Posts by Climate change
Sustainability makes business sense
Far from being a burden, sustainability is a business opportunity, allowing companies to ensure their continuity and positioning and making them more efficient and profitable.
The Floods of 2017: How can the private sector mitigate the impact of natural disasters
There are many theories to explain the current trend of increasing frequency and magnitude of extreme events, but it seems obvious that there is a correlation with increasing average temperatures. Many argue that the world is already experiencing the consequences of climate change and that even if the increase on average world temperature is kept under 2 degrees Celsius, countries will have to adapt to a wider range of natural disasters. During 2017 the world witnessed the occurrence of severe floods from China to Canada. As we wrote this article, Italy was facing its second season of severe flooding. Latin America and the Caribbean was no exception, and Peru was particularly affected by this phenomenon. The floods in the Andean country destroyed 115,000 homes, leaving almost 180,000 homeless, over 110 people were killed, more than 350 were seriously injured, and over 2,500 kilometers of roads have been devastated. The region is particularly vulnerable to the occurrence of floods as it is the most impacted by El Niño. Additionally, due to its high urbanization rate, the impact of floods to cities and urban infrastructure are often devastating. While estimates of necessary annual investments to manage floods in the region vary, given the constraints on fiscal spending, the full burden of this cannot be met by governments alone. Therefore, the private sector has a key role to play, that involves both the development of software as well as hardware. Insurance: A key software for mitigation On the soft side, alternatives to avoid or mitigate the impact of severe floods include flood insurance, payment for environmental services, better flood assessment and warning systems, ecosystems planning, and zoning, among others. All these services can be provided by the private sector through the development of policies and adequate incentive frameworks. For example, unleashing private sector insurers to offer products in Latin America is no easy task but it can bring about a stream of benefits. Insurance is a fundamental component in any strategy of adaptation to natural disasters. As illustrated in a paper by the Global Facility Disaster Reduction and Recovery, flood insurance: Increases resilience against residual risks that cannot be prevented or mitigated Incentivize engagement and investment in risk mitigation measures Reduces pressure on the fiscal budget from natural disasters Private sector participation is driven by a complete shift toward risk-based rates, and more accurate mapping which in turn provide correct economic incentives both in urban as well as in rural areas (agriculture in particular). The private sector can apply innovation and technology to improve early warning systems. The earlier we can identify where storms are likely to hit, the better we can target efforts to minimize damages. In the Netherlands, for example, Siemens has created the concept of “smart levees” by implementing a monitoring system that uses sensors to gauge water pressure, temperature and shifting water profiles. This allows the identification of stretches of levees that are at higher risk of being breached. Innovative solutions for better hardware With respect to hardware, the most obvious opportunities relate to retrofitting and developing infrastructure that is more resilient, and can better perform under extreme conditions. The vulnerability of existing infrastructure was evident during the occurrence of natural disasters in 2017, and the private sector can bring capital, innovation, management systems, and technology. Following hurricane Maria devastation in Puerto Rico, Tesla’s Elon Musk, offered to green and revamp energy generation in the island through the installation of solar systems and high-tech batteries. Bold ideas and innovation will be necessary to assist Latin America and the Caribbean in adapting to the impacts of climate change. In doing so, a vital role of governments is to develop policies and regulatory frameworks that allow the creation of new business models and provide incentives for companies to invest on climate smart infrastructure. For instance, building and financing (public/private) business models for urban drainage transformation in megacities represents a gigantic opportunity to foster investments that will significantly improve the quality of life of millions of urban residents in the region. At IDB Invest we can draw lessons from our vast experience in the region that combined with disruptive technologies, and a menu of financing instruments can offer unique value propositions to our clients. We embrace the opportunity to work with private companies all over Latin America and the Caribbean in the development of innovative models that can contribute to better management of floods and other natural disasters in our countries. Subscribe to receive more content like this! [mc4wp_form]
Can your company be a sustainability champion?
Long-term financial performance is directly proportional to good governance, environmental stewardship and social responsibility, but you probably already knew that. If so, then you should also be able to prove it and measure it, because nowadays a vision is not enough to convince your clients. “What gets measured gets managed.”- Peter Drucker (known as the father of modern management) The Problem What if I tell you that purpose is not enough and that measurement encourages ambition? When I look back to my early school days I remember some of the —silly, but edifying— competitions with my friends and classmates. The range of our “high-performance rivalries” went from copying text from the chalkboard into our notebooks in the fastest possible time, comparing math grades at semester end, scoring backheel goals in a soccer match and much more. Measuring and comparing records was the motivation for continuous improvement to beat my own achievements and those of my fellow mates. But what does that have to do with sustainability? Everything. Measuring progress using a comprehensive yet meaningful list of indicators is the core foundation to turn sustainability into a competitive advantage. The Solution: Measuring, reporting, disclosing. Year after year more corporations perceive the competitive edge existent in being part of a sustainability rating and index. According to the Governance & Accountability Institute, 82% of S&P 500 Companies published Corporate Sustainability reports in 2016. In this context a sustainability index is a barometer to measure the success level of a company. It acts not only as an MRI to detect environmental, social and governance issues, but also indicates the economic relevance of sustainability parameters for corporate management and investors. But we need to go further. A recent report from KPMG on corporate responsibility and sustainability indicates that simply linking corporate responsibility activities thematically to the United Nations Sustainable Development Goals (SDGs) is not enough. People want to know how companies are contributing to achieve the goals, and what is the actual impact. Not only does civil society want this information, but also several large institutional investors are exploring how to align their investment approaches with the SDGs. This is why full transparency and full disclosure are key. The economic relevance of sustainability parameters for corporate management and investors are manifold. A study by the University of Oxford showed impressive results on how disclosing sustainability practices can drive financial outperformance. For example, 90% of the studies on the cost of capital indicate that sound environmental, social and governance (ESG) standards lower the cost of capital of companies. If only there were a specific tool for companies in Latin American and the Caribbean to measure and compare performance of environmental, social and governance (ESG) indicators…THERE IS. IndexAmericas IndexAmericas is the world’s first sustainability index exclusive to Latin America and the Caribbean region. Created by the IDB Group (Inter-American Development Bank and IDB Invest) in partnership with Thomson Reuters, S-Network Indexes and Florida International University, IndexAmericas recognizes the top 100 publicly traded companies operating in the region and leading the way in sustainability. It also identifies the top 30 sustainable companies headquartered in the region. IndexAmericas focuses on four key dimensions: environment, society, corporate governance and development (ESGD). Different from other sustainability indexes, IndexAmericas assesses publicly data rather than using a self-assessment questionnaire. It is a management tool that measures more than 400 ESG indicators and 15 IDB Group proprietary key development indicators to evaluate corporate sustainability. I think professor Peter Drucker would be proud to see this achievement. Want to learn more? Visit IndexAmericas [gallery type="slideshow" size="full" link="none" ids="8440,8441,8443,8442"] Subscribe to receive more content like this! [mc4wp_form]
EYE Scream, You Scream, We All Scream for EYE Bonds!
Three firsts for the Education, Youth and Employment Bond program * By Michelle Viegas On September 23, 2014, a delivery of 16 pints of Ben & Jerry’s ice cream arrived to the Boston office of Breckinridge Capital Advisors. Observers may have assumed that it had been ordered for a celebration, perhaps for a company anniversary or an employee’s retirement or birthday. That day, however, similar deliveries were made to various companies throughout Boston, including Zipcar, Patagonia and Invested Development. Ben & Jerry’s was simply thanking them for their contributions as fellow certified B Corps – companies that meet rigorous standards of social and environmental performance, accountability, and transparency. As the certifying non-profit B Lab explains, “B Corp certification is to sustainable business what LEED certification is to green building.”
How Big Data Is Changing Big Business
Flickr Creative Commons CIFOR Did you know that every minute the world loses 50 soccer fields worth of forest? That’s one of the headline findings from recently published data on global deforestation. Access to deforestation data is making it increasingly easy for companies to monitor deforestation in their supply chains.
What is the World Cup's Carbon Footprint?
When Arjen Robben scored Holland’s fifth goal against Spain, the Arena Fonte Nova in Salvador, Brazil, was overflowing with emotion. The Dutch ecstatic, the Spanish devastated, and neutral fans like myself thrilled just to see such an exciting game. After watching the Netherlands team take a well-deserved victory lap, we poured out of the stadium into Salvador’s streets, singing until our throats were hoarse.