"Net Resilience Gain" concept proposed
Geneva - UN Special Representative of the Secretary-General for Disaster Risk Reduction Mami Mizutori has proposed the idea of a “net resilience gain” to match the “net zero” approach to greenhouse gas emissions.
The idea of “net resilience gain” would mimic the “net-zero” approach of not adding greenhouse gases into the atmosphere, by taking environmentally friendly measures, such as planting trees, to offset polluting activities.
“Ideally, everything has to be resilient. But while we try to reach that stage, can ‘net resilient’ thinking be possible?” Mizutori asked at a webinar hosted by the United Nations Office for Disaster Risk Reduction (UNDRR) last week titled “Accelerating financing for climate and disaster risk prevention and de-risking investment”.
The UNDRR webinar was held against the backdrop of both increasingly frequent and intense global disasters, as well as delayed efforts by developed countries to deliver on a commitment to provide US$100 billion annually in climate finance to developing countries. The Organisation for Economic Co-operation and Development (OECD) estimates that in 2018 there was a $20 billion shortfall.
There is also limited funding directed toward disaster preparedness. Between 2010-2019, developed countries donated $133 billion in disaster-related Official Development Assistance (ODA) but only $ 5.5 billion went toward measures to build resilience before disasters strike.
The virtual gathering brought together participants from Governments, Central Banks, lending institutions, institutional investors, and the private sector to share perspectives, highlight key challenges and present innovative solutions on both raising more preventative funds and de-risking investments.
Keynote speaker, Ms. Marsha Smith, the Minister of State in Jamaica’s Ministry of Finance and the Public Service, spoke to the country's use of an innovative type of catastrophe bond; these bonds buffer the fiscal shock of disaster by triggering payouts when different thresholds, or environmental markers, are reached.
“The government of Jamaica is now approaching disaster risk financing in a much more strategic and sustainable way via a layered approach that allows us to finance the emergency costs associated with natural disasters,” she said.
Speaking specifically about the challenges facing developing economies, Mr. Chris Papageorgiou, Chief of the Development Macroeconomics Division, International Monetary Fund, referenced not only the impact of individual disasters, but how climate change is slowly changing day-to -day realities.
According to Mr. Papageorgiou, despite loans and grants from international finance organizations, “there is still a major gap that needs to be closed by the private sector... It's really a call of urgency for both the IFIs and the private sector to coordinate better to close this gap.”
With multiple participants stressing the importance of private sector investment, Mr. Vikram Raju, Head of Climate Investing, Morgan Stanley Investment Management, mentioned a “cognitive dissonance” regarding disaster risk investment in that businesses know disasters will interrupt their supply chains, but they don’t account for it accordingly.
Mr. Raju recommended the implementation of “disaster risk ratings” and for international organizations like the UN and the World Bank to create appropriate catalytic mechanisms that allow leveraging public sector money into investment opportunities that are commercial but generate a return in avoided disaster losses.
Mr. Francesco Mazzaferro, Head of the European Systemic Risk Board Secretariat, European Central Bank, attended the webinar to speak about developments within the EU. While progress has been slow due to many different countries with varying competencies, Mr. Mazzaferro, told participants that the EU now has a Commissioner for crisis management, who seeks to provide a common framework for risk assessment. Mr. Mazzaferro additionally referenced a “new directive on corporate sustainability reporting” which audits companies and mandates providing information on climate change mitigation and adaptation.
SRSG Mizutori made a final call for mainstreaming disaster risk reduction into investment decisions. “Every decision we make, either in the public sector or in the private sector has consequences. They will either reduce risk or increase risk. So that's what we need to do, mainstream disaster risk reduction into investment decisions,” she said.
Increasing investment for disaster prevention is one of the key priorities of the Sendai Framework, UNDRR’s guiding document. The Sendai Framework was adopted in 2015 by 187 Member States, and complements other international agreements including the Sustainable Developments and the Paris Agreement on Climate Change. In 2023, a midterm review of the Sendai Framework will give stakeholders the opportunity to assess both gaps and achievements made.