stormy weather. But, as humans, do we require a crisis to mobilize us into action? Or can the same results be sparked through other methods without the loss of life, property and human well-being?

Climate scientists have warned for years of how climate change will increase the intensity of hurricanes, and the Southeast U.S. is a highly exposed region for such hurricanes. Yet many of us act as if the storm was always going to hit next door, and fail to apply our rational understanding of risk to better preparedness.

At Four Twenty Seven, we created Climate War Games to put executives and decision-makers into the context of the increasing risks presented by climate change. Gaming and simulation provide teachable moments, which we can apply to our real world behavior.

Climate War Games
Operation, probability and climate outlook cards from the Climate War Game

In game play, we assign the players to companies and task them with running their business while getting through a number of rounds in which they experience unpredictable extreme weather events. We break down uncertainty by type of event and their varying impacts to supply chains and infrastructure that can be damaged by extreme precipitation or temperature.

While the specific outcomes are unpredictable, because they hinge on a dice roll, the risk profile of each player’s hand is clearly laid out, so as to enable teams to understand their company’s risk profile and adopt the most cost-effective portfolio of adaptation measures. The winner is the company that earns the most profit – and  limits its losses — that way, game play reflects the same challenges organizations face in the real world.

The game emulates the escalating risk of climate volatility and simulates through dice rolls the increasing likelihood of “black swan events” with low probability of occurrence, but high consequences and subsequent costs.

Players have to make the same tough choices they would in the real business world between saving or spending, and we see teams approach the choices in both creative and conventional ways. While there are different ways to play, the real value of the game comes from knowing that the risks actually create business opportunities, and acting through an informed strategy pays out over the long run. The game also helps participants reflect upon the potential human implications of their risk mitigation strategy.

Confronting the reality of what climate change is going to bring upon us can feel overwhelming at times. By providing a safe environment with clearly delineated risk profiles, and challenging players to make decisions and take action in a context of uncertainty, we help break down mental and cultural barriers to corporate adaptation, and set participants on track to build climate resilience. We do not know where the next storm will hit, but we can and should prepare to the best of our ability using climate science and probabilities.

Learn more about Climate War Games and our training courses offering here.

By: Sam Irvine