Episode Transcript
Speaker 0 00:00:00 Hello everyone, this is Kesa Shreen, and today we're going to talk about the impacts of climate change. We're seeing these impacts more and more and in various different forms, natural disasters, as well as policy discussions, politics, and even changes in investment strategies. Now, do investors actually have a role in preventing these risks and mitigating these risks? Today with us, we have Anita Dona, senior Director, environment and Disaster Management at wwf and Alessia Valone, head of Sustainable Investing at Pine Bridge Investments. Thank you both for joining Anita and l Sia. So Anita, let's first talk about the way disaster management has changed over the last few years, specifically. We'll, like to think about and talk through the ways hazards have come to mean different things to us, and underlying risks are changing. Could we speak to those two things specifically?
Speaker 1 00:00:58 Sure. And, uh, I wanna start by saying thank you for including us in this important discussion. It's a pleasure to be with you here today. Um, and I also want to recognize the experience that people are having around the world facing different disaster risks. Uh, particularly the, the climate, uh, influence, risk and disasters that are being experienced now in the US on the West Coast, these are ongoing challenges and, um, people are still in great need of support, um, are dealing with rescue and relief. And so I just wanna put that up front, that that is, uh, an ongoing and urgent issue. But as you mentioned, hazards and risk are changing, and the reason why we have the environment and disaster management program at World Wildlife Fund, um, is a recognition of that, that environmental issues contribute to disaster or risk, but they also play a very important part in the safe and resilient recovery, um, from extreme events. So it's, uh, important piece of work and we're learning, uh, as time goes on, how different hazards are changing, how that presents risk to both, both people and ecosystems, and how to deal with that risk successfully for the future. We need to look at a, an integrated approach to understanding risk, understanding hazards, but also in our response and recovery efforts.
Speaker 0 00:02:36 Mm-hmm. <affirmative> and Alessia, let's look at this from the institutional investor perspective. What are these risks such as these hazards, and in the us specifically the California wildfires, what should institutional investors do to adjust their strategies when they're considering such risks?
Speaker 2 00:02:55 Yeah, thank youa. It, it's in a way how, how do investors relate to extreme events? Is, is really the question here, right? Whether they're institutional or not. And more often than not, investors decision making, um, has been really affected by the time horizon and likelihood right, of, of a near term context that deteriorates father. So if you're thinking about California or Oregon, for example, in the wildfires, uh, we're really thinking about, you know, the whole US situation of having had over, uh, I think 12 or, or even 14 of these multibillion dollar, uh, events, um, in the US just last year and this year probably will amount more. So, uh, investors, they think exposures, uh, no matter the root cause of an extreme event, uh, could be weather, could be bankruptcy filing, right? Um, the first question that investors ask is, do I know, do I own it directly in my portfolio?
Speaker 2 00:03:49 Uh, now if not, um, any other adjacent risk I'm facing as a result of conditions deteriorating father, obviously, you know, needs to be considered. So, um, the fact is, investors as first, um, they start zooming in at one point on the map, right? In a very localized fashion, and then they expand, you know, their lens after zooming, you know, in that particular exposure as time goes. Um, where I see the importance of the situation, what Anita just said, that, you know, obviously, um, risk prevention in this case ha has to change and has changed, is that investors continue to fail to do several things. The first one is even the ones with very advanced analytical capabilities, um, call it prediction analytics, over stream weather events and call insurance over insurance companies, for example. Um, you know, which directly link, um, the outcome of event and disaster to financial impact is, again, zooming out that localized mode sooner and start looking for, in a way balancing effects, uh, which I usually call somewhere geographic map, total environmental human catastrophe.
Speaker 0 00:05:10 When we're looking Anita and Alessia, when we're looking at prevention, my thought is partnerships would likely play a role in mitigating and preventing such future events. What do these partnerships look like? So in terms of institutional investors and governments, how do these partnerships come about? And then once they're in play, what is the expectation around solving for these things? Anita, and unless you'll both love for you both to chime in and get your thoughts there,
Speaker 2 00:05:38 Um, again, as I was, uh, I was, um, saying earlier how to solve for it, right? Uh, when you're thinking about including metrics in the evaluation of aard and uncertainty and all the risks that call in a variety of disciplines, right? Like, uh, Anita was pointing out before. So you have a one hand risk management perspective toward ther prevention. On the other hand, you'll have climate change adaptation all the way to sustainable development, right? If you're thinking where the, the catastrophes localized, then you understand that the, the alliance has to be slightly different. Um, and again, in the developing world, for example, there is certainly a need to strengthen and build capacity of monitoring, right? Um, it's completely different than in the case of California, right? So that coordinated really data collection can help, uh, move in a way that, uh, that thinking and, and that partnering and those partnerships together.
Speaker 2 00:06:31 Um, for example, what I think is extremely helpful is when we're thinking about resilience, thinking of resilience, at least from an investor's perspective, building layers. Uh, so I call it an influence map, you know, which investors have available and they need to in, uh, which is network of government, national bodies, you're talking about municipalities, um, and scientific bodies, in this case, NGOs in a forward looking way that obviously allows for, um, early intervention, but planning for, and, and that would ultimately reduce, uh, both the human and the financial cost of future disasters. Um, so that in a ways, how does this influence map have worked over time so that resources can indicate core to confront, um, these type of risks. Hmm. Great. And
Speaker 1 00:07:19 Anita, Anita,
Speaker 2 00:07:20 What are your thoughts?
Speaker 1 00:07:21 Yeah, no, that's great. And I have, uh, almost exactly the same thoughts of what Alicia just said, and that if we replace what she said in terms of the private sector and companies with, uh, civil society organizations and NGOs, we have almost the same approach. Um, and <inaudible>, you mentioned partnerships, and that is a fundamental element to the work that I do. Um, integrating the environment and disaster management, and that's key, uh, for us all going forward. So we're trying to move away from the notion, uh, that climate change adaptation or resilience building is the responsibility of a department or a team or an individual. No, we all have to build our own capacity to understand what is adaptation, what is resilience, and what is my role and responsibility in contributing to that. And so we are working very deliberately within W W F to look at how to build the capacity to do that, to try to facilitate that type of, um, multi participant, if you will, analysis and then response.
Speaker 1 00:08:36 Because the way that the world is changing the number scale and scope of hazards and risks that we are all facing it, it will be virtually impossible for one group, one organization, one sector, to address that. We really have to figure out how to do that more successfully together. And so I am very committed, for example, to training the next generation of practitioners in actively facilitating their ability, whether they're working for an NGO o like WW F or the Red Cross or care, or the private sector company, or those working, um, in the public sector with governments. We all need to be able to work together, understand each other, and communicate in a way, in order to deal with these hazards and risks that we're facing.
Speaker 0 00:09:27 One word that I hear that heard from both of you, and it keeps coming up is resilience. So resilience, planning, determining, um, resilience. Is there a top three, you know, who wanna give a three step process for, these are the top three things that we should think about that any entity should think about when it comes to resilience. Um, this crosses sectors, this crosses regions.
Speaker 1 00:09:50 Sure. Um, that, that is an interesting and a complicated challenge that you put to us. Um, we, we hear the word resilience a lot these days. Um, and we all think of resilience as a, as a good, um, and positive thing. And, and by and large it is, but, but bad things can also be resilient, right? So we really have to do one sort of clarify, uh, when we say resilience, what do we mean by that? Um, and, and then look at a comprehensive approach to understanding, you know, what needs to be resilient, who needs to be resilient, how do you need to be resilient? Um, and then how do you get there? Um, so it's a matter of, uh, taking the time and the effort and having the space, uh, to think about what it means for, for, for you and how you're thinking of that term and that word and that approach.
Speaker 1 00:10:49 Um, and then working with others to, to maybe expand that perspective. Um, and I know that, you know, within w f my colleagues who specifically work with the, uh, private sector, they take a three prong, basically a three pronged approach. One is to help, uh, the private sector look at, uh, where is risk, what is resilience, and then how to prioritize, uh, those issues. And then secondly, looking at nature-based, um, approaches to try to address that resilience objective or, or that risk. And then thirdly, to collaborate with others because of what we were just talking about in terms of the integrated need, uh, to address these things over time.
Speaker 0 00:11:32 Perfect. Perfect. And the last question here, just wanna get your thoughts about have the philosophies of corporations, investors, have they changed over the last few years? And if so, what would you say was the benchmark event or the time period? And then where is in terms of outcome, where would we like these mindsets to be, say, in 12 months or 18 months or so?
Speaker 2 00:12:00 I think he said that, um, you know, I have a very visual image of, of, you know, growing up in the highly, uh, region in central Italy. Um, and so your question reminds me, in 2017 alone, uh, we have six months of deadly earthquakes, which result in 24 billion losses for the country, but you know, hundreds of, of deaths, right? So when we're thinking about resilience building programs and, and, you know, we have to consider that climate change, uh, can be, uh, approached without, you know, putting in, in the context of demographic change as well. Uh, and now obviously population is, is, is shifted and transitioned over time, where, where, where the rebuilding happens, and so on and so forth. So I think from my perspective, that the changing nature of demographics, um, is something that obviously is grabbing a lot more of headlines. Um, um, along the lines of the sustainable development, obviously, uh, issues or, or, uh, goals and ambitions that, you know, world has and along with investors yet, you know, I go back to how many days go by after an extreme event, call it the wildfires, uh, before investors starts, number one, worrying about their longer term consequences.
Speaker 2 00:13:17 And number two, thinking about other negative externalities that are associated with this increased social cost of these extreme events. Uh, which affect not just the local ecosystem, as I said, the zooming in effect. Um, but you have access to productivity in a specific region that is obviously affected by stream events. Um, so I think going back to, uh, what Anita just said, it is not just about what has changed, um, you know, in, in what headline may have switched, um, you know, sort of the focus on, um, how do we build resilience, uh, and what we mean by that, uh, but also the fact that this is a dynamic process, um, that that can be even, even more prolonged than rebuilding infrastructure or physical infrastructure itself, right? If you're thinking about the loss of biodiversity, if you're thinking about the increased level of pollution and so and so on and so forth, um, and the loss of the red access of mobility or connectivity, that all goes into place when you're discussing also the demographic change that we are facing. Uh, so I think, again, the topic of demographic change is probably what is affecting that influence map, um, that investors should and have started to look at, uh, but also the way we build, obviously, resilience over the long term.
Speaker 0 00:14:33 And Anita, if you had, um, you know, a magical ability to kind of shift the future and what 12 months from now or 18 months from now would look like, whether it be from a policy perspective or whether it be from a collaboration perspective, what would be your desired outcome? You were able to do that?
Speaker 1 00:14:48 I, I think it would be really helpful if 12 months from now, um, the we in this community and the role that we play, whether we're working for an NGO like mine or in the private sector, um, is to shift the focus on extreme events from the headline grabbing event itself and the aftermath. Um, and more focus, more attention and time and effort, investment on risk reduction before the extreme events. There's all sorts of perverse incentives, uh, to, to focus on the event and it's aftermath. And we need to shift the, the dynamics to focus more on preventing these bad things from happening. Um, and I think that would, that would point the way to great progress. In addition to what Alexia said about, uh, you know, looking at this from an integrated fashion and understanding that we in our, in our roles, uh, can no longer work separately in our silos. Um, but we have to do the hard work of figuring out how to work more together successfully.
Speaker 0 00:15:56 Mm-hmm. <affirmative> great information. So we've heard today that risk prevention and hazard, the way we think about hazards, it's really changing. We have tools now such as prediction, predictive analytics around extreme weather events, also sustainable development, risk management, prevention, analytics, and data collection all play a role in prevention and mitigation, but it takes a village, municipalities, scientific bodies, private companies, and NGOs. These sorts of partnerships can really work toward reducing the human and financial costs around these disasters. Also, we need to clarify what does resilience mean to us, to individual companies, um, and more corporately as a society, and also look at constructing a plan to get there. Um, finally, some critical points that shifted. How many of us think about these sorts of risks, demographic changes, one critical point, loss of biodiversity, as well as changing into sustainable business models. And, um, the last word we'll have here, one of the future things that it would be great to aim for is focusing attention more on risk reduction before extreme events, not just in its aftermath. Anita Alessia, thank you so much for joining us. Thank you.
Speaker 1 00:17:14 Thank you for having me. Great to talk to you.
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