UN and Norwegian Pension Company Forge Partnership to Identify Financial Investments At Risk
GENEVA/ BRUSSELS, 8 May 2019 – The United Nations Office for Disaster Risk Reduction and KLP, Norway's largest pension company, announced today a partnership to geo-tag financial investments against vulnerability to disaster and climate risk.
The UN Secretary-General’s Special Representative for Disaster Risk Reduction, Mami Mizutori, said: “This is a major breakthrough in the world of finance and investment. It is clear recognition of the need to include disaster risk in the investment portfolios of any self-respecting enterprise seeking to avoid exposure to climate and disaster risks.
KLP is Norway’s largest pension company, holding close to US$80 billion in total assets [NOK 676 billion].
The partnership is focused on connecting the asset geo-location of the largest companies on the Oslo stock exchange with potential vulnerability to natural hazards. It aims to examine the importance and value of assets based on their location. It will include a classification of facility type and overlay that information with an understanding of the asset sensitivity to develop a weighting relative to disaster risk.
Data and information about companies’ geo-locations is currently not readily available. Yet, this information is critical to assess potential financial risks to natural events such as flooding, landslides, erosion and storm winds. This initiative will demonstrate the value that can be created by coupling data on companies’ locations and potential weather-related threats, which can serve as basis for stakeholder feedback. Based upon the feedback from this "proof of concept" study, it is envisioned that the analysis could be expanded to a global scale.
The availability of data on the spatial distribution of companies would ensure that investors can make risk-informed decisions based on a clear understanding of the asset’s exposure to disaster and climate risks. This is a fundamental requirement in considering risk exposure and appropriate risk response to sustainable, long-term returns on investment, and to enhance the resilience of the local communities and economies in which the business activity is located.
KLP's Chief Executive Officer, Sverre Thornes, said: "It is essential for KLP to improve our ability to understand and measure the impact from climate change, such as extreme weather. This ties in with our financial risk assessment, but also connects with our ambition to encourage private companies to take action to address climate change as well. This analysis is not possible without coupling the geo-location of our financial assets with state-of-the-art scientific data on both how climate change may play out and the consequences that may result from flooding, landslides, erosion and other weather-related hazards. "
The United Nations Office for Disaster Risk Reduction and KLP, aim to showcase initial results of the collaboration at the 2019 Global Platform for Disaster Risk Reduction leading to the UN Climate Summit. The initiative is the first-time geotagging will be used to support disaster risk informed investments at a global level. To date, investors have not systematically used or had access to risk data on the vulnerabilities of assets to disaster hazards to inform decision making – a gap this initiative aims to fill.
“The United Nations Office for Disaster Risk Reduction has been campaigning on this issue for many years and we have a major opportunity now, partnering with KLP, to take a major step towards ensuring that a more risk-informed approach to investments becomes the norm as part of a global trend towards sustainable finance. This issue is particularly important for new infrastructure investment, which is often built with a view to cost-saving rather than long-term resilience,” said Mami Mizutori.
If replicated widely, the initiative could provide a much-needed boost to efforts by UN Member States and the private sector to implement the Sendai Framework for Disaster Risk Reduction 2015-2030- the global plan to reduce disaster losses.