Category: Policy

Newsletter: How will climate change worsen wildfire exposure?

Posted on by Jeremiah Kim

Four Twenty Seven's monthly newsletter highlights recent developments in climate risk and resilience. This month we share new data on wildfire potential, highlight the connection between racial justice and climate change and feature new reports on climate risk.
In Focus: Projecting Future Wildfire Potential

Four Twenty Seven Analysis - Days of High Wildfire Potential will Increase by Up to Three Months in Most Exposed Regions
 
Areas ranging from California and Australia to the Amazon, Spain and the Arctic have experienced unprecedented loss of life and damage from wildfires in the past several years. Climate change is already making wildfires more severe and Four Twenty Seven's latest analysis finds that it will lead to more days with high wildfire potential in areas already prone to wildfires, and create hotter and drier conditions that will expose entirely new areas. 

This analysis leverages Four Twenty Seven's new dataset, which provides the only known globally comparable assessment of future wildfire potential in a changing climate at a scale of approximately 25 kilometers by 25 kilometers. The data is built upon the two key factors of soil moisture deficit and wildfire fuel type and incorporates data from global climate models to provide a view of changing conditions by 2030-2040, capturing both absolute and relative change in frequency and severity. This new data is now available on-demand for our clients via Four Twenty Seven’s Physical Climate Risk Application for real assets.

Register for our webinar on August 20th at 8am PST / 11am ET / 16:00 BST to learn more about the methodology and findings.
Read the Report
Climate Change and Racial Justice

Exploring Environmental Justice and the Need for Equitable Adaptation

The relationship between race and climate change is too often ignored. The recent protests for racial justice and police reform call attention to the fact that racism is still deeply embedded in our institutions and public policies. In the United States, people of color are disproportionately affected by polluting industries and climate change, while at the same time often lacking the resources to prepare and being excluded from decision-making on adaptation investment.

As part of our commitment to help raise awareness of the nexus between racial justice and climate change, Four Twenty Seven published a two-part blog series on the nexus of racial justice and climate change. The first blog focuses on exposure, providing a brief overview of environmental injustice issues in the U.S., and shedding light on the disproportionate impacts of climate change on Black communities and people of color. One solution is to ensure that climate adaptation intentionally considers this disproportionate exposure, factoring racial equity into decision-making. The second blog on adaptation outlines the need to integrate equity into adaptation and highlights emerging best practices.

Read our analyses:

Webinar Recording

Last week Four Twenty Seven and Moody's hosted a webinar exploring these topics. Four Twenty Seven's Yoon Kim discussed disproportionate exposure of people of color to climate hazards, Moody's Investors Services' Ram Sri-Saravanapavaan presented on the implications of inequality on sovereign credit, Tulane's Jesse Keenan discussed climate justice in urban development and UC Irvine's Michael Méndez presented on racial equity in climate policy. Register here to watch the recording. 
Central Banks on Climate Risk

The Bank of England's Climate Risk Disclosure
Last month the Bank of England published its first TCFD-aligned climate risk disclosure, assessing the exposure of its own portfolios to physical and transition risks. The Bank underscores the importance of addressing climate change as a financial risk and states the importance of assessing and disclosing risks even as the best available resources continue to evolve. The risk assessment leverages Four Twenty Seven and Moody's Analytics analysis on physical risk exposure. Meanwhile, the Bank of England's Climate Financial Risk Forum published a guide for financial stakeholders to assess, manage and disclose climate risk.

Guide to Climate Scenario Analysis for Central Banks and Supervisors
The Network for Greening the Financial System released a four step approach for central banks and supervisors to implement scenario analysis for climate risk, accompanied by a detailed set of climate scenarios. The steps include identifying the scope of the assessment; identifying scenarios; assessing the best way to connect climate risk exposure to economic and financial impacts; and explaining the results and methodology.

Indebted to Nature - Exploring Biodiversity Risks for the Dutch Financial Sector
Last month the De Nederlandsche Bank (DNB) and PBL Netherlands Environmental Assessment Agency released this report outlining the ways in which biodiversity loss poses economic and financial risk and the role the financial sector plays in biodiversity loss. The report also assesses the Dutch financial sector's exposure to biodiversity risk leveraging Four Twenty Seven's database. The separate report, Methods for analyses in Indebted to nature, explains the full approach. 
Public Consultations on Climate Risk

EIOPA Discussion Paper on Methodological Principles of Insurance Stress Testing
The European Insurance and Occupational Pensions Authority's (EIOPA) recent discussion paper outlines an approach to climate risk stress testing for transition and physical risks, citing Four Twenty Seven's methodology. EIOPA has asked for feedback by October 2.

European Central Bank Consultation on Climate Risk Disclosure Guidance
The European Central Bank (ECB) published guidance asking banks to disclose their climate-related risks and integrate these risks into their risk management processes. Compliance will be expected when the guidelines are finalized at the end of the year. The ECB has solicited feedback through a public consultation open until September 25.
Four Twenty Seven Wins
WatersTechnology Asia Award

Four Twenty Seven Recognized as Best Alternative Data Provider
The WatersTechnology Asia Award 2020 for Best Alternative Data Provider recognizes Four Twenty Seven’s innovation, accuracy and high standard in curating and deploying data for financial stakeholders.
This regional award showcases vendors and end users with high quality solutions with global relevance that are also especially pertinent to Asia markets.This came as financial regulators across the Asia-Pacific region have increasingly contributed to the global call for increased measurement and disclosure of climate risks in investment portfolios, encouraging financial actors to step up. With an office in Tokyo and a partnership with Sydney based DB Funds Advisory, Four Twenty Seven is excited to bring our award-winning climate risk data to more financial stakeholders in these markets. 

Four Twenty Seven Recognized in Exeleon Magazine's Top Companies

Business and Tech Magazine Exeleon, includes Four Twenty Seven in its listing of the top 100 companies to watch in 2020. "While the past several years have seen an increase in awareness of the material risks of climate change, Four Twenty Seven was on the leading edge of analyzing many complex scientific datasets and translating them for financial and business stakeholders." Exeleon writes. "Emilie and her team publish deeply data-driven and location-specific analysis, based on the best available climate data and the specific need of financial stakeholders."
Four Twenty Seven Partners with Nova Group

Nova's Climate Resilience Assessment Leverages Four Twenty Seven's Physical Risk Data
Four Twenty Seven is pleased to announce a partnership with Nova Group, GBC, a leading environmental and engineering due diligence advisory firm. Four Twenty Seven's asset-level physical climate
risk data now informs Nova’s new Climate Resilience Assessment, providing resilience recommendations based on the risks and characteristics of the specific asset of interest.
Inside the Office at Four Twenty Seven

Associate Director, Research - Stephanie Auer
Four Twenty Seven welcomes Stephanie as Associate Director, Research. Stephanie develops and incorporates metrics of novel climate indices into Four Twenty Seven’s products and services. Stephanie’s background is in data science and conservation ecology. She has worked for NatureServe and the California Academy of Sciences in ecological forecasting, data visualization and mapping, with a focus on analysis and communication for climate change adaptation planning.

Join the team! Four Twenty Seven is Hiring

There are several opportunities to join Four Twenty Seven's dynamic team. See the open position below and visit our Careers page and Moody's Careers page for more information.
  • IAM Modeler with expertise in Integrated Assessment Models (IAMs) and in translating IAM outputs for a wide range of stakeholders
Upcoming Events

Join the team online at these upcoming events and check our Events page for updates:
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Copyright © 2020 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for investors, corporations and governments. Fill in the form below to join our mailing list. As data controller, we collect your email address with your consent in order to send you our newsletter. Four Twenty Seven will never share your mailing information with anyone and you may unsubscribe at any moment. Please read our Terms and Conditions.
 

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Climate Change and Wildfires: Projecting Future Wildfire Potential

Posted on by Natalie Ambrosio

August 6, 2020 – Four Twenty Seven Report. Wildfires are complex physical phenomena that come at extraordinary costs to human and natural systems. Climate change is already making wildfires more severe and this new research finds that it will lead to more days with high wildfire potential in areas already prone to wildfires, and create hotter and drier conditions that will expose entirely new areas. Understanding which areas are exposed to changing wildfire conditions will help leaders in government, finance and public health to mitigate catastrophic loss. This report explores Four Twenty Seven’s new methodology for assessing global wildfire potential, identifying regional trends and hot spots.

Download the report.

The 2019-2020 Australian bushfires raged for seven months, killed more than 30 people, hospitalized thousands more,[1] and burned more than 10 million hectares of land.[2] While the full financial and ecological impact is still unknown, costs from those fires are likely to exceed the $4.4 billion.[3] Meanwhile, ten of the largest wildfires in Arizona’s history occurred in the last eight years and nine of California’s largest wildfires occurred in just the last seven years.[4]

Beyond direct losses and disruption from damage to buildings and infrastructure, air pollution from wildfires has led to healthcare costs in excess of $100 billion in losses per year in the United States.[5] Leaders in government, finance, and public health need to understand how and where climate change will further heighten wildfire potential because of the serious threat wildfires pose to societies, economies, and natural systems.

This new report, Climate Change and Wildfires: Projecting Future Wildfire Potential, outlines Four Twenty Seven’s approach to quantifying global wildfire potential, capturing both absolute and relative changes in frequency and severity by 2030-2040.  Wildfire potential refers to meteorological conditions and vegetative fuel sources that are conducive to wildfires. Using a proprietary methodology submitted for peer review, our analytics link climate drivers such as changing temperature and precipitation patterns with the availability of vegetative fuels to assess wildfire potential in the future.

The analysis also explores key regions exposed to increasing wildfire potential and discusses the implications for financial stakeholders and communities. Our analytics affirm common understanding about locations exposed to wildfire, providing an indication of the increasing severity and frequency of wildfires in areas already prone to these events. The report also offers insight into areas that may have less obvious exposure, but are likely to have higher wildfire potential over time. Preparing for wildfires is a local, and often regional effort. The relatively high spatial granularity of our results (~25 kilometers) enables decision-makers to evaluate wildfire potential at a useful scale.

Key Findings:

  • Four Twenty Seven developed a first-of-its-kind global dataset projecting changes to wildfire potential under a changing climate, at a granularity of about 25 x 25 kilometers.
  • In areas already exposed to wildfires, by 2030-2040 climate change will prolong wildfire seasons, adding up to three months of days with high wildfire potential in Western Australia, over two months in regions of northern California and a month in European countries including Spain, Portugal and Greece.
  • New wildfire risks will emerge in historically wet and cool regions, such as Siberia, which is projected to have 20 more days of high wildfire potential in 2030-2040.
  • Globally, western portions of the Amazon and Southeast Asia will experience the largest relative increases in wildfire severity, further threatening crucial biodiversity hotspots and carbon sinks.
  • Confronting this new risk will take unprecedented resources and new approaches in regions not familiar with wildfires and worsening wildfire seasons will continue to threaten already limited resources in currently exposed areas.

Download the report.

Download the press release.

[1] Cohen, Li, “Australian bushfire smoke killed more people than the fires did, study says,” CBS News, March 20, 2020, https://www.cbsnews.com/news/australia-fires-bushfire-smoke-killed-more-people-than-the-fires-did-study-says/.

[2] Rodway, Nick, “‘We are a ghost town’: Counting the cost of Australia’s bushfires,” Aljazeera, January 27, 2020, https://www.aljazeera.com/ajimpact/ghost-town-counting-cost-australias-bushfires-200127035021168.html.

[3] Ben Butler, “Economic Impact of Australia’s Bushfires Set to Exceed $4.4bn Cost of Black Saturday,” The Guardian, January 7, 2020, https://www.theguardian.com/australia-news/2020/jan/08/economic-impact-of-australias-bushfires-set-to-exceed-44bn-cost-of-black-saturday.

[4] Cappucci, Matthew and Freedman, Andrew, “Arizona wildfires grow as flames flicker throughout Desert Southwest and California,” The Washington Post, June 22, 2020, https://www.washingtonpost.com/weather/2020/06/22/arizona-wildfires-grow-flames-flicker-throughout-desert-southwest-california/

[5] Fann N., Alman B., Broome R. A., Morgan G. G., Johnston F. H., Pouliot G., & Rappold A. G., “The health impacts and economic value of wildland fire episodes in the U.S.: 2008-2012,” The Science of the Total Environment, 2018.

Racial Justice and Climate Change: Adaptation

Posted on by Natalie Ambrosio

Introduction

Black communities and other people of color are disproportionately exposed to the impacts of climate change and also tend to have fewer financial and healthcare resources to prepare for and respond to these impacts. Adapting to climate change without an explicit focus on racial justice can further reinforce inequalities; hence, building systemic resilience to climate change must include investment in communities that are on the frontlines of climate impacts, including Black communities.

For the Local and Regional Government Alliance on Race & Equity, “racial equity means that race can’t be used to predict success, and we have successful systems and structure that work for all.” Equity means that different groups are provided with the resources they need to address their distinct challenges, acknowledging that these will not necessarily be equal. Thus, adaptation must include equity in every step of the process, from risk assessment and decision-making to planning, implementation, monitoring and evaluation. Key elements of equitable adaptation include conducting vulnerability assessments that account for place-based vulnerabilities, integrating consideration of social and cultural value within budgeting decisions, involving frontline communities in the decision-making from the start, and investing in the resources and policies these communities need to thrive. While by no means exhaustive, this article highlights the importance of racial equity for several phases in the climate adaptation process and shares some emerging best practices.

Risk and Vulnerability Assessment

The first step in the climate adaptation process is identifying risk exposure and vulnerability. Climate risk is not based solely on exposure to climate hazards like floods and extreme heat, but also on vulnerability, driven by a community’s specific characteristics. Vulnerability is shaped by the sensitivity of a given population and its adaptive capacity. Thus, the impact of a climate hazard, such as a storm or drought, will depend upon the resources and sensitivities of exposed communities.

Adaptive capacity is multifaceted, including both tangible resources such as access to transportation, air conditioning and green spaces and intangible elements such as social capital. Effective risk and vulnerability assessments explore these characteristics of a community, to identify how risks may manifest, and serve as the foundation for determining what adaptation measures are needed. For example, members of low-income communities with low vehicle ownership and greater dependence on public transportation will be less likely to be able to evacuate during an extreme event, experience longer-term impacts if subway stations are flooded or damaged, and be more likely to face economic hardship if they cannot get to work or lose their jobs. For extreme heat, communities with more urban green spaces, widespread access to air conditioning, or access to public cooling centers such as libraries, are likely to be less vulnerable than communities in dense urban centers with little greenery and/or those without access to safe public cooling centers.

Social capital is built through regular interaction, shared values or culture, and human connections, which build trust and lead individuals to look out for one another. In some cases, high social capital has increased communities’ resilience, helping to counterbalance a lack of tangible resources. For example, during Chicago’s deadly 1995 heat wave, while Black communities were hit hardest, the Black community of Auburn Gresham stood out with lower death rates than Chicago’s most affluent neighborhoods. The distinguishing factor was the way Auburn Gresham’s infrastructure was conducive to building social capital—its sidewalks and restaurants promoted opportunities to get to know each other and interact. Assessing the social elements of adaptive capacity in climate vulnerability assessments is critical to understanding a community’s needs and ensuring that adaptation efforts build on and leverage existing social capital.

Sensitivity refers to the characteristics of individuals and communities that affect how a climate hazard may impact them. For example, Black communities often have high sensitivity to climate hazards, due to preexisting health conditions, which are driven by disproportionate exposure to environmental toxins. Likewise, agricultural communities are particularly sensitive to water stress due to the water-intensive nature of agricultural activities, with those that lack financial resources and political influence likely to experience the greatest impacts. Engaging with a community to assess its exposure to physical climate hazards, the resources it has to respond, and its residents’ particular sensitivities lays the groundwork for equitable adaptation.

Budgeting

A climate risk assessment centered on concerns for social equity can inform an equitable planning and budgeting process. Traditional cost benefit analysis can undervalue the needs of low-income communities or communities of color, due to its emphasis on ensuring adaptation costs do not exceed  property values. While this approach is often used to determine the best locations for adaptation investment, it can perpetuate inequitable distribution of impacts and investment. For example, in Cedar Rapids, IA, a flood mitigation study found that a region on the Cedar River’s West Bank did not qualify for investments in flood barriers due to relatively low property values. However, hundreds of these homes were destroyed by flooding in 2008. Policy makers can integrate a consideration for equity and improve the longer-term return on investment by replacing the current cost benefit analysis to account for vulnerability and longer-term community impacts and savings, rather than only up-front economic impacts.

The distribution of disaster recovery funds will dictate the resources available for community rebuilding and, in many instances, Black communities do not receive the funds they need. For example, after Hurricane Harvey, Taylor Landing, TX received $1.3 million in recovery funds—about $60,000 per affected resident. Taylor Landing is a town of 228, which had a median household income of about $69,000 in 2017 and, according to the Census, had no Black residents. Meanwhile, nearby Port Arthur, a town of 54,000 residents, with a median household income of $32,000 and a population that was over a third Black, received $4.1 million from the same funding—about $84 per affected resident. This inequitable distribution of funds is due to an unrepresentative regional fund allocation system. The members of the council that distributes the funds disproportionately represent the region’s smaller, primarily white towns, rather than the region’s largest cities, including Port Arthur. Moreover, the Small Business Administration approves disaster loan applications from primarily white communities at almost twice the rate that it does for applications from majority Black communities. This discrepancy is largely because disaster loan applications are based on credit scores, which are typically lower for minority populations and are more likely to remain low if these communities lack the resources to recover. This exemplifies the need for Black communities most exposed to climate impacts to be represented in decisions about resource allocation to support climate resilience and for reconsidering financing structures.

Acknowledging that many Black communities face compounding challenges due to a historic lack of investment in their communities, investing in these communities, and reducing the loss and costs that come with repeated impacts are important steps in ending this cycle. This calls for a restructuring of federal disaster response funding processes, moving beyond rigid frameworks based on home value and including advisory committees composed of members of the frontline communities. Financial institutions also have an opportunity to increase the flow of financial capital to Black communities. Strategies can include building advisory offerings meant to foster financial literacy and savings, shifting to key performance indicators focused on client financial health rather than promoting indebtedness and creating new models to reach those typically excluded. For example, accepting proof of current employment instead of requiring credit history to allow individuals to begin building credit would help those typically unable to access capital begin to obtain financing. Building equity in budgeting and promoting equitable lending practices would play a role in breaking the cycle of disenfranchisement.

Integrating Equity into Adaptation

Maladaptation and the Need for Change

There are many different types of adaptation measures, including structural measures, land-use policies and capacity-building. The impacts and efficacy of any adaptation measure is highly context-dependent. One common point of failure is the exclusion of certain stakeholders or when planners, consultants, and policy-makers make their own judgements of what is important and may ignore important characteristics of the community. In this case, there is often high potential for maladaptation, or unintended consequences that end up perpetuating existing social inequities by increasing the exposure of those who are already on the frontline.

For example, levees and other flood barriers often worsen downstream flooding as they force the water through a narrower channel, so there is more volume to inundate surrounding areas that do not have flood protection. The cost benefit calculations discussed above drive these engineering decisions and lead to protection for more affluent communities while nearby low-income towns endure the consequences. Likewise, while increasing flood insurance premiums may help provide incentives to move from flood-prone areas, for those who cannot afford to leave it also leads to increased affordability challenges and potentially the decision to forgo flood insurance, compounding challenges when flooding does occur.

As governments begin to invest in adaptation measures, there is a risk of climate gentrification, or the pricing out of Black residents and low-income communities. For example, in Norfolk, VA, part of the sea level rise strategy is to demolish several public housing units, replacing them with mixed-income buildings and transforming the rest of this exposed area into a green space that can absorb floodwater. The city provides some assistance and vouchers for relocation, but the burden largely falls on the low-income residents. In some cases, their only options are to live farther away from the city center, paying more money for gas to commute to work and making the daily efforts of providing for their families even more challenging.

Many factors influence the efficacy of adaptation outcomes, including whether or not the adaptation is responsive to the community’s needs. For example, if a new cooling center is built, but residents lack transportation or feel uncomfortable meeting in public spaces with few amenities, the cooling center will do little good. Likewise, evacuating ahead of hurricanes saves lives and warning systems can help prompt more thorough evacuations. However, residents that are not informed about the importance of evacuations or those who do not trust public authorities are unlikely to heed evacuation warnings, particularly if evacuations are challenging due to resource and transportation constraints. The long history of racism and exclusionary government programs have weakened trust of public authorities in some communities. Creating adaptation strategies that are truly equitable and effective requires understanding the community’s needs and tailoring a climate response that can be fully embraced by the community at risk.

Changing Policies

Policy makers must start exploring alternatives to adaptation guidelines that perpetuate inequity, such as the Army Corps of Engineers’ sole use of property value metrics when assessing which communities get flood protection, or waterfront adaptation that leads to climate gentrification. Some cities including those in the Bay Area, Atlanta and Chicago have started developing Land Trusts to ensure that affordable housing is available in the long-term, even as areas increase in value. The Land Trusts permanently own the land, but allow low-income families to enter into long-term leases and to build equity on the homes. When the time comes to move, the family sells to another qualifying low-income family and a resale formula is used to determine the amount, providing profit for the family that is selling while keeping the home affordable for other low-income families. This is one example of ways that innovative policies can foster equity alongside climate adaptation.

Engagement and Representation

Community engagement should be integrated into all steps of the adaptation process. This engagement can be broken down into three forms: outreach, consultation and deliberation. Outreach is the one-way, information sharing that comes from informing the community about climate risks or adaptation efforts, and consultation involves soliciting community feedback on draft plans and decisions. While this is important, it is essential that community engagement doesn’t just occur in the middle or end of the process, but rather is a central component from the beginning. Having community members present during the decision-making process will help identify what the community really needs. Equitable representation of community members, in terms of demographics and socioeconomic status is essential.

Another important outcome of intentional community engagement is transparent, two-way trust-building. Understanding the language, scientific literacy and culture of a community helps to build trust, and ultimately, to reduce vulnerability as a result of more successful and inclusive adaptation efforts.

Building Upon Existing Capacity

As discussed above, social capital is an important component of resilience and shared culture is one element of social capital. It is often the case that strong bonds exist in communities of color based on shared culture. While many Black communities and other communities of color lack financial capital and, thus, often do not have financial resources to build resilience, their social capital provides a solid foundation from which to build equitable, cohesive adaptation plans. Funneling resources through existing networks such as local religious groups and community cultural centers helps bolster this social capital while also allowing the organizations most informed regarding a community’s needs and trusted by its population to lead adaptation.

One example of adaptation rooted in community engagement and trust building is Baltimore’s Make a Plan, Build a Kit, Help Each Other program centered around residents sharing their stories and discussing the impacts of climate change, while working with local experts to develop preparedness plans. It is important to meet communities where they are, framing adaptation efforts around ensuring that communities have the social resources needed to prepare for climate hazards and acknowledging the wealth of insight and experience the community has to provide.

Conclusion

Equitable climate adaptation involves identifying areas that are on the frontlines of climate change and what they need to prepare for climate impacts. It also involves considering the implications of policy and ensuring that a disproportionate burden is not placed on frontline communities. Investing in equitable adaptation is one essential tool for addressing the disproportionate impacts of climate change on Black communities and other people of color. For too long, planning decisions have excluded communities of color, with long-term negative impacts. While more recent adaption efforts have sought to end this vicious cycle by creating a more inclusive environment for planning, communities of color still lack the political clout and funding to move projects forward. Opportunities to build partnerships with (or within) these communities, identify new funding and development models that directly address decades of exclusion, and reduce repeated loss by helping those most exposed confront climate change, must be embraced and advanced.

 

Racial Justice and Climate Change: Exposure

Posted on by Natalie Ambrosio

Introduction

The relationship between race and climate change is too often ignored. The recent protests for racial justice and police reform call attention to the fact that racism is still deeply embedded in our institutions and public policies. In the United States, people of color are disproportionately affected by polluting industries and climate change. A long legacy of racist housing policy and weak environmental protections contribute to this disproportionate exposure, coupled with systemic issues related to public health, education and wealth.

As part of our commitment to help raise awareness of the nexus between racial equity and climate change, this article will provide a brief overview of environmental injustice issues in the U.S., as well as highlight the disproportionate impacts of climate change on Black communities and people of color.

Disclaimer: We are aware that the history of environmental justice in the U.S. is deep and complex, and this short piece cannot do justice to the complex web of issues and suffering imposed on minorities. We hope this blog post provides an entry point for identifying organizations and researchers with greater expertise and a long history of commitment to environmental justice.

Housing Discrimination and Environmental Injustice  

The disenfranchisement of Black communities and other people of color in the United States includes discrimination in terms of access to education, public transportation, recreation, employment, healthcare and housing. Environmental racism is just one manifestation of this oppression and is particularly evident in housing and development.

Black communities and other people of color have been relegated to neighborhoods that have greater exposure to environmental pollution and toxicity than primarily white neighborhoods. Housing and lending policies have historically limited options for Black communities and people of color and concentrated these communities in locations with higher exposure to environmental hazards. In the 1930s, federal housing policy actively and intentionally contributed to segregation, subsidizing development for middle to low-income white households and prohibiting people of color from purchasing those homes. Relegated to live only in certain areas, entire minority communities were then “redlined,” labeling home buyers’ mortgages as too risky to insure. “Threat of infiltration of negro[s]” and “Infiltration of: Negroes” were often listed as reasons for giving a community a low grade, and for deeming the community as “hazardous.”

In America, where homeownership is the single most important source of equity- and wealth-building, Black households have historically been shut out of higher-value neighborhoods and have been systematically prevented from benefiting from the upward mobility and financial resources that accompany homeownership. Factors like redlining, disenfranchisement and the operation of toxic facilities in Black neighborhoods means that homes in majority Black neighborhoods are valued at half the price of homes with non-Black residents. Lack of opportunity to build equity through home ownership is a key reason that African American wealth equals just 5% of white wealth in the U.S.

Furthermore, as of 2019 over 30 million Americans live in areas where water infrastructure has violated safety standards. For example, in rural and primarily Black Lowndes County, Alabama, only around 20% of the population has a sewer system—the others have pipes deploying raw sewage into their yards. Navajo Nation residents rely on water contaminated by uranium mining, and infections and cancer are rampant in these communities. Lack of access to safe water leads some residents to drive for hours to obtain safe water, which in turn hampers education and work efforts, further perpetuating inequities. There is a nationwide trend in lack of enforcement and regulation around safety standards for drinking water, and often low-income, Black, Indigenous and other people of color who lack political clout endure the most severe impacts. In 2017 the American Society of Civil Engineers rated the U.S. drinking-water infrastructure as a D, estimating a need for $1 trillion investment in the next 25 years to prevent further erosion of pipes.

After decades of discriminatory housing policies and inequitable development, Black communities are still disproportionately exposed to pollution and environmental toxins, leading to detrimental health impacts which are often compounded by lack of access to suitable healthcare. This disproportionate exposure has been well-documented since the 1980s when a nationwide study by The United Church of Christ Commission on Racial Justice found that race was the strongest determinant of the location of commercial hazardous waste sites. Nationally, “African Americans are 75 percent more likely than Caucasians to live in fence-line communities—those next to commercial facilities whose noise, odor, traffic or emissions directly affect the population.”

Disproportionate Exposure to Climate Impacts and Climate Justice

While climate justice has multiple dimensions, at its core it refers to the understanding that those who are least responsible for climate change suffer its gravest consequences. Globally this manifests in developing countries experiencing the worst impacts of climate change, while their industrialized counterparts bear the responsibility for the carbon emissions responsible for worldwide climate impacts. From an intergenerational perspective, today’s younger generations are inheriting the consequences of older generations’ actions related to climate change, with Greta Thunberg a vocal advocate for generational justice.

Climate justice also manifests through racial inequity, in particular in the U.S., where the impacts of climate change will not be distributed evenly. While Black communities and other people of color bear the greatest health costs of industrial activity and of physical climate hazards, they also bear less responsibility for the greenhouse gas emissions causing the climate crisis. While individuals within these communities can be highly resilient, confronting social and economic disparities daily, these communities also often lack the resources to adequately prepare for and respond to the health impacts of pollution and physical impacts of climate change.

Floods

Flooding in the United States disproportionately affects Black residents, as Black neighborhoods are often in low-lying floodplains, with impermeable surfaces and a lack of effective flood protection infrastructure. In many cases, nearby chemical sites, refineries and other industrial infrastructure are also located in flood zones, multiplying the risks of exposure to toxic chemicals during storms. While many middle-income white households face difficult decisions about whether to permanently leave their home in the floodplain, not everyone has the economic freedom to make such decisions. In many cases, Black residents and other people of color do not have access to the transportation or the savings to evacuate at a moment’s notice, let alone permanently relocate.

Storms

The overexposure of Black neighborhoods to flood risk, alongside the lack of resilience investment in these communities, also leads to disproportionate vulnerability to the impacts of storms. During Hurricane Katrina, Black individuals were among those that were least likely to evacuate, with access to transportation being a key factor. The city’s four largest public housing buildings, primarily occupied by Black residents, were permanently closed after incurring storm damage. Four of the seven zip codes enduring the costliest flood damage due to Hurricane Katrina were at least 75% Black and the community most damaged by Hurricane Harvey was 49% nonwhite. This is a common trend across the nation.

These statistics, stem partially from a history of inequitable funding. In 1965 Hurricane Betsy hit New Orleans, causing the most damage in New Orleans East and the Lower Ninth Ward, which are primarily Black neighborhoods. This catalyzed investment in levees to protect New Orleans from flood waters, but these investments went primarily to predominantly White neighborhoods which were not as damaged and already had some flood protection infrastructure. This distribution of funds foreshadowed the unequal distribution of impacts when Katrina hit decades later.

Sea level rise

Global sea levels have risen by about eight inches over the past century, with the rate of rise increasing recently. In responding to sea level rise, jurisdictions tend to take one of two approaches: invest in adaptation measures to keep the water out, or abandon an area to the rising seas. Studies show that low-income minority neighborhoods are more likely to be abandoned while higher-income predominately white neighborhoods tend more often to be protected. One reason for this is decision-making that relies only on financial indicators. Resilience investments driven by cost benefit analysis focusing only on the property values, rather than looking at social and cultural characteristics of a community, further contribute to the inequitable impact of climate change.

Relatedly, as the risks of sea level rise become more evident there is an increased risk of “blue-lining” – a term used by Tulane Professor Jesse Keenan, to express its connection to redlining. Many Black and low-income populations that did not receive investment in sound sewage and drainage systems due to redlining experience the worst impacts of flooding today. As banks and investors learn about exposure to floods and sea level rise, they are increasingly hesitant to offer funding to these neighborhoods. Yet without investment, communities are unable to improve their infrastructure and build resilience, further reinforcing the cycle of racial injustice.

Research in Miami-Dade County, Florida found a positive relationship between price appreciation and elevation in most study cities. This shift can potentially lead to ‘climate gentrification’—another term coined by Prof. Keenan, as minority populations migrate towards more exposed areas. For example, in Miami’s higher elevation, traditionally minority neighborhoods such as Liberty City and Little Haiti, rising property values are making homes unaffordable for residents, reflecting the new preference for high elevation. This combination of being priced out of higher elevation neighborhoods and property values decreasing in more exposed coastal areas may further contribute to the cycle of disproportionate exposure to sea level rise among Black populations and other minority residents.

Water Stress

According to the World Resources Institute’s data, 20% of the U.S. currently experiences “high” or “extremely high” water stress, and this number is expected to increase significantly by midcentury. Population growth will further threaten drinking water supplies, and the impacts will be uneven. In 2014 the water table in Fairmead, an unincorporated town in California’s Central Valley with majority Black and Latino residents, dried up and the citizens had to rely on donations and emergency relief for drinking water. Many of Fairmead’s residents are farmers, relying on water for their livelihoods as well as for human consumption, and water for irrigation comes from private wells that are only a few hundred feet deep. While these farmers cannot afford to drill deeper wells, nearby corporate farms can afford to drill wells up to 1,000 feet deep and are thus less affected by the dwindling water table. Climate change will exacerbate existing inequities around water access, particularly for Black and Indigenous communities.

Extreme Heat

Extreme heat kills more residents annually in the U.S. than any other climate hazard. Temperatures can vary by as much as 20ºF between neighborhoods due to the urban heat island effect. The hottest neighborhoods tend to be disproportionately covered in concrete and home to low-income and Black residents. Research shows that these urban development trends are connected to the history of racist housing policies. Residents in low-income and Black communities are also less likely than middle-income and white populations to have well-insulated homes, access to consistent air-conditioning or cool, safe public gathering spaces. Meanwhile, the asthma, heart disease and other chronic illnesses precipitated by exposure to air pollution, increases the health risks of extreme heat.

Conclusion

Due to a history of segregation and systematic economic oppression Black communities are consistently relegated to areas most exposed to flooding and extreme heat, while at the same time lacking resilience investment and access to educational, health and transportation resources to effectively prepare for and respond to disasters. Investing in equitable climate change adaptation is one facet of pursuing climate justice. Equitable adaptation requires involving community members in every step of decision-making and reviewing adaptation options based on the exposure and vulnerability of the community in question, as well as the potential for downstream impacts on others. We discuss this subject in our blog on equity as a cornerstone of adaptation.

Panel Recording: Electric Vehicles, Green Public Travel

Posted on by Jeremiah Kim

This Responsible Investor Digifest panel features a discussion on the time frame for adoption of evolving electric vehicle technology, the improvements of green mass transit, how this affects carbon transition risk and the investment impacts and credit rating implications of the transport revolution.

Speakers

  • James Leaton, Vice President and Senior Credit Officer of Moody’s discusses the future of mobility and its cross-sector credit implications.
  • William Todts, Executive Director of Transport and Environment, highlights prominent issues to consider post-COVID-19 in the transport space.
  • Joy Williams, Senior Advisor of Mantle 314, shares investor and analyst perspectives on navigating resilience.
  • Moderator: Daniel Brooksbank, Head of Strategic Content, Responsible Investor

Newsletter: Black Lives Matter

Posted on by Natalie Ambrosio

Four Twenty Seven's monthly newsletter highlights recent developments in climate risk and resilience. This month we emphasize the need for racial justice, share new resources on climate risk for investors and regulators and highlight recent calls for climate risk disclosure.
Black Lives Matter

We at Four Twenty Seven are saddened and angered by the recent killings

of Rayshard Brooks, George Floyd, Breonna Taylor, Ahmaud Arbery along with so many others, and by the systemic injustice and continued brutality Black individuals experience every day. We stand in solidarity with the Black community against all forms of racial injustice and we state unequivocally that Black Lives Matter.

During this time of national reckoning, we are reflecting on our responsibility to use our platform to speak out against injustice and elevate the voices of Black people, other People of Color, and those who have dedicated themselves to racial justice.

While the issues we are facing today are not new, they have reached a boiling point, due to centuries of injustice, mistreatment and violence against Black individuals. This is a systemic problem, deeply rooted in our society, that calls for systemic change. We are committed to being a part of the change.

Together with Moody’s, our parent company, we believe “we all have a responsibility to do better and to build a more just society that serves everyone equally.”

As a company whose mission is to catalyze climate adaptation and resilience, we are committed to supporting equity and racial justice in our daily work. Black communities and communities of color are disproportionately affected by climate change and environmental degradation. They are on the frontlines of the impacts of pollution, extreme heat, storms, and disease. They have less means to mitigate detrimental climate and environmental effects, and often lack insurance and other means to recover when disaster strikes. Any investment in systemic resilience must be an investment in equitable adaptation.

As part of our commitment to change and owing to our expertise on environmental and climate-related issues, we commit to taking the following steps:

  • Use Four Twenty Seven’s platform to educate about environmental justice, equitable adaptation, and the interplay of race and climate change through webinars, publications and research;
  • Incorporate into our analytics a lens on equity and racial justice wherever possible; and
  • Connect students from underserved communities with education around opportunities in climate science through mentorship and internship opportunities.

As an organization and an employer, we also commit to fostering dialogue on racial justice among our team members and will strive to enhance the diversity of our team.

James Baldwin’s words ring true today more than ever: “Not everything that is faced can be changed, but nothing can be changed until it is faced.” We stand in solidarity with the Black community and are committed to doing our part to change the system and fight racism and injustice in our country.

Forthcoming Publications & Webinar on Racial Justice & Climate Action

As part of our commitment to using our platform to educate on these topics, we have planned the following pieces:
  • A blog outlining the issues of environmental justice in the U.S. and the disproportionate exposure and vulnerability of Black communities and other People of Color to the impacts of climate change.
  • A blog explaining the need for racial equity in climate adaptation and sharing approaches for integrating equity into adaptation planning and implementation.
  • A webinar on racial equity and climate action, scheduled for July 8th at 5pm CET / 11am EST / 8am PST.
Guidance for Addressing Climate Risk

Network for Greening the Financial System Guide for Supervisors
The NGFS Guide for Supervisors: Integrating climate-related and environmental risks into prudential supervision, outlines five recommendations for supervisors to address climate risks: determine how climate risks affect economies, develop a strategy, identify risk exposure in supervised firms, set transparent supervisory expectations and engage with financial institutions around effective risk management. The report highlights ways in which supervisors around the world are taking steps to address these risks, citing data from Four Twenty Seven.

The Institutional Investors Group on Climate Change Guidance for Asset Owners and Asset Managers
The new report, Understanding physical climate risks and opportunities, and its brief companion report, Addressing physical climate risks: key steps for asset owners and asset managers, provide an overview on the latest climate science, its implications for financial institutions and a process for addressing climate risks. It outlines five key steps, providing examples of how firms can understand physical climate risks, assess risks at the asset or fund level, review portfolio-level effects, identify risk management options, and monitor and report on these actions.
Continued Calls for Climate Risk Disclosure

The International Monetary Fund on Physical Risk and Equity Prices
The International Monetary Fund (IMF) dedicated a chapter of its Global Financial Stability Report to exploring the affects of physical climate risks on financial stability and found that equity investors may not be pricing these risks sufficiently. The IMF encourages mandating global physical climate risk disclosure and emphasizes the need for granular climate risk exposure data.

Ceres on Why U.S. Regulators Need to Address Climate Risk
Ceres' recent report, "Addressing Climate as a Systemic Risk: A call to action for U.S. financial regulators," encourages US. regulators to address climate risk as a systemic risk. Its recommendations include integrating climate change into prudential supervision, exploring how to address climate risks through monetary policy, considering climate risk in community reinvestment programs and joining the NGFS. 
Meanwhile, the Commodities Futures Trading Commission is preparing to release a report on addressing climate risks next month.
Rising Temperatures and Climate Science
The past seven Mays have been the seven hottest Mays on record, with this past spring being the second hottest on record. As the climate continues to change, we have record high temperatures more often, and parts of Africa, Asia, western European, South and Central America all experienced record warmth this spring. Meanwhile, new research suggests that the climate may be more sensitive to carbon emissions than previously expected, due to increased understanding of cloud microphysics. 
Four Twenty Seven Partners with Measurabl

Access Four Twenty Seven's Physical Climate Risk Data on Measurabl's ESG software for Commercial Real Estate
Twenty Seven’s physical risk data is now available in a new Physical Climate Risk Exposure tool on Measurabl’s investment grade ESG (environmental, social, governance) data hub. Through this integration Measurabl customers can now identify their physical climate risks to inform opportunities to build resilience across their real estate portfolios. “We’re thrilled to partner with the leading ESG data management platform to provide unprecedented levels of transparency to real estate owners and managers worldwide,” said Emilie Mazzacurati, Four Twenty Seven's Founder and CEO. “As climate change increasingly causes financial damage to real assets, this partnership helps fill the urgent demand for data to help the real estate industry prepare for the impacts of climate change.”

“The evolution of Measurabl’s software to include climate risk data was a natural development as we continue to build the best-in-class ESG –and now “R” – platform for commercial real estate,” said Matt Ellis, Measurabl's Founder and CEO. “The union of physical climate risks with ESG creates unparalleled transparency for climate-related financial decisions and disclosures.”
 

Webinar on Physical Climate Risk: Identifying Your Exposure with Measurabl

How does physical climate risk manifest for real estate assets and how can investors identify and manage their risk exposure? Josh Turner, Director, Research, at Four Twenty Seven, joined Measurabl's Noelle Bohlen and Cameron Ravanbach to discuss the climate data driving Four Twenty Seven's analysis and share insights on how real estate investors can leverage this information. Watch the recording.
Public Consultations on Climate Risk

European Commission Consultation on Climate Adaptation
As part of its Green Deal the European Commission has launched a climate adaptation strategy to encourage eco-friendly investments and build resilience. It is refining the initiative and soliciting feedback through a public consultation. Respond by June 30.

European Central Bank Consultation on Climate Risk Disclosure Guidance
Last month the European Central Bank (ECB) published guidance asking banks to disclose their climate-related risks and integrate these risks into their risk management processes. Compliance will be expected when the guidelines are finalized at the end of the year. The ECB has solicited feedback through a public consultation open until September 25.
Inside the Office at Four Twenty Seven

Derani Brewis - Australia & New Zealand
Four Twenty Seven is delighted to partner with Derani Brewis, of DB Funds Advisory, who will lead Four Twenty Seven's business development and growth strategy in Australia and New Zealand.

Derani brings over 25 years of experience in the Australian asset management industry, with relationships across the Australian superannuation and investment management community.
Most recently, Derani was Head of Business Development and Asset Consultants at GMO Australia. Derani has also held senior roles with BT Financial Group, Rothschild Asset Management and Prudential Fund Managers. 

Join the team! Four Twenty Seven is Hiring

There are several opportunities to join Four Twenty Seven's dynamic team. See the open positions below and visit our Careers page for more information.
  • Project Manager with excellent leadership skills and proven experience coordinating activities across teams of different disciplines within research, content and technology
  • Regional Sales Director (North America) with extensive experience selling and supporting data products and services for large commercial, financial and government institutions
  • Climate Data Analyst with expertise translating applied climate science for a wide range of stakeholders.
Upcoming Events

Join the team online at these upcoming events and check our Events page for updates, including registration links to webinars not yet available:

  • Jun. 15 - 19 - Responsible Investor Digital Festival, Virtual: Four Twenty Seven joins Moody's and Vigeo Eiris at a virtual exhibit and Emilie Mazzacurati, Founder & CEO, will presented on climate scenario analysis today.
  • Jun. 30 – Urban Land Institute Webinar, Living on the Edge: Sea Level Rise, 9:30am EST / 6:30am PST: Emilie Mazzacurati will present on climate risk for real estate.
  • Jul. 2 – Finance for Adaptation Solutions & Technologies Roundtable, 4pm BST/ 8am PST: Emilie Mazzacurati will speak.
  • Jul. 8 – Moody's Sustainable Finance Webinar on Racial Justice and Climate Change, 5pm CET / 11am EST / 8am PST: Members of the Four Twenty Seven team will speak.
  • Sept. 2-3 – Risk Americas Convention, New York, NY: Members of the Four Twenty Seven team will host a booth and present on climate risk.
  • Sept. 9 – Environmental Finance - The Future of ESG Data 2020, Virtual: Léonie Chatain will speak.
  • Sept. 15 - 16 – Responsible Investor Tokyo 2020, Tokyo, Japan: Members of the Four Twenty Seven team will present on risk disclosure and host a booth. 
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Copyright © 2020 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for investors, corporations and governments. Fill in the form below to join our mailing list. As data controller, we collect your email address with your consent in order to send you our newsletter. Four Twenty Seven will never share your mailing information with anyone and you may unsubscribe at any moment. Please read our Terms and Conditions.
 

Our mailing address is:
Four Twenty Seven
2000 Hearst Ave
Ste 304
Berkeley, CA 94709








Black Lives Matter

Posted on by Natalie Ambrosio

We at Four Twenty Seven are saddened and angered by the recent killings of Rayshard Brooks, George Floyd, Breonna Taylor, Ahmaud Arbery along with so many others, and by the systemic injustice and continued brutality Black individuals experience every day. We stand in solidarity with the Black community against all forms of racial injustice and we state unequivocally that Black Lives Matter.

During this time of national reckoning, we are reflecting on our responsibility to use our platform to speak out against injustice and elevate the voices of Black people, other People of Color, and those who have dedicated themselves to racial justice.

While the issues we are facing today are not new, they have reached a boiling point, due to centuries of injustice, mistreatment and violence against Black individuals. This is a systemic problem, deeply rooted in our society, that calls for systemic change. We are committed to being a part of the change.

Together with Moody’s, our parent company,  we believe “we all have a responsibility to do better and to build a more just society that serves everyone equally.”

As a company whose mission is to catalyze climate adaptation and resilience, we are committed to supporting equity and racial justice in our daily work. Black communities and communities of color are disproportionately affected by climate change and environmental degradation. They are on the frontlines of the impacts of pollution, extreme heat, storms, and disease. They have less means to mitigate detrimental climate and environmental effects, and often lack insurance and other means to recover when disaster strikes. Any investment in systemic resilience must be an investment in equitable adaptation.

As part of our commitment to change and owing to our expertise on environmental and climate-related issues, we commit to taking the following steps:

  • Use Four Twenty Seven’s platform to educate about environmental justice, equitable adaptation, and the interplay of race and climate change through webinars, publications and research;
  • Incorporate into our analytics a lens on equity and racial justice wherever possible; and
  • Connect students from underserved communities with education around opportunities in climate science through mentorship and internship opportunities.

As an organization and an employer, we also commit to fostering dialogue on racial justice among our team members and will strive to enhance the diversity of our team.

James Baldwin’s words ring true today more than ever: “Not everything that is faced can be changed, but nothing can be changed until it is faced.” We stand in solidarity with the Black community and are committed to doing our part to change the system and fight racism and injustice in our country.

Newsletter: Will There be a Green Recovery?

Posted on by Christina Guo

Four Twenty Seven's monthly newsletter highlights recent developments in climate risk and resilience. This month we discuss the potential for a green recovery, highlight ways in which asset owners can leverage Four Twenty Seven's Physical Climate Risk Application and share recent and upcoming webinars.
In Focus: Will There be a Green Recovery?

Governments Include Climate Measures in Recovery Efforts
As many EU leaders commit to pursuing Europe's Green deal alongside recovery efforts, already approved measures in European countries also mandate that corporations consider climate goals during their use of relief funds. As part of its green recovery programs Germany invited over 400 listed companies to participate in a research project on how these firms are aligned with the EU Taxonomy, currently focused on climate mitigation and adaptation activities.

Meanwhile, Canada requires that large corporations commit to filing TCFD-aligned climate risk disclosures to receive specific bailouts. China's Politburo Standing Committee has endorsed new infrastructure spending of $1.4 trillion over five years for several low-carbon technologies such as electric vehicle charging, high-speed rail and others. However, the details and implementation are still unclear, with provincial governments having significant control, and many still in favor of traditional energy.

Low interest rates do make this a particularly good time for governments to invest in resilience and green infrastructure, with substantial return on investment over time. Though in the U.S. there is less indication that stimulus efforts will include significant measures to support a green recovery, with any current action coming scattered from some states. However, if Biden is elected in November the situation may change in the U.S. Biden's appointment of Alexandria Ocasio-Cortez as co-chair of his climate task force could signal an intent to favor green jobs to help the economy recover.

Moody's Webinar: COVID-19 and Climate Change

During last week's webinar Founder & CEO, Emilie Mazzacurati, joined Rahul Gosh, SVP, Credit Research & Strategy at Moody's, to discuss what organizations can learn from the pandemic to help prevent and prepare for climate change. Emilie discussed the impact on emissions, government responses and how these events can help companies understand the implications of carbon transition risk. Register for the webinar to watch the replay.
How Can Asset Owners Manage
Climate Risk?

Use Case - Climate Data for Risk Management in Real Asset Portfolios
As regulatory pressure to assess and report climate risks picks up, and physical climate hazards increasingly result in financial damage, asset owners face the daunting challenge of leveraging climate data for financial decision-making. Real estate, infrastructure, agriculture, timber and other real assets have long been an integral component of an asset owner’s portfolio due to their returns and the diversification they offer to the overall fund. However, many real assets are highly vulnerable to physical climate risks. These risks manifest in direct and indirect ways, including increased costs, reduced revenues and decreased asset value.

Evaluating an asset’s exposure to physical climate hazards is challenging, yet also an essential first step in managing climate risks. Four Twenty Seven’s Physical Climate Risk Application allows investors to assess exposure to floods, sea level rise, hurricanes & typhoons, heat stress and water stress at the asset and portfolio levels. Asset owners leverage hazard exposure scores to identify regional and sectoral trends as well as specific hotspots. Flexible viewing options and digestible data provide insight for portfolio risk assessments and due diligence processes. This new case study explores how, armed with climate risk data at decision-relevant scales, asset owners can begin to manage their risk. 
 
Read the Case Study
Regulatory Updates

Bank of England Postpones Climate Stress Tests
Earlier this month the Bank of England and the Prudential Regulatory Authority postponed its climate-related stress tests until at least mid-2021 to allow banks and insurers to focus on COVID-19 recovery efforts. The announcement emphasized the ambitious scope of the stress tests and the hope that the delay will allow firms to invest sufficient resources in the exercise when the time comes.

European Central Bank Publishes Guidance on Climate Risk Disclosure
Yesterday, the European Central Bank (ECB) published guidance asking banks to disclose their climate-related risks and integrate these risks into their risk management processes. Compliance will be expected when the guidelines are finalized at the end of the year. The ECB has solicited feedback through a public consultation open until September 25.

Update to the EU Non-financial Reporting Directive
The European Commission is soliciting feedback on its non-financial reporting directive as part of its efforts to improve oversight of non-financial reporting in alignment with its Green Deal and a global call for a new approach to regulating non-financial disclosure. Provide feedback by June 11.

European Commission Consultation on Climate Adaptation
As part of its Green Deal the European Commission has launched a climate adaptation strategy to encourage eco-friendly investments and build resilience. It is refining the initiative and soliciting feedback through a public consultation. Respond by June 30.
Four Twenty Seven Shortlisted in Waters Ranking 2020

Vote for Four Twenty Seven as Best Alternative Data Provider
Four Twenty Seven is honored to be short-listed in the Best Alternative Data Provider category in the 2020 Waters Rankings.
This readers' choice award recognizes the capital markets' leading technologies and providers. We'd be grateful for your vote! You can vote here before May 29. 
Webinars on Integrating Climate Risk into Financial Decision Making

IIF Webinar Recording: Quantifying the Impacts of Climate Change
This Institute of International Finance webinar (IIF) features Emilie Mazzacurati, Founder & CEO of Four Twenty Seven, and Jing Zhang, Managing Director, Global Head of Quantitative Research at Moody’s, as they provide an overview of Moody’s climate risk solutions on the financial impacts of climate change. Watch now.

AllianceBernstein Webinar: Incorporating Climate Change into Investment Research
Please join us for a discussion about how the investment value chain is incorporating climate change into decision-making. Sara Rosner and David Wheeler, of AllianceBernstein, will discuss their collaboration with Columbia University on climate change and highlight the climate theme in their sustainable portfolios. Martina Macpherson, of Moody’s, will provide an overview of the current market environment and Moody's ESG and climate efforts, and Emilie Mazzacurati will present a deep dive into climate risk analytics. This webinar is next Wednesday, May 27 at 2pm BST / 9am EST / 6am PST. Register here.
Inside the Office at Four Twenty Seven

UK Sales Director - Ben Boukhobza
Four Twenty Seven welcomes Ben as UK Sales Director. Ben leads Four Twenty Seven’s business development and growth strategy in the United Kingdom and Ireland.

Ben leverages ten years of experience across various roles within the Commercial Group at Moody’s Investors Service (MIS). Most recently Ben led the EMEA Sales Support team, having previously held roles ranging from sales and account management to operations and technology.

Join the team! Four Twenty Seven is Hiring

There are several opportunities to join Four Twenty Seven's dynamic team. See the open positions below and visit our Careers page for more information.
  • Project Manager with excellent leadership skills and proven experience coordinating activities across teams of different disciplines within research, content and technology
  • Regional Sales Director (North America) with extensive experience selling and supporting data products and services for large commercial, financial and government institutions
Upcoming Events

Join the team online at these upcoming events and check our Events page for updates, including registration links to webinars not yet available:
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Copyright © 2020 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for investors, corporations and governments. Fill in the form below to join our mailing list. As data controller, we collect your email address with your consent in order to send you our newsletter. Four Twenty Seven will never share your mailing information with anyone and you may unsubscribe at any moment. Please read our Terms and Conditions.
 

Our mailing address is:
Four Twenty Seven
2000 Hearst Ave
Ste 304
Berkeley, CA 94709








Newsletter: Climate Resilience in the Age of COVID

Posted on by Christina Guo

Four Twenty Seven's monthly newsletter highlights recent developments in climate risk and resilience. This month we discuss the overlapping challenges of COVID-19 and climate hazards, share consultations on climate risk for financial stakeholders and highlight developments in climate risk at Moody's.
The Compounding Challenges of Climate Hazards and COVID-19

Climate Preparedness Takes on New Meaning - Four Twenty Seven Analysis 
Last week in the Southern U.S., residents and policy-makers weighed the risks of high winds and flooding alongside the risks of spreading COVID-19, as many evacuated to storm shelters, and 750,000 people lost power across ten states from Texas to West Virginia. Meanwhile that same week 50,000 people in Connecticut lost power because of a storm, with restoration efforts complicated by COVID-19. The devastating human health and economic impacts of the COVID-19 pandemic are exacerbated by climate hazards, which threaten communities around the world. Four Twenty Seven's new analysis explores exposure to floods, heat stress, hurricanes and wildfires in U.S. municipalities alongside the impacts of COVID-19 on the same regions.

Our analysis explores exposure to extreme rainfall in the Midwest and the particular vulnerability of essential services such as manufacturers of personal protective equipment and farmers, to disruptions due to floods. It discusses the human health implications of extreme heat and its particular threat to business continuity from power disruptions when business operations are dispersed across employees' homes. States like Louisiana and Florida are addressing COVID-19 while preparing for a busy hurricane season. Likewise, typical wildfire preparations have been delayed and canceled due to the pandemic, leaving states like California, Washington and Colorado particularly vulnerable to this year's wildfires.
Read the Analysis

Further reading on climate change and COVID-19:
Public Consultations on Climate Change in the Financial Sector
While the world is sheltering from COVID-19, regulators are moving forward with their goals to address climate change. There are currently several open consultations to gather industry feedback on new standards and reporting requirements. 
 

EU Draft Minimum Standards for Climate Benchmarks

The European Commission is seeking feedback on draft standards for its "EU Climate Transition" and "EU Paris-aligned" benchmarks. The goals of the benchmarks are to increase transparency, help direct capital toward climate-friendly investments and prevent green-washing. Provide feedback by May 6.
 

FCA Proposal for Updated Climate Risk Disclosure

The UK Financial Conduct Authority is seeking feedback on its proposals to mandate climate risk disclosure for all commercial companies with premium listings. This requirement would build upon the Task Force on Climate-related Financial Disclosures recommendations and use a comply or explain approach. Respond by June 5.
 

Update to the EU Non-financial Reporting Directive

The European Commission is soliciting feedback on its non-financial reporting directive as part of its efforts to improve oversight of non-financial reporting in alignment with its Green Deal and a global call for a new approach to regulating non-financial disclosure. Provide feedback by June 11.
 

Consultation on Renewed EU Sustainable Finance Strategy

The European Commission is soliciting public feedback on its updated sustainable finance strategy, building upon its 2018 Action Plan for Sustainable Finance. This strategy aims to integrate climate change and other environmental considerations into the financial system, supporting the European Green Deal. The deadline to respond was extended to July 15.
ESG and Climate at Moody's

Moody's Launches New ESG & Climate Risk Website
Moody's new ESG and Climate Risk Hub collates resources on climate risk and ESG from Moody's and its affiliates, including Four Twenty Seven. The platform includes solutions and insights to help investors, lenders and other stakeholders integrate climate risk into decision-making.

ESG Factors Frequently Cited as Material Credit Considerations
Out of almost 8,000 Moody's private sector ratings actions in 2019, about a third referenced material ESG considerations. Moody's Investor Service's new report shares findings on how ESG considerations are factored into ratings actions.
Climate Risk News

New High Temperature Records Set
Last month was the hottest month on record for the world's oceans and the oceans' five hottest years have been within the last ten years. Warm oceans are connected to many climate hazards, ranging from hurricanes to wildfires. If the Atlantic remains warm during hurricane season, it's expected to contribute to stronger storms this year. Meanwhile, warm seas can pull rain from inland, contributing to drought associated with wildfire conditions. This occurred last year in Australia when the Indian Ocean was particularly warm off of Africa's coast.

Meanwhile, this year's first quarter had the second warmest air temperatures on record globally. NOAA projects there is a high chance that 2020 will become the warmest year on record.

Climate Resources for the Financial Sector
These ongoing scientific findings on the dire rate of climate change, including new temperature records and updated sea level rise projections, have significant financial implications. The Global Association of Risk Professionals (GARP) launched a new Global
Sustainability and Climate Risk Resource Center to help communicate these risks. This platform introduces climate change for financial stakeholders and provides resources to help risk managers understand climate risks.
Inside the Office at Four Twenty Seven

Senior Climate Data Analyst - John Naviaux
Four Twenty Seven welcomes John as Senior Climate Data Analyst. John performs stochastic modeling of climate and weather data to advance Four Twenty Seven’s climate risk analytics. Previously, John worked on topics ranging from transportation economics in Los Angeles to particle physics at the Large Hadron Collider in Geneva, Switzerland. John monitored arctic mercury pollution in Norway as part of a Fulbright Fellowship, and received his Ph.D. at Caltech for his research on the ocean’s response to climate change.

Four Twenty Seven is Here to Serve our Clients

As COVID-19 has led to widespread disruption in businesses and personal lives, Four Twenty Seven remains committed to ensuring the safety of our staff and clients while also continuing to provide the same data, analysis and client support that we are known for. Our business remains open globally, with teams in the U.S., Paris, London and Tokyo working remotely. Please do not hesitate to reach out to us via email or on our cell phones. 
Upcoming Events

An Update on Postponements and Cancellations:

  • Apr 28 – Afire Rising Leaders Summit, New York, NY: Chief Revenue Officer, Lisa Stanton, will speak - CANCELED
  • May 12 at 10am EDT – IIF ESG Webinar Series: Quantifying the Impact of Climate Change: Founder & CEO, Emilie Mazzacurati will speak.
  • May 18 – Sciences Po Award Dinner, New York, NY: Founder and CEO, Emilie Mazzacurati, will speak. - POSTPONED
  • Jun 8 - 12 – University of Notre Dame CARE Conference, Heron Island, AU: Director of Communications, Natalie Ambrosio, will speak. - CANCELED
  • Jun 9 - 10 – Responsible Investor London 2020, London, UK: Members of the Four Twenty Seven team will attend and host a booth. - PENDING
  • Sept 2-3 – Risk Americas Convention, New York, NY: Members of the Four Twenty Seven team will host a booth and present on climate risk.
  • Sept 9 – The Future of ESG Data 2020, London, UK: Senior Analyst, Léonie Chatain, will speak.
  • Sept 15 - 16 – Responsible Investor Tokyo 2020, Tokyo, Japan: Members of the Four Twenty Seven team will present on risk disclosure and host a booth. 
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Copyright © 2020 Four Twenty Seven, All rights reserved.
Four Twenty Seven sends a newsletter focused on bringing climate intelligence into economic and financial decision-making for investors, corporations and governments. Fill in the form below to join our mailing list. As data controller, we collect your email address with your consent in order to send you our newsletter. Four Twenty Seven will never share your mailing information with anyone and you may unsubscribe at any moment. Please read our Terms and Conditions.
 

Our mailing address is:
Four Twenty Seven
2000 Hearst Ave
Ste 304
Berkeley, CA 94709








The Compounding Challenges of Climate Hazards and COVID-19

Posted on by Natalie Ambrosio

April 22, 2020 – Four Twenty Seven Analysis.  The devastating human health and economic impacts of the COVID-19 pandemic are exacerbated by climate hazards, which threaten communities around the world. This analysis explores exposure to floods, heat stress, hurricanes and wildfires in U.S. municipalities alongside the impacts of COVID-19 on the same regions. It discusses the compounding challenges for economies, infrastructure and human health and the importance of preparing for these overlapping disasters.

Introduction: Climate Preparedness Takes on New Meaning

Last week in the Southern U.S., residents and policy-makers weighed the risks of high winds and flooding alongside the risks of spreading COVID-19, as many evacuated to storm shelters, and 750,000 people lost power across ten states from Texas to West Virginia. Meanwhile that same week 50,000 people in Connecticut lose power because of a storm, with restoration efforts complicated by COVID-19 precautions. The threat of climate-driven extreme weather events takes on new meaning when standard responses such as evacuating to shelters conflict with guidelines for preventing the spread of the disease. The pandemic’s impacts have been compared to Hurricane Katrina hitting all 50 states. FEMA, which is leading the nation’s response, typically only battles disasters in a few states at once.

To ensure the safety of residents, many are typically urged to evacuate ahead of hurricanes and wildfires. However, crowded evacuation centers are prime conditions for diseases to spread. Authorities in several states are actively exploring the best responses to this challenge, considering options for increasing the capacity of evacuation centers, taking temperatures before admitting evacuees and booking blocks of hotel rooms as a last resort.

Hazards such as heat waves and wildfires pose human health risks that will contribute to already overwhelmed healthcare systems. Further, many communities rely on cooling centers and visit public spaces such as shopping malls to seek relief during summer months. Measures to reduce the spread of COVID-19 include the closure of facilities such as libraries and malls that typically serve as cooling centers. During a time when residents are encouraged to stay in or near their own homes, a heat wave would pose new danger. However, measures to improve preparedness, such as ensuring that hospitals have back-up power generators, improving availability of virtual healthcare and seeking alternative sources of personal protective equipment, will help communities prepare for the impacts of climate hazards as well as the pandemic.

The economic consequences of the pandemic also exacerbate the challenges presented by climate hazards for cities and residents. For those individuals who have lost their jobs due to COVID-19-related closures, decreased income may make it difficult to acquire needed emergency supplies or pay to relocate to a safe haven. Local governments already reaching deep into their coffers and straining existing resources, may have trouble allocating emergency personnel and resources to evacuate residents and to rebuild after a disaster.

This analysis explores the regions of the U.S. that are particularly exposed to the climate hazards of floods, heat stress, hurricanes and wildfires and how this exposure may exacerbate existing challenges due to COVID-19.

Extreme Rainfall and Flooding

Devastating flooding last year disrupted lives, threatened livelihoods and contributed to 19 million acres of cropland going unplanted. Seventy percent of those acres were in the Midwest, which was sodden for months. Communities are bracing for new floods this year which are expected to be severe, though not as devastating as last year’s floods. Counties in the Midwest are among the most exposed to increasing extreme precipitation due to climate change in the next several decades (Figure 1), where these floods are likely to become a regular occurrence.

Figure 1. Exposure to extreme rainfall by county, with red representing the most exposed counties and dark green representing the least exposed. Source: Four Twenty Seven.

This year, inundation would exacerbate the existing challenges of containing COVID-19, while COVID-19 containment precautions would, in turn, make flood response more challenging. Midwestern states such as Michigan, Illinois and Indiana are among states with the highest number of COVID-19 cases relative to their populations. While less densely populated communities have fewer cases to date, many Midwestern counties such as Cook County in Illinois and Franklin and Hamilton Counties, in Ohio already have a significant number of COVID-19 cases. Likewise, smaller towns typically have fewer financial resources and fewer staff dedicated to emergency relief.

The economies of many Midwestern communities depend upon agricultural and manufacturing industries, which require manual labor and the physical presence of the employees. Some manufacturing facilities reopened to produce personal protective equipment, and farms and grocery stores are both considered essential. However, these industries are at heightened risk of disruption from employees falling ill, as seen at several meatpacking facilities across the country. Floods can exacerbate these challenges, inundating roadways, manufacturing facilities, farms, and even grocery stores, preventing healthy staff from getting to and from their place of employment and disrupting the movement of goods. These impacts can also threaten food security if they disrupt food supply chains.

Heat Waves

Figure 2. Exposure to heat stress by county, with red representing the most exposed counties and dark green representing the least exposed. Source: Four Twenty Seven.

NOAA predicts above-average temperatures for much of the country through July, with no regions expecting below-average temperatures. Exposure to extreme heat is concentrated in Missouri and western Illinois, fanning out across the Midwest and South and including several areas that have had high numbers of COVID-19 cases to date (Figure 2). For example, the metropolitan areas surrounding Chicago and Detroit have both been hard hit by COVID-19 and face moderate exposure to heat stress. The Southeast corner of Florida faces high numbers of COVID-19 impacts as well as high heat stress and a looming hurricane season.

It is currently unclear how warmer temperatures will affect the spread of the virus. However, heat waves hinder worker productivity and can lead to safety concerns for outdoor workers, such as farmers. In addition to their human health impacts, heat waves also lead to higher peak energy demand as use of air conditioning surges. If governments and businesses alike continue to require or encourage their employees to work from home, reliance on air conditioning and power will likely be higher this year than in typical summer months. Resulting power outages can disrupt business continuity, particularly with operations dispersed across employees’ homes.

Hurricanes

Figure 3. Exposure to hurricanes by county, with red representing the most exposed counties and dark green representing the least exposed. Source: Four Twenty Seven.

Climate change is contributing to more frequent intense hurricanes and more severe storms are expected this season compared to the average season. States along the Gulf Coast and Atlantic Ocean are highly exposed to hurricanes (Figure 3), and several of these states, such as Louisiana and Florida, also have among the highest numbers of COVID-19 cases to date.

Local governments that depend upon sales tax are likely to feel the most immediate fiscal impacts from COVID-19, while those that rely more on property tax may feel longer term impacts influenced by foreclosures. In Florida, sales tax was responsible for 77% of the state’s general revenue in the 2018-2019 fiscal year, which suggests that it will face the fiscal impacts of COVID-19 over the next several months, corresponding with the hurricane season, when funds may be most needed. Other states, such as Louisiana, have extended their tax filing date indefinitely, which will delay tax income. Regions that depend on tourism, such as the Florida Keys, will be going into hurricane season with fewer fiscal resources than usual this year. A lack of fiscal resources will challenge preparedness efforts and emergency response to hurricanes.

Wildfires

As climate change contributes to more severe droughts and extreme heat events, wildfire season in the western U.S. has worsened over the past several years. California, Washington and Colorado are among those states most exposed to wildfires, and they are also among those states with the highest numbers of COVID-19 cases to date.

While the spring is usually spent preparing for wildfire season, these preparations have been hindered this year. Annual efforts to remove brush have been postponed, while hiring has been delayed and annual trainings have been canceled. Fire agencies are going into this year’s season understaffed, with many firefighters already sick or quarantined. They are also wary of the dangerous conditions of base camps, where firefighters sleep in close quarters on the front lines.

The economic impacts of COVID-19 on employment and incomes will exacerbate the losses caused by wildfires and will likely lead to higher numbers of residents facing tough questions around whether or not to leave an area if they lose their homes. The resulting emigration or delayed rebuilding will in turn reduce local government revenues.

Residents in fire-prone areas increasingly wear N95 masks to protect themselves from wildfire smoke. However, these masks are in short supply and authorities have directed that masks should be saved for medical personnel. If shortages persist into this year’s wildfire season, communities could face greater long-term respiratory health impacts due to wildfire smoke.

Conclusion

As COVID-19 continues to spread and its timeline remains unknown, each region of the country faces exposure to climate hazards which will complicate containment efforts. However, in a time when local jurisdictions and individuals are paying increased attention to disaster preparedness there is an opportunity to strategically prepare for climate hazards and invest in resilience that supports responses to any disaster. Hurricanes, wildfires, floods and heat waves are inevitable in our changing world, and the more proactive resilience-building that occurs, the better positioned communities will be to minimize the loss of lives and livelihoods.