1 00:00:00,640 --> 00:00:04,280 Speaker 1: This is cobobarbenergree and you're listening to Switched on the 2 00:00:04,360 --> 00:00:08,160 Speaker 1: podcast brought to you by Bloomberg. Nif the physical impacts 3 00:00:08,200 --> 00:00:11,840 Speaker 1: of climate change are no longer distant risks, they already 4 00:00:11,880 --> 00:00:15,120 Speaker 1: cost the global economy around one point four trillion dollars 5 00:00:15,240 --> 00:00:19,640 Speaker 1: every year For businesses and investors. Those losses show up 6 00:00:19,720 --> 00:00:24,680 Speaker 1: as damaged assets, disrupted supply chains, and reduced productivity. As 7 00:00:24,720 --> 00:00:28,680 Speaker 1: these costs rise, climate adaptation is becoming as much a 8 00:00:28,760 --> 00:00:32,680 Speaker 1: financial issue as an environmental one. A country's readiness for 9 00:00:32,720 --> 00:00:36,360 Speaker 1: the climate impacts it will face in future now shape 10 00:00:36,360 --> 00:00:41,720 Speaker 1: investment decisions, insurance coverage, and even credit risk. Here at BNF, 11 00:00:41,840 --> 00:00:45,320 Speaker 1: we've been examining how well major economy is preparing for 12 00:00:45,360 --> 00:00:48,960 Speaker 1: the physical realities of climate change, and today I'm joined 13 00:00:48,960 --> 00:00:53,040 Speaker 1: by Daniel lu a Senior Associate on BNF's Climate Risk Team, 14 00:00:53,120 --> 00:00:57,120 Speaker 1: and Natasha Maudsley, a strategy analyst, to discuss their recent 15 00:00:57,200 --> 00:01:02,600 Speaker 1: note ranking Resilience Assessing Country Climate Adaptation. The report introduces 16 00:01:02,600 --> 00:01:07,160 Speaker 1: a framework and scorecard that assess national resilience from risk 17 00:01:07,200 --> 00:01:12,840 Speaker 1: assessments and adaptation strategies to project implementation and financial recovery planning, 18 00:01:13,000 --> 00:01:16,640 Speaker 1: and together we'll explore how adaptation is being measured, what 19 00:01:16,680 --> 00:01:20,600 Speaker 1: it means for governments, investors and companies, and why resilience 20 00:01:20,640 --> 00:01:24,760 Speaker 1: could define the next major frontier in global finance. BNF 21 00:01:24,840 --> 00:01:27,880 Speaker 1: clients can find this note, along with other climate and 22 00:01:27,959 --> 00:01:31,720 Speaker 1: adaptation research by heading to BNF go on the Bloomberg 23 00:01:31,800 --> 00:01:35,759 Speaker 1: terminal or visiting BNF dot com to learn more about 24 00:01:35,840 --> 00:01:39,880 Speaker 1: how BNF approaches strategy research on the energy transition, including 25 00:01:39,920 --> 00:01:44,200 Speaker 1: developments in commodity markets, sector trends, and the technologies shaping 26 00:01:44,240 --> 00:01:47,800 Speaker 1: the future. You can find more information at BNF dot 27 00:01:47,840 --> 00:01:50,240 Speaker 1: com for those who would like to hear more about 28 00:01:50,320 --> 00:01:54,000 Speaker 1: climate adaptation. Later this week, we'll be releasing a bonus 29 00:01:54,040 --> 00:01:57,279 Speaker 1: episode where I read an article that I recently penned, 30 00:01:57,520 --> 00:02:01,240 Speaker 1: exploring how the adaptation imperative is reached, shaping strategy and 31 00:02:01,360 --> 00:02:04,840 Speaker 1: creating new risks and opportunities for business. And Before we 32 00:02:04,920 --> 00:02:08,359 Speaker 1: get into today's episode, a quick note for students tuning in. 33 00:02:08,680 --> 00:02:13,240 Speaker 1: Bloomberg and EF's summer Internship program is now open for applications, 34 00:02:13,320 --> 00:02:16,560 Speaker 1: with roles available in our London offices if you're in 35 00:02:16,600 --> 00:02:20,880 Speaker 1: a relevant undergraduate or postgraduate program and graduating in twenty 36 00:02:20,919 --> 00:02:24,040 Speaker 1: twenty six or twenty twenty seven. It's a great opportunity 37 00:02:24,120 --> 00:02:27,480 Speaker 1: to work on the energy transition alongside our research teams 38 00:02:27,720 --> 00:02:31,639 Speaker 1: gain the exposure to the energy, transport and industrial sectors 39 00:02:31,960 --> 00:02:36,560 Speaker 1: to apply. Send your CV to Andrew Hill at AHL 40 00:02:36,840 --> 00:02:41,000 Speaker 1: two three three at Bloomberg dot net before the end 41 00:02:41,080 --> 00:02:44,880 Speaker 1: of December. Now to today's episode, where we explore how 42 00:02:44,880 --> 00:02:48,119 Speaker 1: countries are building climate resilience and what it will take 43 00:02:48,360 --> 00:03:02,480 Speaker 1: to turn adaptation plans into action. Welcome to the show, 44 00:03:02,560 --> 00:03:06,000 Speaker 1: Danielle Hey, Cobed Natasha. Really great to have you with us. 45 00:03:06,320 --> 00:03:07,120 Speaker 2: Thanks for having me. 46 00:03:07,560 --> 00:03:10,800 Speaker 1: So you've just released this new piece of research called 47 00:03:10,919 --> 00:03:15,239 Speaker 1: Ranking Resilience Assessing Country Climate Adaptation, which is kicking off 48 00:03:15,240 --> 00:03:20,000 Speaker 1: Benef's new research on the topic of adaptation and resilience 49 00:03:20,240 --> 00:03:23,480 Speaker 1: for our listeners. Can we start by just defining what 50 00:03:23,560 --> 00:03:27,040 Speaker 1: is climate adaptation and why does it matter right now? 51 00:03:27,520 --> 00:03:32,560 Speaker 3: Adaptation is any measure that helps people cope with the 52 00:03:32,600 --> 00:03:36,880 Speaker 3: effects of climate change. So it can be structural like 53 00:03:36,920 --> 00:03:41,080 Speaker 3: a floodwall. It can be nature based like preserving wetlands. 54 00:03:41,200 --> 00:03:44,120 Speaker 3: It can even be process and planning based, so knowing 55 00:03:44,200 --> 00:03:47,840 Speaker 3: your emergency response plan before it happens. And it's gaining 56 00:03:47,880 --> 00:03:50,880 Speaker 3: a lot of attention now because folks are starting to 57 00:03:50,960 --> 00:03:54,440 Speaker 3: realize that we have a lot of baked in effects 58 00:03:54,480 --> 00:03:58,120 Speaker 3: of climate change over the past several decades of heavy emissions. 59 00:03:58,280 --> 00:04:02,640 Speaker 3: Adaptation and resilience and our collectively have become a very 60 00:04:02,640 --> 00:04:05,200 Speaker 3: hot topic, and there's lots of eyes watching to see 61 00:04:05,280 --> 00:04:08,520 Speaker 3: which countries will make new pledges, will put more money 62 00:04:08,560 --> 00:04:10,520 Speaker 3: forward to finance some of these solutions. 63 00:04:10,800 --> 00:04:14,360 Speaker 1: And so why the emphasis on adaptation at dis COP 64 00:04:14,640 --> 00:04:17,560 Speaker 1: and at this moment is the world really starting to 65 00:04:17,720 --> 00:04:21,400 Speaker 1: feel the impacts of climate change? Are they starting to 66 00:04:22,080 --> 00:04:26,720 Speaker 1: affect people's lives more than they have previously, or are 67 00:04:26,760 --> 00:04:28,840 Speaker 1: the financial damages becoming more material. 68 00:04:29,200 --> 00:04:33,359 Speaker 3: The financial damages are definitely becoming more material. Our colleagues 69 00:04:33,400 --> 00:04:37,479 Speaker 3: in Bloomberg Intelligence run this really great climate Damages tracker 70 00:04:37,760 --> 00:04:41,560 Speaker 3: where they can segment out by event type, by state, 71 00:04:41,640 --> 00:04:46,200 Speaker 3: by country, how much economic damage does climate change and 72 00:04:46,360 --> 00:04:50,400 Speaker 3: natural hazards create. For the US, it's amounting to about 73 00:04:50,440 --> 00:04:54,119 Speaker 3: three percent of GDP. Globally, we're hitting about one point 74 00:04:54,120 --> 00:04:58,840 Speaker 3: four trillion dollars of climate induced economic damages per year. 75 00:04:59,120 --> 00:05:01,680 Speaker 3: That's a big number and it's ever growing. So I 76 00:05:01,680 --> 00:05:05,520 Speaker 3: think that's causing a lot of renewed interest in trying 77 00:05:05,560 --> 00:05:06,720 Speaker 3: to solve the problem. 78 00:05:06,839 --> 00:05:10,200 Speaker 1: Wow, three percent already in the United States of JDP. 79 00:05:10,360 --> 00:05:14,360 Speaker 1: That's an enormous number. So those losses are they mainly 80 00:05:14,360 --> 00:05:18,000 Speaker 1: from major events. So what makes up that huge damage bill. 81 00:05:18,360 --> 00:05:21,520 Speaker 3: Well, one of the aspects that we're interested in as 82 00:05:21,560 --> 00:05:26,719 Speaker 3: BNF is tracking the indirect effects from climate physical risks, 83 00:05:26,880 --> 00:05:30,279 Speaker 3: and I think this Bloomberg Intelligence data set captures that well. 84 00:05:30,400 --> 00:05:36,120 Speaker 3: So the primary vector of loss isn't necessarily asset damage 85 00:05:36,200 --> 00:05:40,039 Speaker 3: or building damage or property damage. It's the accumulation of 86 00:05:40,080 --> 00:05:44,400 Speaker 3: effects surrounding that. So for instance, lost productivity because you 87 00:05:44,440 --> 00:05:47,520 Speaker 3: can't go into the office, or lost productivity because your 88 00:05:47,560 --> 00:05:52,400 Speaker 3: power lines are down, or lost agriculture, lost crops because 89 00:05:53,080 --> 00:05:56,359 Speaker 3: of extreme events, things like that. So it's really the 90 00:05:56,360 --> 00:06:00,520 Speaker 3: accumulation of indirect effects that's getting us to such a 91 00:06:00,600 --> 00:06:01,200 Speaker 3: large number. 92 00:06:01,440 --> 00:06:05,480 Speaker 1: But the US has also faced some very expensive climate 93 00:06:05,520 --> 00:06:08,960 Speaker 1: related disasters, right so that we don't know necessarily know 94 00:06:09,000 --> 00:06:13,480 Speaker 1: how much is a climate change component, but hurricanes, the 95 00:06:13,480 --> 00:06:17,520 Speaker 1: recent LA wildfires, these were all very costly events, right. 96 00:06:17,680 --> 00:06:20,560 Speaker 3: Yeah, And you can track some of these through what 97 00:06:20,839 --> 00:06:25,000 Speaker 3: was previously the billion dollars disaster data set, and that's 98 00:06:25,360 --> 00:06:28,279 Speaker 3: up into the right graph. If I've ever seen one, right, 99 00:06:28,360 --> 00:06:32,400 Speaker 3: So the frequency of those very expensive, very costly disasters 100 00:06:32,560 --> 00:06:34,119 Speaker 3: has been increasing in the US. 101 00:06:34,360 --> 00:06:36,640 Speaker 1: Yeah. So Natasha, if I can bring you in here, 102 00:06:36,760 --> 00:06:40,320 Speaker 1: this rapidly escalating damage bill, as Daniel said, one point 103 00:06:40,360 --> 00:06:43,239 Speaker 1: four trillion dollars we're up to in the year twenty 104 00:06:43,279 --> 00:06:46,000 Speaker 1: twenty four. But what are the big drivers behind that? 105 00:06:46,600 --> 00:06:49,600 Speaker 1: How much is climate? How much other components which may 106 00:06:49,640 --> 00:06:51,000 Speaker 1: be pushing that damage bill up? 107 00:06:51,440 --> 00:06:54,719 Speaker 2: Yeah, I mean, obviously climate change isn't the only driver 108 00:06:55,000 --> 00:06:58,960 Speaker 2: of these increasing damages. Obviously there's inflation, but also we 109 00:06:59,120 --> 00:07:03,240 Speaker 2: are choosing to build more expensive things in high risk locations, 110 00:07:03,279 --> 00:07:07,599 Speaker 2: such as along coastlines along floodplaines, which is also leading 111 00:07:07,640 --> 00:07:11,960 Speaker 2: to an increase in damages to properties in these regions. 112 00:07:12,120 --> 00:07:14,240 Speaker 2: So it isn't purely climate driven, but we do know 113 00:07:14,280 --> 00:07:16,960 Speaker 2: there is a climate change component, and so we really 114 00:07:17,000 --> 00:07:19,640 Speaker 2: need to be focusing in on this now to see 115 00:07:19,640 --> 00:07:22,200 Speaker 2: how we can reduce these moving into the future. And 116 00:07:22,240 --> 00:07:24,320 Speaker 2: I think that is kind of starting to hit home 117 00:07:24,360 --> 00:07:27,840 Speaker 2: for people. No matter what we now do on mitigation 118 00:07:28,040 --> 00:07:31,360 Speaker 2: to kind of to reduce those climate hazards where there 119 00:07:31,440 --> 00:07:34,920 Speaker 2: will still be some residual risk, these extreme weather events 120 00:07:34,960 --> 00:07:37,360 Speaker 2: will still occur, and therefore we need to be focusing 121 00:07:37,480 --> 00:07:38,200 Speaker 2: on adaptation. 122 00:07:38,800 --> 00:07:41,600 Speaker 1: One way or another. This damage build is increasing, although 123 00:07:41,600 --> 00:07:44,720 Speaker 1: we don't know the exact proportion of the increase that 124 00:07:44,800 --> 00:07:48,040 Speaker 1: has been driven by climate change itself, there's more and 125 00:07:48,080 --> 00:07:51,120 Speaker 1: more loss in the economy, so it's something the financial 126 00:07:51,120 --> 00:07:54,440 Speaker 1: sector has to respond to. How should investors be sort 127 00:07:54,480 --> 00:07:58,600 Speaker 1: of thinking about this climate risk and then the potential 128 00:07:58,640 --> 00:07:59,960 Speaker 1: response to that in adaptive. 129 00:08:00,760 --> 00:08:02,880 Speaker 2: So there are a number of ways in which these 130 00:08:02,920 --> 00:08:06,560 Speaker 2: climate risk can turn into sort of real economic outcomes. 131 00:08:06,680 --> 00:08:09,880 Speaker 2: The obvious one would be through damages to things like 132 00:08:09,920 --> 00:08:13,280 Speaker 2: property and infrastructure, but as Daniel's mentioned, there are also 133 00:08:13,400 --> 00:08:16,680 Speaker 2: a number of other impacts that aren't currently being considered 134 00:08:16,880 --> 00:08:19,720 Speaker 2: by companies and by investors who are trying to model 135 00:08:19,840 --> 00:08:23,080 Speaker 2: what the total climate risk could be across their portfolio, 136 00:08:23,080 --> 00:08:26,480 Speaker 2: across their supply chain. And these are things like impacts 137 00:08:26,480 --> 00:08:31,160 Speaker 2: of labor productivity, impacts to human health, which can also 138 00:08:31,280 --> 00:08:35,560 Speaker 2: lead to kind of much greater financial outcomes. And therefore 139 00:08:35,880 --> 00:08:38,080 Speaker 2: we're trying to encourage a kind of a more holistic 140 00:08:38,240 --> 00:08:41,040 Speaker 2: view of what the climate impacts could be and that 141 00:08:41,160 --> 00:08:44,559 Speaker 2: need to be estimated through climate risk assessments. 142 00:08:44,960 --> 00:08:49,040 Speaker 1: So it's not just about the impacts on buildings or 143 00:08:49,280 --> 00:08:52,520 Speaker 1: damage from a storm which may blow the roof of 144 00:08:52,640 --> 00:08:56,040 Speaker 1: a house and render it uninhabitable, just saying there are 145 00:08:56,080 --> 00:08:57,440 Speaker 1: more economic impacts in that. 146 00:08:57,800 --> 00:09:01,640 Speaker 2: Yeah, absolutely, and we are seeing more new methodologies to 147 00:09:01,640 --> 00:09:03,560 Speaker 2: be able to look into some of these things. I 148 00:09:03,600 --> 00:09:07,160 Speaker 2: think labor productivity is one that we're saying being quantified 149 00:09:07,240 --> 00:09:11,080 Speaker 2: more regularly, particularly by governments, maybe less so by corporates, 150 00:09:11,120 --> 00:09:13,160 Speaker 2: but trying to think about things like you know, how 151 00:09:13,280 --> 00:09:15,480 Speaker 2: much econ am I going to need in the future 152 00:09:15,520 --> 00:09:17,640 Speaker 2: to be able to ensure that my staff can work 153 00:09:17,760 --> 00:09:19,120 Speaker 2: at an appropriate temperature. 154 00:09:19,440 --> 00:09:25,760 Speaker 1: So, Daniel, why is the national adaptation strategy and important 155 00:09:25,920 --> 00:09:29,760 Speaker 1: lens to be looking at when thinking about of adaptation 156 00:09:29,920 --> 00:09:32,040 Speaker 1: and what it means for an investor. 157 00:09:32,360 --> 00:09:34,800 Speaker 3: Well, when you think about the types of climate risk 158 00:09:34,880 --> 00:09:39,840 Speaker 3: that you're exposed to, there's always an undercurrent of systemic 159 00:09:39,920 --> 00:09:43,400 Speaker 3: climate risk that you, as an individual person or as 160 00:09:43,400 --> 00:09:48,920 Speaker 3: an individual company, can't directly alter yourself necessarily, and that 161 00:09:49,080 --> 00:09:52,040 Speaker 3: class of systemic climate risk is something that we think 162 00:09:52,160 --> 00:09:55,000 Speaker 3: is best addressed at the national level. So a good 163 00:09:55,000 --> 00:09:58,720 Speaker 3: example is you can put up little sand barriers around 164 00:09:58,760 --> 00:10:01,680 Speaker 3: your factory, or you can and try and construct a 165 00:10:01,679 --> 00:10:06,400 Speaker 3: little floodwall around your property. But if the overall city floods, 166 00:10:06,480 --> 00:10:08,840 Speaker 3: then there's not much that your tiny little floodwall is 167 00:10:08,840 --> 00:10:11,320 Speaker 3: going to do. But if the city can invest in 168 00:10:11,360 --> 00:10:15,080 Speaker 3: better drainage or better levees, or any number of solutions, 169 00:10:15,080 --> 00:10:19,359 Speaker 3: then that brings up that improves the systemic climate resilience 170 00:10:19,440 --> 00:10:22,520 Speaker 3: of an entire region and of all the assets and 171 00:10:22,720 --> 00:10:26,120 Speaker 3: the people within that region. So, taking lat lens, we 172 00:10:26,160 --> 00:10:29,840 Speaker 3: thought that the national level adaptation progress was a good 173 00:10:29,840 --> 00:10:32,959 Speaker 3: way to kind of proxy how larger regions and all 174 00:10:33,040 --> 00:10:37,360 Speaker 3: the assets and people within them are moving towards resilience goals. 175 00:10:37,160 --> 00:10:39,600 Speaker 1: And so how does that translate. It sort of mentioned 176 00:10:39,600 --> 00:10:41,840 Speaker 1: that the city level. If we could take another bite 177 00:10:41,840 --> 00:10:43,880 Speaker 1: of that answer, I think and talk about what it 178 00:10:43,880 --> 00:10:45,120 Speaker 1: means at the country level. 179 00:10:45,400 --> 00:10:49,720 Speaker 3: There's a lot of adaptation efforts that need a very 180 00:10:49,800 --> 00:10:53,760 Speaker 3: large orchestration, and a lot of that has to start 181 00:10:54,080 --> 00:10:58,560 Speaker 3: originate from a national level policy or a national level strategy. 182 00:10:58,920 --> 00:11:02,360 Speaker 3: So it's not enough for individual cities or states to 183 00:11:02,400 --> 00:11:06,280 Speaker 3: plan for their own resilience. But because everything is so interconnected, 184 00:11:06,400 --> 00:11:11,000 Speaker 3: you have to have this national layer or interregional layer 185 00:11:11,400 --> 00:11:13,840 Speaker 3: making sure that they're all speaking to each other and 186 00:11:13,880 --> 00:11:16,880 Speaker 3: that the solutions that they're proposing makes sense and don't 187 00:11:16,880 --> 00:11:21,120 Speaker 3: bring mal adaptation to other regions. So this high level, 188 00:11:21,280 --> 00:11:24,200 Speaker 3: national level orchestration is very important. 189 00:11:24,520 --> 00:11:28,160 Speaker 1: Great, So, Natasha Daniel, you've done this analysis to try 190 00:11:28,200 --> 00:11:33,240 Speaker 1: and evaluate the state of adaptation preparedness at the country level. 191 00:11:33,400 --> 00:11:35,560 Speaker 1: Can you tell us what does that mean and what 192 00:11:35,679 --> 00:11:38,640 Speaker 1: is the analysis that you've done? How does it ascertain 193 00:11:39,080 --> 00:11:40,520 Speaker 1: how a country is performing? 194 00:11:40,840 --> 00:11:44,480 Speaker 2: Well, we've produced two new resources, so firstly an Adaptation 195 00:11:44,600 --> 00:11:49,720 Speaker 2: Preparedness Framework and secondly an Adaptation Preparedness Country Schoolcard so BUZSI. 196 00:11:49,840 --> 00:11:53,400 Speaker 2: The framework looks at the key building blocks that a 197 00:11:53,520 --> 00:11:56,680 Speaker 2: country should put in place in order to build resilience 198 00:11:56,679 --> 00:11:59,640 Speaker 2: across the economy. So that's things like putting in place 199 00:11:59,640 --> 00:12:03,720 Speaker 2: the right pace policy, so an adaptation strategy with underpinned 200 00:12:03,760 --> 00:12:06,640 Speaker 2: by a CLIP budget, a climate risk assessment to understand 201 00:12:06,640 --> 00:12:09,160 Speaker 2: which risks you need to adapt to, but also looking 202 00:12:09,200 --> 00:12:11,920 Speaker 2: at evidence of projects on the ground to prove that 203 00:12:11,960 --> 00:12:15,240 Speaker 2: adaptation is actually starting to happen. And then we've considered 204 00:12:15,280 --> 00:12:18,200 Speaker 2: how could we score how a country is performing against 205 00:12:18,200 --> 00:12:21,720 Speaker 2: that framework. So we've identified key metrics and data points 206 00:12:21,840 --> 00:12:24,760 Speaker 2: that allow us to score the G twenty and Southeast 207 00:12:24,760 --> 00:12:27,760 Speaker 2: Asian countries against the framework to get sort of an 208 00:12:27,800 --> 00:12:30,679 Speaker 2: overall ranking of how they compare against each other. So 209 00:12:31,240 --> 00:12:34,560 Speaker 2: we see this as a useful tool for investors, but 210 00:12:34,679 --> 00:12:37,640 Speaker 2: also for governments themselves and corporates to be able to 211 00:12:37,679 --> 00:12:42,240 Speaker 2: assess country level preparedness. This kind of complements other existing 212 00:12:42,320 --> 00:12:46,400 Speaker 2: asset level climate risk assessments to be able to understand 213 00:12:46,440 --> 00:12:49,400 Speaker 2: some of the broader resilience to these systemic risks. 214 00:12:49,800 --> 00:12:51,760 Speaker 1: So if we dig in a little bit, Daniel, can 215 00:12:51,800 --> 00:12:55,319 Speaker 1: you sort of explain what the pillars are of this 216 00:12:55,920 --> 00:13:00,560 Speaker 1: adaptation preparedness framework and how you would think of what 217 00:13:00,600 --> 00:13:02,920 Speaker 1: are the key things that a country really needs to 218 00:13:02,920 --> 00:13:05,880 Speaker 1: be doing and investors need to be thinking about when 219 00:13:05,960 --> 00:13:09,720 Speaker 1: assessing is a country well prepared for the climate impacts 220 00:13:09,840 --> 00:13:11,040 Speaker 1: that likely to come. 221 00:13:11,320 --> 00:13:15,840 Speaker 3: We identified four pillars. The first is assessing and understanding 222 00:13:15,840 --> 00:13:20,720 Speaker 3: your risk. Number two is formalizing a strategy. Number three 223 00:13:21,000 --> 00:13:25,560 Speaker 3: is executing on projects, and number four is aligning a 224 00:13:25,600 --> 00:13:28,400 Speaker 3: disaster recovery plan with your strategy. 225 00:13:28,679 --> 00:13:30,920 Speaker 1: Let's delve a little further so when we talk about 226 00:13:31,040 --> 00:13:34,679 Speaker 1: sort of that first pillar about assessing the risks, what 227 00:13:35,200 --> 00:13:37,520 Speaker 1: are the things that a country should be doing that 228 00:13:37,600 --> 00:13:39,599 Speaker 1: we think are important bell weathers. 229 00:13:39,480 --> 00:13:42,959 Speaker 3: Well, this goes into this old adage you can't manage 230 00:13:43,040 --> 00:13:46,800 Speaker 3: what you don't track, right, So I think a national 231 00:13:46,920 --> 00:13:49,720 Speaker 3: level climate risk assessment is a great example of that. 232 00:13:50,040 --> 00:13:53,040 Speaker 3: You need to understand at a hyper local level and 233 00:13:53,120 --> 00:13:57,520 Speaker 3: at a national level, how physical risks are expected to 234 00:13:57,720 --> 00:14:02,240 Speaker 3: impact your country, your population, in your industries, and climate 235 00:14:02,240 --> 00:14:07,280 Speaker 3: assessments make that publicly available so that any actor within 236 00:14:07,320 --> 00:14:10,600 Speaker 3: that country or with business within that country can access 237 00:14:10,640 --> 00:14:13,360 Speaker 3: it and understand how they'll be impacted and plan for 238 00:14:13,360 --> 00:14:15,800 Speaker 3: their own adaptation or risk management as well. 239 00:14:16,520 --> 00:14:19,640 Speaker 1: And when people think about adaptation, they tend to think 240 00:14:19,680 --> 00:14:25,880 Speaker 1: about building sea walls and sort of physical interventions, mainly 241 00:14:25,920 --> 00:14:29,640 Speaker 1: around water. What are some other examples of what actually 242 00:14:29,680 --> 00:14:32,920 Speaker 1: building things and building resilience actually are. 243 00:14:33,200 --> 00:14:35,040 Speaker 2: So you've already taught to some of the well known 244 00:14:35,080 --> 00:14:38,120 Speaker 2: ones from an engineered solutions bucket. A lot of that 245 00:14:38,280 --> 00:14:40,840 Speaker 2: is kind of structural protection, but in this bucket we 246 00:14:40,920 --> 00:14:44,280 Speaker 2: also consider ways to build resilience across our kind of 247 00:14:44,320 --> 00:14:48,720 Speaker 2: engineered environment. So that might be things like storage and 248 00:14:48,800 --> 00:14:52,120 Speaker 2: smart grids to improve the resilience of our grids and 249 00:14:52,160 --> 00:14:55,280 Speaker 2: our power supply. If we move on to ecosystem based solutions, 250 00:14:55,400 --> 00:14:59,080 Speaker 2: these are basically can either be kind of restoring nature 251 00:14:59,280 --> 00:15:01,880 Speaker 2: to its kind of a potential to provide you know, 252 00:15:01,960 --> 00:15:05,400 Speaker 2: natural flood protections such as from mangroves. But it can 253 00:15:05,480 --> 00:15:08,880 Speaker 2: also be sort of natural versions of some of these 254 00:15:08,960 --> 00:15:12,800 Speaker 2: engineered solutions. So in urban environments, for example, you know, 255 00:15:12,920 --> 00:15:16,440 Speaker 2: just through planting more trees, we can reduce temperatures at 256 00:15:16,480 --> 00:15:18,680 Speaker 2: ground level. And then finally, if we look at planning 257 00:15:18,720 --> 00:15:22,080 Speaker 2: and social solutions, this can be everything from sort of 258 00:15:22,120 --> 00:15:26,800 Speaker 2: improving early warning systems, it can be changing building codes 259 00:15:26,920 --> 00:15:31,400 Speaker 2: to use more resilient materials, and also building resilience through 260 00:15:31,440 --> 00:15:32,200 Speaker 2: our communities. 261 00:15:32,480 --> 00:15:35,120 Speaker 1: And then the last pillar you mentioned in the framework 262 00:15:35,240 --> 00:15:38,680 Speaker 1: is about recovery. Daniel, can you expand a bit upon that. 263 00:15:38,840 --> 00:15:40,520 Speaker 1: What does that mean and why does that matter? 264 00:15:40,920 --> 00:15:45,040 Speaker 3: It's important because the recovery period, the rebuild period post 265 00:15:45,080 --> 00:15:49,280 Speaker 3: disaster is a really great time to embed resilience. If 266 00:15:49,320 --> 00:15:52,000 Speaker 3: you're going to be building something or rebuilding something from 267 00:15:52,040 --> 00:15:55,160 Speaker 3: the ground up anyway, it's a really opportunistic time and 268 00:15:55,240 --> 00:15:59,640 Speaker 3: economical time to try and embed some resilient strategies or 269 00:15:59,680 --> 00:16:03,080 Speaker 3: some resilient materials. It's also a great way to make 270 00:16:03,120 --> 00:16:07,720 Speaker 3: sure that maladaptation is not creeping into the system. If 271 00:16:07,720 --> 00:16:11,360 Speaker 3: you're aligning your disaster recovery, which tends to be separate 272 00:16:11,480 --> 00:16:16,000 Speaker 3: from climate strategy. If you're aligning disaster recovery, what's climate strategy. 273 00:16:16,160 --> 00:16:19,040 Speaker 3: That's a great way to make sure that maladaptation is 274 00:16:19,080 --> 00:16:21,120 Speaker 3: not creeping into the system unintentionally. 275 00:16:21,600 --> 00:16:24,840 Speaker 1: Maladaptation of it. That's a really great and interesting word. Well, 276 00:16:25,000 --> 00:16:27,240 Speaker 1: what does that mean? What is maladaptation? 277 00:16:27,720 --> 00:16:33,200 Speaker 3: Maladaptation is anything that brings down the resilience of an 278 00:16:33,200 --> 00:16:35,560 Speaker 3: asset or a region, and most of the time it 279 00:16:35,600 --> 00:16:38,880 Speaker 3: can be unintentional. So if you have two side by 280 00:16:38,920 --> 00:16:43,040 Speaker 3: side factories and one factory wants to elevate itself to 281 00:16:43,080 --> 00:16:45,240 Speaker 3: get out of the flood zone and builds this great 282 00:16:45,280 --> 00:16:49,360 Speaker 3: slope to protect itself, a maladaptation effect might be that 283 00:16:49,520 --> 00:16:52,880 Speaker 3: it is inadvertently increasing the flood risk for its neighbor. 284 00:16:53,040 --> 00:16:55,880 Speaker 3: So you want to be careful to avoid those types 285 00:16:56,000 --> 00:16:59,360 Speaker 3: of effects because what we care about ultimately is building 286 00:16:59,440 --> 00:17:00,720 Speaker 3: up system resilience. 287 00:17:01,160 --> 00:17:05,840 Speaker 1: Maladaptation can also be not making bad decisions about where 288 00:17:06,560 --> 00:17:09,800 Speaker 1: you build things. You know, we've seen, as we talked 289 00:17:09,800 --> 00:17:12,840 Speaker 1: about we're talking about this escalating damage bill that over 290 00:17:12,880 --> 00:17:15,840 Speaker 1: the last couple of decades there's been a lot more 291 00:17:16,160 --> 00:17:19,639 Speaker 1: construction and location of more and more expensive assets in 292 00:17:19,720 --> 00:17:25,320 Speaker 1: vulnerable areas on coastlines, in whether exposed places. What can 293 00:17:25,359 --> 00:17:30,000 Speaker 1: governments do to discourage that sort of development and to 294 00:17:30,040 --> 00:17:33,320 Speaker 1: stop encouraging it. Is that that's also an important component 295 00:17:33,320 --> 00:17:35,080 Speaker 1: in preventing mal adaptation, right. 296 00:17:35,200 --> 00:17:37,800 Speaker 3: Yeah, And governments can go as far as to say, 297 00:17:38,000 --> 00:17:40,479 Speaker 3: you know, this zone that we've identified is just too 298 00:17:40,600 --> 00:17:44,080 Speaker 3: high risk in general for us to sustain any assets 299 00:17:44,160 --> 00:17:48,200 Speaker 3: or any population there and mandate some kind of exit altogether. 300 00:17:48,520 --> 00:17:52,120 Speaker 3: That's in an extreme case, but there are certainly steps 301 00:17:52,119 --> 00:17:57,000 Speaker 3: that can be taken prior to that to encourage people 302 00:17:57,119 --> 00:18:01,439 Speaker 3: to move out of hyri zones and therefore reduce the 303 00:18:01,480 --> 00:18:04,560 Speaker 3: economic impact of those climate hazards. 304 00:18:05,119 --> 00:18:08,000 Speaker 1: Let's pivot to thinking about the results. You know, I'm 305 00:18:08,000 --> 00:18:11,440 Speaker 1: really eager to know how have countries performed, Who's sort 306 00:18:11,440 --> 00:18:13,480 Speaker 1: of at the top of the later board on this 307 00:18:13,520 --> 00:18:17,000 Speaker 1: score card that you guys have produced, who's well prepared 308 00:18:17,080 --> 00:18:20,600 Speaker 1: for future climate impacts, and who's not doing so well. 309 00:18:20,920 --> 00:18:24,399 Speaker 2: So at the top of our twenty five country let's 310 00:18:24,480 --> 00:18:28,280 Speaker 2: we have Canada with a near perfect score across our framework, 311 00:18:28,359 --> 00:18:31,919 Speaker 2: actually followed up by Singapore and South Korea at the 312 00:18:32,000 --> 00:18:37,760 Speaker 2: other end, we see Thailand, Russia, and Saudi Arabia with 313 00:18:38,040 --> 00:18:42,879 Speaker 2: many gaps across a number of key pillars across the framework, 314 00:18:43,000 --> 00:18:46,919 Speaker 2: so they're sort of lagging on this scoreboard. Interestingly, I 315 00:18:46,960 --> 00:18:50,359 Speaker 2: guess US sits very much in the middle, with a 316 00:18:50,440 --> 00:18:53,399 Speaker 2: number of rollbacks as we've seen over this year, for 317 00:18:53,440 --> 00:18:58,160 Speaker 2: example for disaster funding and on climate risk disclosure regulation. 318 00:18:58,640 --> 00:19:01,600 Speaker 1: The US is ranking sort of middle in the pact 319 00:19:01,680 --> 00:19:06,960 Speaker 1: despite having already three percent of GDP down you as 320 00:19:06,960 --> 00:19:09,359 Speaker 1: you had mentioned, So what are the things that the 321 00:19:09,440 --> 00:19:11,600 Speaker 1: US is getting wrong right now? Dania? 322 00:19:12,000 --> 00:19:16,760 Speaker 3: In our assessment, it was lacking two main fundamentals. One 323 00:19:17,119 --> 00:19:21,080 Speaker 3: is a centralized strategy on how to build long term 324 00:19:21,200 --> 00:19:24,520 Speaker 3: resilience and number two is funding to back that up 325 00:19:24,520 --> 00:19:28,080 Speaker 3: and make that happen. Interestingly, the US actually performed quite 326 00:19:28,080 --> 00:19:31,280 Speaker 3: well when it comes to getting projects off the ground. 327 00:19:31,400 --> 00:19:34,040 Speaker 3: So that data set where we were able to track 328 00:19:34,080 --> 00:19:38,600 Speaker 3: the number of engineered resilience projects or nature based resilience projects, 329 00:19:38,760 --> 00:19:41,760 Speaker 3: the US did quite well. So there is activity going, 330 00:19:41,840 --> 00:19:45,399 Speaker 3: but without a centralized strategy and a long term plan, 331 00:19:45,680 --> 00:19:49,880 Speaker 3: you risk again maladaptation or you risk missing out on 332 00:19:50,320 --> 00:19:51,119 Speaker 3: key synergies. 333 00:19:51,480 --> 00:19:54,200 Speaker 1: And so what is it that's really separating the leaders 334 00:19:54,480 --> 00:19:56,240 Speaker 1: and the lag adds Heo. 335 00:19:56,640 --> 00:19:59,600 Speaker 3: Well, one thing that we found is that countries that 336 00:19:59,800 --> 00:20:03,800 Speaker 3: are are more exposed overall to physical risks tend to 337 00:20:04,200 --> 00:20:08,320 Speaker 3: fare better on our assessment of adaptation preparedness, So that 338 00:20:08,480 --> 00:20:12,600 Speaker 3: was a positive sign. Countries that are not as susceptible 339 00:20:12,680 --> 00:20:15,640 Speaker 3: to physical risks tend to be a little bit lagging 340 00:20:15,720 --> 00:20:19,120 Speaker 3: in their preparedness for it, which I suppose makes sense right, 341 00:20:19,119 --> 00:20:23,160 Speaker 3: they have potentially fewer economic benefits or incentives to act, 342 00:20:23,520 --> 00:20:27,560 Speaker 3: But those two fundamental drivers that I mentioned, a centralized 343 00:20:27,600 --> 00:20:32,640 Speaker 3: strategy and dedicated budget for adaptation and resilience. Again not 344 00:20:32,920 --> 00:20:36,720 Speaker 3: just dedicated climate budget, but a pool of money specifically 345 00:20:36,840 --> 00:20:41,240 Speaker 3: for adaptation and resilience. That's very much key to making 346 00:20:41,520 --> 00:20:43,800 Speaker 3: any type of action materialize. 347 00:20:44,000 --> 00:20:47,720 Speaker 1: And so governments really have a very central role to 348 00:20:47,800 --> 00:20:50,800 Speaker 1: play in adaptation preparedness and planning. 349 00:20:51,320 --> 00:20:54,280 Speaker 3: We think the governments have a key role and our 350 00:20:54,720 --> 00:20:57,720 Speaker 3: best poised to set that central strategy and set the 351 00:20:57,720 --> 00:21:00,879 Speaker 3: long term vision and basically create a blueprint so that 352 00:21:00,960 --> 00:21:04,160 Speaker 3: other actors, whether that be the construction industry or whether 353 00:21:04,200 --> 00:21:08,400 Speaker 3: that be finance industry, can participate and know how they 354 00:21:08,440 --> 00:21:11,720 Speaker 3: can aid this long term journey of building resilience, and. 355 00:21:11,680 --> 00:21:14,840 Speaker 1: So one of the biggest roadblocks that are holding governments 356 00:21:14,920 --> 00:21:16,600 Speaker 1: back from adapting effectively. 357 00:21:16,960 --> 00:21:20,119 Speaker 3: One of the big ones is definitely financing. The financing 358 00:21:20,200 --> 00:21:25,320 Speaker 3: is just not there. To date. Most adaptation financing globally 359 00:21:25,400 --> 00:21:28,640 Speaker 3: has come from governments, but when you compare that against 360 00:21:28,640 --> 00:21:32,080 Speaker 3: what's needed, it's small potatoes. And most of the money 361 00:21:32,119 --> 00:21:35,239 Speaker 3: to date has been public financing. But private capital has 362 00:21:35,280 --> 00:21:37,240 Speaker 3: a very large role to play too, So there's a 363 00:21:37,280 --> 00:21:40,480 Speaker 3: lot of work in trying to attract more private investors, 364 00:21:40,520 --> 00:21:42,240 Speaker 3: private capital into this space. 365 00:21:42,680 --> 00:21:46,080 Speaker 1: One of the ways that private capital and the private 366 00:21:46,200 --> 00:21:51,520 Speaker 1: sector can build more resilience is through the use of insurance. Natasha, 367 00:21:51,600 --> 00:21:54,840 Speaker 1: can you talk us through the role that insurance plays 368 00:21:55,040 --> 00:21:57,840 Speaker 1: in this framework and a ranking what we found about 369 00:21:58,480 --> 00:22:03,080 Speaker 1: insurance as a leave to help increase climate resilience. Yeah. 370 00:22:03,119 --> 00:22:08,000 Speaker 2: Absolutely, So we've included insurance under our final pillar on 371 00:22:08,119 --> 00:22:13,040 Speaker 2: disaster recovery in terms of building financial resilience to extreme 372 00:22:13,119 --> 00:22:17,719 Speaker 2: weather events. Now, this uses data from Bloomberg Intelligence which 373 00:22:18,080 --> 00:22:23,480 Speaker 2: looks at the ratio between insured climate losses to uninsured losses, 374 00:22:23,600 --> 00:22:26,080 Speaker 2: and there were some quite interesting findings from that. There 375 00:22:26,080 --> 00:22:28,440 Speaker 2: are only a number of countries that scored kind of 376 00:22:28,520 --> 00:22:32,919 Speaker 2: highly in terms of having majority damages ensured, and that 377 00:22:33,160 --> 00:22:37,760 Speaker 2: was Canada, Australia, Japan, and the US and all other 378 00:22:37,800 --> 00:22:42,840 Speaker 2: countries had a very low insurance ratio for climate damages. Now, 379 00:22:43,000 --> 00:22:46,560 Speaker 2: insurance is a tricky one. Obviously, in developed markets where 380 00:22:46,680 --> 00:22:50,080 Speaker 2: the insurance market is functioning properly, it can be a 381 00:22:50,280 --> 00:22:54,520 Speaker 2: very important tool to be able to protect assets protect 382 00:22:54,520 --> 00:22:57,800 Speaker 2: homes from some of these climate damages. But it's not 383 00:22:57,880 --> 00:23:01,280 Speaker 2: going to work everywhere. So in developing countries there is 384 00:23:01,480 --> 00:23:04,000 Speaker 2: much less coverage and we have to look to some 385 00:23:04,520 --> 00:23:08,120 Speaker 2: sort of other financial models to be able to protect 386 00:23:08,280 --> 00:23:09,199 Speaker 2: assets and homes. 387 00:23:10,119 --> 00:23:12,199 Speaker 1: And if we think as well about the sort of 388 00:23:12,240 --> 00:23:16,080 Speaker 1: building resilience component as well as the engineered projects, which 389 00:23:16,119 --> 00:23:18,040 Speaker 1: we talked a bit about, what are the sort of 390 00:23:18,160 --> 00:23:23,640 Speaker 1: natural solutions that are being employed successfully and how big 391 00:23:23,640 --> 00:23:25,359 Speaker 1: a role do those things have to play. 392 00:23:25,680 --> 00:23:28,640 Speaker 2: So we are seeing an increasing role for nature based 393 00:23:28,640 --> 00:23:32,160 Speaker 2: solutions or ecosystem based projects as we've termed them here 394 00:23:32,200 --> 00:23:34,960 Speaker 2: in the report, So where we can look to projects 395 00:23:35,200 --> 00:23:39,840 Speaker 2: which actually hit multiple benefits, so projects which are building 396 00:23:39,840 --> 00:23:44,760 Speaker 2: resilients but they're also supporting biodiversity. So looking at natural 397 00:23:44,880 --> 00:23:50,080 Speaker 2: versions of some of these engineered protections such as flood barriers, 398 00:23:50,240 --> 00:23:54,040 Speaker 2: so using natural flood barriers, so that is kind of 399 00:23:54,160 --> 00:23:58,000 Speaker 2: through building up by natural ecosystems that already exist, such 400 00:23:58,080 --> 00:24:02,360 Speaker 2: as mangroves, but also you know, building hedgerows around fields 401 00:24:02,400 --> 00:24:05,640 Speaker 2: to kind of improve resilience of our agricultural land. 402 00:24:05,960 --> 00:24:10,080 Speaker 1: And early warning systems is another component of this, and 403 00:24:10,119 --> 00:24:12,760 Speaker 1: they sound like a pretty simple fix which could have 404 00:24:12,880 --> 00:24:13,960 Speaker 1: large benefits. 405 00:24:14,280 --> 00:24:18,160 Speaker 3: Yeah, you're right, that is a really effective adaptation, and 406 00:24:18,400 --> 00:24:22,280 Speaker 3: it's unique because it's almost always universally effective, right, which 407 00:24:22,320 --> 00:24:25,040 Speaker 3: is not always the case for adaptation. The UN actually 408 00:24:25,160 --> 00:24:28,680 Speaker 3: has a goal to have every single person on Earth 409 00:24:28,800 --> 00:24:31,480 Speaker 3: covered by an early warning system by the end of 410 00:24:31,600 --> 00:24:33,960 Speaker 3: twenty twenty seven, so we're a few years away from 411 00:24:33,960 --> 00:24:38,280 Speaker 3: that goal. However, I believe currently we're only at roughly 412 00:24:38,320 --> 00:24:40,960 Speaker 3: one in three people being covered, so a long way 413 00:24:40,960 --> 00:24:44,119 Speaker 3: to go, but certainly, yes, early warning systems are a 414 00:24:44,119 --> 00:24:47,600 Speaker 3: great return on investment because it allows you to have 415 00:24:47,720 --> 00:24:51,040 Speaker 3: time to either prepare for a hazard before it hits, 416 00:24:51,280 --> 00:24:54,320 Speaker 3: or to evacuate if need be and minimize the damage. 417 00:24:54,400 --> 00:24:57,200 Speaker 1: And Natasha, another component that you guys have talked about 418 00:24:57,200 --> 00:25:01,200 Speaker 1: in your work is national risk assessment. Why are those 419 00:25:01,280 --> 00:25:04,560 Speaker 1: important and how do they separate leaders from lagouts? 420 00:25:05,000 --> 00:25:07,720 Speaker 2: Well, there really are the first step in this process 421 00:25:07,720 --> 00:25:11,000 Speaker 2: to building resilience because you need to understand what the 422 00:25:11,080 --> 00:25:13,960 Speaker 2: risks are that require adapting to. I would see it 423 00:25:14,000 --> 00:25:16,720 Speaker 2: as quite a red flag over country is putting in 424 00:25:16,760 --> 00:25:21,440 Speaker 2: place in adaptation strategy without first doing a climate risk assessment. 425 00:25:21,600 --> 00:25:25,119 Speaker 2: So these risk assessments should be looking across the economy, 426 00:25:25,280 --> 00:25:29,280 Speaker 2: so identifying the most material hazards, so you know, are 427 00:25:29,320 --> 00:25:32,600 Speaker 2: you most exposed to floods or is it hurricanes or 428 00:25:32,680 --> 00:25:34,960 Speaker 2: is it extreme heat, and then thinking about what those 429 00:25:34,960 --> 00:25:37,919 Speaker 2: impacts could be across every area of the economy, so 430 00:25:38,200 --> 00:25:42,720 Speaker 2: across the built environment, across natural ecosystems for health, and 431 00:25:42,840 --> 00:25:45,400 Speaker 2: to really be able to hot spot those exposures so 432 00:25:45,520 --> 00:25:47,960 Speaker 2: that there's the foundations to be able to build an 433 00:25:48,119 --> 00:25:51,040 Speaker 2: adaptation strategy to build resilience those impacts. 434 00:25:51,400 --> 00:25:53,679 Speaker 1: The country that I think is ranked lowest tier that 435 00:25:53,720 --> 00:25:56,240 Speaker 1: you mentioned that the laggard in the thirty or so 436 00:25:56,359 --> 00:25:59,080 Speaker 1: countries that have been assessed in this pace of work 437 00:25:59,160 --> 00:26:02,560 Speaker 1: is Saudi Arabia. So what's going on over there? If 438 00:26:02,640 --> 00:26:05,240 Speaker 1: I think about Saudi Arabia, I imagine that it's already 439 00:26:05,280 --> 00:26:07,560 Speaker 1: a country which faces extreme HETE. 440 00:26:07,840 --> 00:26:10,520 Speaker 3: I think maybe there's two main factors that play here. 441 00:26:10,560 --> 00:26:14,320 Speaker 3: Specifically for Saudi Arabia, their government and their investors have 442 00:26:14,400 --> 00:26:18,200 Speaker 3: funneled a lot of money towards renewable energy so mitigation, 443 00:26:18,520 --> 00:26:21,960 Speaker 3: but not as much towards adaptation. There's actually a couple 444 00:26:22,000 --> 00:26:26,439 Speaker 3: examples of governments that have emphasized energy transition goals but 445 00:26:26,600 --> 00:26:30,200 Speaker 3: have not yet put their foot on the pedal on adaptation. 446 00:26:30,520 --> 00:26:33,159 Speaker 3: The other aspect for Saudi Arabia and a number of 447 00:26:33,160 --> 00:26:36,640 Speaker 3: other countries actually is the level of disclosure. So we 448 00:26:36,960 --> 00:26:40,639 Speaker 3: based most of our analysis on publicly available information, and 449 00:26:40,960 --> 00:26:44,360 Speaker 3: if the government is not disclosing as much or creating 450 00:26:44,520 --> 00:26:47,840 Speaker 3: regular progress reports, then there's not much that we can 451 00:26:48,160 --> 00:26:49,720 Speaker 3: incorporate into our assessment. 452 00:26:50,040 --> 00:26:52,440 Speaker 1: Well, me's sort of being to talk about which countries 453 00:26:52,440 --> 00:26:55,600 Speaker 1: are sort of feeling the hete and where investment would 454 00:26:55,640 --> 00:26:58,639 Speaker 1: make the biggest difference. Do we have a sense of 455 00:26:58,640 --> 00:27:02,159 Speaker 1: that of who is the most vulnerable country compared to 456 00:27:02,240 --> 00:27:03,840 Speaker 1: how well they are prepared. 457 00:27:04,359 --> 00:27:07,399 Speaker 3: Yeah. In our report, we put all the countries that 458 00:27:07,440 --> 00:27:12,159 Speaker 3: we assessed on a quadrant, so adaptation preparedness low to 459 00:27:12,240 --> 00:27:16,000 Speaker 3: high on one axis, and exposure to climate risks on 460 00:27:16,040 --> 00:27:20,639 Speaker 3: another axis, and three countries came in to the top 461 00:27:20,680 --> 00:27:24,800 Speaker 3: climate vulnerability quadrant, and they were India, Brazil, and Vietnam. 462 00:27:24,960 --> 00:27:28,000 Speaker 3: So these are the countries where they are exposed to 463 00:27:28,119 --> 00:27:32,880 Speaker 3: high physical risks, but their adaptation progress is not commensurate 464 00:27:33,080 --> 00:27:36,000 Speaker 3: with their risk exposure, which leads us to believe that 465 00:27:36,160 --> 00:27:39,520 Speaker 3: any progress or any steps taken in these countries will 466 00:27:39,560 --> 00:27:41,200 Speaker 3: have the biggest bane for your buck. 467 00:27:41,440 --> 00:27:44,880 Speaker 1: There is this narrative now emerging that adaptation is becoming 468 00:27:44,920 --> 00:27:48,600 Speaker 1: a bit of an investment opportunity. So what are some 469 00:27:48,680 --> 00:27:54,400 Speaker 1: of the upsides that countries who are doing adaptation policy 470 00:27:54,440 --> 00:27:57,360 Speaker 1: and preparedness well may experience. 471 00:27:57,800 --> 00:28:01,439 Speaker 2: Some of the benefits of building resis billions to climate 472 00:28:01,520 --> 00:28:05,320 Speaker 2: change that we've identified are things like a reduction of 473 00:28:05,440 --> 00:28:08,680 Speaker 2: climate damages, so or a slow down of the rise 474 00:28:08,720 --> 00:28:13,199 Speaker 2: in climate damages. There's also some additional benefits for industries 475 00:28:13,280 --> 00:28:18,560 Speaker 2: located in those countries, such as improved global competitiveness, particularly 476 00:28:18,600 --> 00:28:22,320 Speaker 2: in industries that are climate exposed, so say in agriculture 477 00:28:22,560 --> 00:28:24,960 Speaker 2: or mining. There's also a kind of would be a 478 00:28:25,000 --> 00:28:28,720 Speaker 2: lower global risk perception from foreign investors, so might see 479 00:28:28,760 --> 00:28:32,399 Speaker 2: a kind of an increased attractiveness from foreign investors. But 480 00:28:32,560 --> 00:28:35,639 Speaker 2: also a growth of new markets for adaptation solutions. So 481 00:28:36,040 --> 00:28:38,760 Speaker 2: if a country has a strong adaptation strategy in place, 482 00:28:38,760 --> 00:28:41,560 Speaker 2: then they need to be investing in these solutions, which 483 00:28:41,600 --> 00:28:44,760 Speaker 2: we know will require hundreds of billions of dollars of 484 00:28:44,760 --> 00:28:48,080 Speaker 2: investment across our economy, across all sectors of the economy, 485 00:28:48,240 --> 00:28:50,920 Speaker 2: and therefore you can expect to see a growth of 486 00:28:50,960 --> 00:28:54,360 Speaker 2: these new markets for the technologies and solutions across all 487 00:28:54,440 --> 00:28:57,800 Speaker 2: of those areas, that engineered solutions, that ecosystem based solutions, 488 00:28:57,840 --> 00:28:59,800 Speaker 2: add some of the social solutions as. 489 00:28:59,720 --> 00:29:03,080 Speaker 1: Well, and so on the flip side, countries that you 490 00:29:03,080 --> 00:29:05,680 Speaker 1: know that school lowly on our framework, those lag guards 491 00:29:05,760 --> 00:29:08,960 Speaker 1: that we're assessing are not very well prepared for future 492 00:29:08,960 --> 00:29:13,440 Speaker 1: climate impacts. What does that mean? How should investors or 493 00:29:13,480 --> 00:29:16,560 Speaker 1: companies really interpret those results? What is the outlook for 494 00:29:16,600 --> 00:29:18,200 Speaker 1: those countries and the ramifications. 495 00:29:18,520 --> 00:29:21,120 Speaker 2: Well, it's hard to say because we don't necessarily know 496 00:29:21,360 --> 00:29:24,080 Speaker 2: if it's always that nothing is happening or whether and 497 00:29:24,360 --> 00:29:26,680 Speaker 2: it's not just being disclosed, but there is a lot 498 00:29:26,720 --> 00:29:30,520 Speaker 2: of uncertainty about what the future impacts could be in 499 00:29:30,560 --> 00:29:33,760 Speaker 2: those countries, and the economic losses are more likely to 500 00:29:33,800 --> 00:29:36,440 Speaker 2: go unchecked in these countries, particularly in the near term. 501 00:29:36,880 --> 00:29:39,280 Speaker 3: Yeah, I would say that the opportunity is not just 502 00:29:39,400 --> 00:29:44,560 Speaker 3: limited to countries but to private investors as well, which 503 00:29:44,560 --> 00:29:48,080 Speaker 3: I think we're starting to see among the financial institutions. 504 00:29:48,240 --> 00:29:50,880 Speaker 3: Singapore was a great example of this. Their pension fund 505 00:29:51,000 --> 00:29:56,000 Speaker 3: did this study on investment opportunity in the adaptation driven market. 506 00:29:56,240 --> 00:30:00,000 Speaker 3: So if you do believe that adaptation will be need, 507 00:30:00,360 --> 00:30:02,200 Speaker 3: somebody is going to have to build that and that's 508 00:30:02,240 --> 00:30:05,120 Speaker 3: going to generate revenue. Japan was also a great example. 509 00:30:05,200 --> 00:30:09,200 Speaker 3: In their adaptation strategy, they specifically called out that Japanese 510 00:30:09,240 --> 00:30:13,080 Speaker 3: companies that sell into the adaptation market, for instance through 511 00:30:13,400 --> 00:30:19,040 Speaker 3: environmental engineering or construction fields, these companies could find new 512 00:30:19,120 --> 00:30:23,600 Speaker 3: markets throughout their region or in other countries as those 513 00:30:23,600 --> 00:30:26,680 Speaker 3: countries start to invest more in adaptation and look for 514 00:30:26,720 --> 00:30:27,840 Speaker 3: expertise in building it. 515 00:30:28,040 --> 00:30:32,440 Speaker 1: So financing is a really important component here, making capital flow. 516 00:30:32,760 --> 00:30:34,760 Speaker 1: What are some of the new ideas that are emerging 517 00:30:34,880 --> 00:30:36,760 Speaker 1: to make adaptation investable. 518 00:30:37,160 --> 00:30:41,640 Speaker 2: Well, obviously governments need to prioritize crowding in private capital 519 00:30:41,840 --> 00:30:44,600 Speaker 2: to be able to scale some of these solutions. So 520 00:30:44,640 --> 00:30:47,640 Speaker 2: some of the types of mechanisms that countries are deploying 521 00:30:48,000 --> 00:30:51,320 Speaker 2: are in sort of green bonds, green debt. For example, 522 00:30:52,080 --> 00:30:56,320 Speaker 2: in Japan, Tokyo has recently launched a resilience bond to 523 00:30:56,560 --> 00:31:00,440 Speaker 2: fund flood protection, which has been received very well and 524 00:31:00,480 --> 00:31:04,560 Speaker 2: has actually been oversubscribed. Other examples are catastrophe bonds, such 525 00:31:04,600 --> 00:31:10,760 Speaker 2: as recently used in Jamaica for Hurricane Melissa. Also adaptation 526 00:31:10,840 --> 00:31:14,640 Speaker 2: link debt swaps, such as the Barbados twenty twenty two deal, 527 00:31:14,920 --> 00:31:18,800 Speaker 2: which restructures sovereign debt to fund resilience building in the Caribbean. 528 00:31:18,960 --> 00:31:22,680 Speaker 2: These instruments have remained complex and untested at scale, but 529 00:31:22,720 --> 00:31:25,960 Speaker 2: there are kind of emerging examples of where this is 530 00:31:26,080 --> 00:31:30,160 Speaker 2: being able to fund adaptation and resilience, and private capital 531 00:31:30,440 --> 00:31:33,480 Speaker 2: is starting to flow and there is definitely a great 532 00:31:33,480 --> 00:31:36,560 Speaker 2: interest and so I think we'll be seeing a lot 533 00:31:36,600 --> 00:31:38,000 Speaker 2: more emerging in the near future. 534 00:31:38,440 --> 00:31:41,520 Speaker 1: Natasha Daniel, thank you so much for shedding light on 535 00:31:41,560 --> 00:31:45,160 Speaker 1: this really important new topic. All eyes will really be 536 00:31:45,320 --> 00:31:49,280 Speaker 1: on the outcome of the COP thirty negotiations. Can they 537 00:31:49,520 --> 00:31:53,600 Speaker 1: advance the adaptation agenda at least at the policy and 538 00:31:53,680 --> 00:31:57,280 Speaker 1: the international level and motivate more countries, particularly the ones 539 00:31:57,280 --> 00:31:59,680 Speaker 1: that on your schoolcard which have not scored so well. 540 00:32:00,080 --> 00:32:02,880 Speaker 1: This is a really interesting construct and a new lens 541 00:32:02,960 --> 00:32:06,720 Speaker 1: for investors and companies to start to think about their 542 00:32:06,760 --> 00:32:10,200 Speaker 1: exposure to future climate impacts. Thank you so much for 543 00:32:10,280 --> 00:32:13,280 Speaker 1: joining us, and look forward to the future research that 544 00:32:13,320 --> 00:32:15,520 Speaker 1: you can produce on this topic. So thanks very much 545 00:32:15,560 --> 00:32:18,600 Speaker 1: for joining us. Natasha, thank you, and thanks as well 546 00:32:18,600 --> 00:32:19,720 Speaker 1: to you, Danielle. 547 00:32:19,840 --> 00:32:20,200 Speaker 3: Thank you. 548 00:32:29,360 --> 00:32:32,480 Speaker 2: Today's episode of Switched On was produced by Cam Gray 549 00:32:32,680 --> 00:32:36,400 Speaker 2: with production assistants from Kamala Shelling. Bloomberg NEIF is a 550 00:32:36,440 --> 00:32:39,560 Speaker 2: service provided by Bloomberg Finance LP and its affiliates. 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