Roundtable on 'Finance for disaster risk reduction and boosting public-private sector cooperation'
Climate crisis and the role of disaster risk reduction in risk proofing
private sector investments
24 October 2019
Ms. Mami Mizutori
Special Representative of the UN Secretary-General for Disaster Risk
Reduction and Head of the UN Office for Disaster Risk Reduction
It is a pleasure to be here today in Brussels and to welcome you to this roundtable on ‘Finance for disaster risk reduction and boosting public-private sector cooperation.’
We are meeting one month after the Climate Action summit in New York and the greatest public demonstrations that the world has ever seen over the climate emergency and the lack of action on reducing greenhouse gas emissions.
Every day brings news of just how urgent it is that we get on track to reduce greenhouse gas emissions by 45% over the next decade and to net zero emissions by 2050.
The extent of the challenge to the private sector was outlined in stark terms by the Governor of the Bank of England, Mark Carney, who warned ten days ago that companies and industries that are not moving towards zero-carbon emission will be punished by investors and go bankrupt.
The latest research from the Climate Accountability Institute highlights that since 1965, twenty fossil fuel companies have collectively contributed 480 billion tons of carbon dioxide and methane to greenhouse gas emissions. That is equivalent to 35% of all fossil fuel and cement emissions worldwide since that time.
These companies, many of them State-owned, benefit from considerable subsidies and yet continue to operate in a manner which ignores the climate science and the accumulation of corporate risk for themselves, their shareholders and employees, and looming catastrophe for all of us.
There was some positive news from the UN Climate Summit. More than seventy countries committed to net zero carbon emissions by 2050 but major emitters have yet to do so.
The UN Secretary-General has emphasized the gravity of the situation and underlined that we have about ten years left to avoid long-term irreversible climate change.
This highlights why public-private partnerships for reducing disaster risk are so fundamental to the future well-being of this planet.
Outside of the fossil fuel industry, we also know that private investment largely determines disaster risk. In most economies, 70% to 85% of overall investment is made by the private sector.
Among these global investments, many often fail to take disaster and climate-related risk into account. In Europe, close to 50% of the exposure of Euro area banks to risk is directly or indirectly linked to risks stemming from climate change.
At the same time, it is currently estimated that US$6 trillion will have to be invested annually in infrastructure globally (urban, land-use and energy systems) by 2030.
So how do we face this situation, when much of what is already invested is exposed to the worse effects of climate change? And without coordinated action, much of what needs to be invested, will be at risk too?
My office is responsible for promoting implementation of the global plan to reduce disaster risk and disaster losses by 2030. The Sendai Framework for Disaster Risk Reduction has seven targets. Along with targets for reducing mortality, numbers of people affected, economic losses and damage to infrastructure, it has a target with a deadline of 2020 for putting in place national and local strategies for disaster risk reduction which are essential to achieving reductions in disaster losses.
These strategies are an important opportunity for the public sector and the private sector to engage with each other in a way that ensures a multi-hazard, systemic approach to disaster risk management.
This means fostering a deeper understanding of disaster risk and its many permutations. It means ensuring links between disaster risk reduction, climate change adaptation and related financing strategies.
These strategies must respond to the classic drivers of disaster risk including climate change, poverty and inequality, environmental degradation, rapid urbanization, governance challenges, population growth and industrial expansion in hazard-exposed areas.
We can further support efforts to develop a taxonomy of ‘sustainable’ and ‘unsustainable’ economic activities which include those that are not resilient to disaster and climate risk.
We can encourage credit rating agencies to integrate sustainability factors into their assessments, including corporate resilience to physical climate change and disaster risk.
Work at the EU level on integrating disaster resilience into sustainable finance are positive developments in this regard. And we hope this continues and disaster resilience becomes a key factor that informs the European Green Deal and the new green financing strategy.
We, at the UN Office for Disaster Risk Reduction, see public-private partnerships as essential. We have taken several recent steps toward engaging the private sector and working with new actors to build disaster resilience.
We recently announced a partnership with Norway’s largest pension company, KLP, to geo-tag financial investments against vulnerability to disaster and climate risk.
This initiative is a step toward ensuring that investors make risk-informed decisions based on a clear understanding of an asset’s exposure to disaster and climate risks. This is fundamental to enhance the resilience of the local communities and economies in which the business activity is located.
Innovative partnerships around resilient infrastructure is another key priority. We have worked closely with the Government of India to support the creation of a Coalition for Disaster Resilient Infrastructure, which aims to help countries ensure all infrastructure is made climate and disaster resilient.
Until now, there has been a lack of technical capacity, tools, and knowledge exchange needed to ensure all countries put in place the policies, strategies and regulations needed to make infrastructure resilient. There is growing support for this Coalition and 13 UN member States have joined since it was launched at the Climate Action Summit.
Within the private sector, the engagement of micro, small and medium enterprises in building resilience is of critical importance. They represent 99% of all businesses and account for 85% of new jobs created in the last five years. And when disaster does strike, studies indicate that up 40-60 % of these small and medium businesses never reopen.
UNDRR is engaging with a wide variety of partners, both public and private, to increase access to finance, investment and insurance needed for adaptation and enhanced resilience. We are working to build a baseline understanding of how small and medium businesses manage their risks, and how they can increase resilience.
To conclude, I would like to thank Commissioner Stylianides, for his leadership and commitment to the disaster risk reduction agenda during his tenure as Commissioner. It has been a pleasure working with you during my time with UNDRR, and I wish you all the best for the future.
I look forward to the fruitful and engaging discussions which I am sure will follow today. Thank you all very much.