many people, climate change is a fairly recent issue. Yet, governments all around the world have been commissioning scientists and economists to analyse the impacts of climate change since the 1970s. As nations and businesses work towards building a low-carbon, climate resilient economy, access to finance has emerged as a critical challenge. Private investors are now channelling huge amounts of money into the measures underpinning this transition, including energy efficiency, renewable energy (solar, wind, hydro, biomass), sustainable transport, climate adaptation, climate smart agriculture and deforestation mitigation. But, much more capital investment is needed to identify, develop, and support transformative sustainable finance ideas. This is particularly true for developing countries, which often face difficulties attracting private investment at the scale needed to reach their sustainable development goals. As a result, IFAD predicted that climate change would create barriers to future poverty reduction and reverse many important socio-economic gains, which had been made.
Evidence of Environmental Risks and Impacts
In Africa and Asia, there has been strong evidence of increasing extreme events such as heatwaves, tsunamis, droughts, intense rainfall, floods and hurricanes. This is not a coincidence by any means. Whilst the science was already proven, the severity of global warming, and the additional risks posed for vulnerable communities striving to combat poverty and development challenges, wasn’t anticipated. The ongoing exploitation and degradation of natural resources due to urbanisation, and rapid economic development in many countries further reduces the resilience towards climate change. Rather than efficiently use resources to address the impacts that are considered long-term threats, poorer countries are investing limited resources to face-up to short term goals.
Globally, as businesses are facing evolving challenges from increasing investor and regulatory pressure, changing consumer preferences, the realities of climate and environmental issues, there is evidence that corporate behaviour is changing, too. In response, corporates are launching to the market new environmentally-friendly products and services that help to manage climate change impacts. Driven by an opportunity to differentiate from competitors, a changing landscape attracts the right clients and employees to find innovative solutions for the world biggest challenges. As world leaders agreed a deal that would prevent global warming at the 2016 Conference of the Parties to United Nations Framework Convention on Climate Change (COP21), one thing became clear: that the private sector, with its financial strength and drive for innovation must play a lead role in the struggle for a greener, more sustainable future.
A collaborative approach to investing in climate resilience programs
Actors are considering a range of proactive measures to fight back. From improved forecasting, awareness and identification, to robust national strategies and policies. However, the fight against climate change will not be cheap. A collaborative approach to implement the right infrastructure is paramount, and likely to be a major factor in the economic appraisal of future capital investments. The World Bank estimates that “Developing countries will need about $100 billion of new investments per year over the next 40 years to build resilience to the effects of climate change. Mitigation costs are expected to be about $140 – $175 billion per year by 2030.” We must step up efforts to address climate change and decrease our carbon footprint, by investing in more renewable energy and other sustainable resources. Private, Public and the Civil society must collaborate to fight against this risk as part of their corporate strategies.
For Sub-Saharan Africa, in particular, the repercussions of climate change will reverberate across the entire region. Without clear risk assessment and mitigation, the ripple effect will be catastrophic. For example, agricultural livelihoods upon which the majority of the population depends, will be destroyed. People will seek to migrate to greener pastures, leading to new socio-economic and environmental vulnerabilities.
As impacts across sectors are likely to amplify the landscape but aren’t well understood, the National Climate Assessment provides an in-depth look at the implications on the US. It shows the number of ways that the phenomenon will increasingly affect the lives of Americans; potential response strategies and useful insights for the rest of the world.